For Immediate Release February 17, 2012

Contact: Steve Ray (512) 803-0229

Pharmacists, Beneficiaries File Federal Lawsuit To Delay Devastating Medicaid Cuts

Texas Plan Will Force Pharmacies To Close Doors, Patients To Be Turned Away

[Austin, TX] - Texas TrueCare Pharmacies today filed a lawsuit in federal court to delay implementation of Texas’ planned move to managed care for Medicaid pharmacy services on March 1, 2012.  Without changes, the state’s plan will devastate community pharmacies and make it much more difficult for the poor and vulnerable to obtain needed medications and other health services. 

“The state is failing in its most basic responsibility to ensure access to pharmacy care for its most vulnerable patients,” said John Heal, director of governmental affairs for Texas TrueCare Pharmacies. “Without action, pharmacies across the state will be forced to choose between providing prescriptions at a loss or ceasing service to their patients.”

Additional plaintiffs in the suit are Fred’s Pharmacy in Falfurrias, DeLeon’s Pharmacy in Corpus Christi, Clinic Pharmacy in Brackettville, Tyson Pharmacy in Coleman and two parents on behalf of their children who receive Medicaid benefits.

The suit alleges that the Texas Health and Human Services Commission has failed to establish reasonable standards for the reimbursement of pharmacy claims under Medicaid managed care, in violation of existing law.

Under managed care, reimbursements to pharmacies for filling Medicaid prescriptions are set by pharmacy benefit managers (PBMs), which are for-profit middlemen hired by the managed care companies.  PBMs are slashing current dispensing fees for pharmacies by up to 80 percent.  In most cases, pharmacies are bound by “take it or leave it” contracts with limited ability to negotiate.

During the last session of the Texas Legislature, the move to managed care was seen as a way for the state to curb rising healthcare costs during tough economic times.  But during several interim committee hearings that have taken place since the legislature adjourned, legislators have heard repeatedly from Texans of the unintended consequences of the change.

“I have determined that I will literally go broke trying to keep my pharmacy open,” said Louis Rumsey, R.Ph., owner of Elam Road Pharmacy in Dallas. “The reimbursement is so low that even if I let go of several employees, cut back on expenses and did not pay myself, I still could not stay in business,” he said.  Over 90 percent of the prescriptions filled at Elam Road Pharmacy are for children, Mr. Rumsey said. 

In addition, HHSC claims they have no oversight to ensure reasonable rates.  And despite requests by Texas TrueCare, HHSC has failed to take any action to remedy the inequitable fees being imposed on Texas pharmacists.

“I really don’t believe the legislature intended for pharmacies to take such a huge cut, I really don’t,” said Rep. Chuck Hopson (R)-Jacksonville.  “Nor do I believe that the legislature thought HHSC would lose oversight of such a vital aspect of the program.”

With HHSC denying that pharmacies may appeal the new rates, Texans will begin feeling the disastrous effects in less than two weeks as the March 1st deadline looms.  Texas economist Dr. Ray Perryman estimated in 2011 that the move to managed care would lead to the closure of hundreds of pharmacies and the loss of tens of thousands of jobs in already-struggling Texas communities.

Loss of community pharmacies would result in local residents losing access to badly-needed medications, pharmacy counseling and other health services pharmacists provide, such as immunizations, screenings and home IV therapies.  Loss of these services would affect everyone, but would have an especially severe impact on the state’s most vulnerable citizens: low-income families, the elderly and disabled.  Rural residents would also face additional hardships obtaining the medicine they need, particularly those with few or no transportation options.

According to Austin attorney Jennifer Riggs, who is bringing the case on behalf of Texas pharmacists and certain Medicaid beneficiaries, the state should establish a system of transparency to ensure an equitable professional fee to pharmacists that prevents PBMs from slashing rates without economic justification.  “Texas pharmacists are entitled to a reasonable rate and an open and transparent process for determining that rate,” Ms. Riggs said.  “Under the plan proposed by HHSC, rate setting is abdicated to PBMs where the process is swept under the rug and away from public scrutiny.”

She also noted that an analysis by HHSC grossly underestimates the adverse economic effect new managed care rules will have on community pharmacies throughout Texas.  State law requires agencies to be mindful of the negative economic impact on small businesses when creating new rules.  The law also requires HHSC to consider ways to accomplish its objectives, while minimizing the adverse impact on small businesses. “The result of HHSC's effort was an analysis that excluded pharmacy participation, lacked an accurate account of the negative economic impact on small business and failed to identify a single viable alternative to lessen that impact,” Ms. Riggs said. 

Heal also noted that HHSC’s estimated cost savings from moving the pharmacy benefit to a managed care system represents a “moving target” with estimates ranging from $83 million to $119.7 million. And those estimates have trended down, not up.

“Texans deserve better,” said Ron Garza, owner of DeLeon’s Pharmacy in Corpus Christi and president of the Coastal Bend Pharmacy Association. “The unintended effect of this plan kills jobs and hurts access to healthcare across the state.  HHSC has ceded its responsibility to protect patients and Texas businesses to PBMs that directly compete with our pharmacies.  I can think of no other business where your competitor sets its own rate.” 

According to TrueCare Pharmacies, instead of saving money, Medicaid managed care would likely increase costs to taxpayers when access to pharmacies is diminished.  Pharmacists enhance patient health and improve outcomes by ensuring that patients take their medications as directed, and by counseling patients about side effects and drug interactions.  Loss of these services could result in unnecessary complications for some patients, and trips to the emergency room increasing overall health care costs for everyone.  “When access to healthcare is reduced, overall healthcare costs increase.  It’s that simple,” said Mr. Garza.

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Thank You !

Texas TrueCare is grateful to the AIP-Texas, PBA Health, the Rio Grande Valley Independent Pharmacy Association and the many independent pharmacists around the state who have made contributions to the Pharmacy Survival Fund that has been used to protect the interests and advocate on behalf of all of community pharmacy.  

Please join this group by making a contribution to the future of independent pharmacy through the Pharmacy Survival Fund.  The stakes have never been so high.

 

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