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Fri Apr 29, 2011 at 08:55 AM CDT
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| With the State of Texas needing to find ways to trim billions of dollars to balance its budget, shifting pharmacy services from a fee-for-service system to a Medicaid managed care system in order to save money may seem like a good idea at first blush. A closer look at the proposed Medicaid managed care "carve-in" of pharmacy services, however, reveals that any such savings predicted from the program are elusive, manufactured, and fleeting, at best.
Currently, pharmacy services for Medicaid patients are delivered by community-based pharmacies who are reimbursed by the state through a fee for service structure. This simply means that the state reimburses a pharmacy a pre-determined rate to cover the cost of the product (drug) and the cost of doing business (paying the pharmacist). The administrative cost of this approach to the State is a mere 1% of total program outlays.
The Texas legislature is proposing that Medicaid pharmacy services be shifted to a restricted managed care system where "middlemen," known as Pharmacy Benefit Managers (PBMs), would set the rules for administering pharmacy services to Medicaid patients. It is asserted by proponents of this change that this move would save money, but such "savings" come only in the form of a premium tax on health insurance plans, which would in turn be passed on to all consumers of private insurance products in Texas.
This premium tax "benefit" to the State is nothing more than a tax and is dwarfed by the economic damage that a the resulting restriction in access to pharmacy services would impose on the State and its citizens. |
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If PBMs are given control of pharmacy services in Medicaid, reimbursement rates for prescription drugs could be forced so low that many local pharmacies would not be able to continue to provide Medicaid services to patients. Many of these local pharmacies would go out of business entirely. Communities would lose their local pharmacies, and Medicaid patients would lose seamless access to the medicines they rely on to keep them out of costly emergency rooms.
We have calculated that by going to a PBM system, between 770 and 1,150 independent or small chain pharmacies would go out of business. These shuttered pharmacies would occur primarily in small towns scattered across Texas. Added together, these shuttered businesses and the associated ripple effect and increased health care costs would mean the loss of between 43,000 and 65,500 jobs in Texas - again mostly in small towns and rural communities where population contraction and economic stagnation are continuing problems.
The overall expenditure losses from the proposed legislation to "carve-in" pharmacy services to Medicaid and to lower prescription dispensing fees would be in the range of $3-$4 billion per year in the Texas economy. The cost to taxpayers is also many times larger than the purported savings. Simply put, a pharmacy carve-in is something that does not make sense for Texas and is something we cannot afford.
All across the economic landscape politicians, think tanks, universities, and businesses are attempting to balance short-term gains against long-term losses. One can turn on any cable news channel at any time during the day or night and hear that debate. The Texas legislature should take a collective deep breath and look at the true costs of massively re-aligning our Medicaid drug program and weigh the real, additional long-term costs of proposed changes before taking such a massive, ill-advised step. |
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Barack Obama,
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