Pharmacists Urge Federal Medicaid Officials to Reject Oregon Proposal to Further Reduce Pharmacy Reimbursement

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Oregon Plan Would Upend Prior Deal; CMS Urged to Provide Advice to States

Alexandria, Va. - July 22, 2011

The National Community Pharmacists Association (NCPA) has "grave concerns" regarding a purported Oregon state plan amendment that would renege on a pact the state previously reached with the Centers for Medicare & Medicaid Services (CMS) and cut Medicaid pharmacy reimbursement for the second time this year.

Earlier this year, CMS approved a state plan amendment, or SPA, proposal by Oregon that reduced pharmacy reimbursement by basing it on the pharmacy's average acquisition cost (AAC) instead of the average wholesale price (AWP). This cut was mitigated by an accompanying increase in its dispensing fee to better reflect pharmacy costs. In discussions with the pharmacy community, CMS has indicated a shift to an AAC-based reimbursement methodology needs to be considered simultaneously with an enhanced dispensing fee.

In a letter to CMS this week, available here, NCPA stated it was "cautiously optimistic that a switch to AAC could be an appropriate method on which to base pharmacist reimbursement as long as such a proposal would be considered simultaneously with an enhanced dispensing fee."

However, as NCPA's letter notes, Oregon's latest SPA would reduce the new dispensing fee and set a "dangerous precedent." In effect, states could win CMS approval for a shift to the lower, AAC-reimbursement benchmark by also agreeing to increase pharmacy dispensing fees. Then the state could later pare back the dispensing fee, further reducing pharmacy overall reimbursement and potentially jeopardizing Medicaid patients' access to pharmacies, some of which may be forced to leave the Medicaid program rather than dispense at a financial loss.

"Independent community pharmacists are the backbone of the Medicaid drug benefit and often serve rural and urban areas that have few, if any, other pharmacy providers," said NCPA Executive Vice President and CEO B. Douglas Hoey, RPh, MBA. "Local pharmacists can help states reduce their Medicaid costs by promoting low-cost generic drugs, where appropriate, and through face-to-face counseling on the proper use of medication. Unfortunately, this proposal is a step in the wrong direction and turns a blind eye toward the health needs of Medicaid patients. For these and other reasons, CMS should not approve it."

Currently, there are 160 independent community pharmacies in Oregon, providing nearly 2,000 jobs and contributing greatly to the local economy and tax base.

The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies, pharmacy franchises, and chains. Together they represent a $93 billion health-care marketplace, have more than 315,000 employees including 62,400 pharmacists, and dispense over 41% of all retail prescriptions. To learn more go to or read NCPA's blog, The Dose, at

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