Medicaid managed care squeezing independent pharmacies

May 26--BLOOMINGTON -- Independent pharmacists are increasingly worried that their days filling prescriptions may be numbered because recent Medicaid managed care changes mean they are losing money on some orders.

But a bill working its way through the Illinois General Assembly is attempting to address some of the pharmacists' concerns.

"With this new managed care, you can't make it," said Rob Taveggia, owner of Chenoa Pharmacy in Chenoa. "With the way things are going with managed care ... it will be impossible to sustain."

"It's more difficult to stay in business," added Bill Martin, owner of Merle Pharmacy in Bloomington.

"We are trying to stretch every dollar," said Lauren Young, business manager for Dale's Southlake Pharmacy and Colee's Community Pharmacy in Decatur and Colee's Corner Drugs in Forsyth.

State Sen. Andy Manar, D-Bunker Hill, hopes to address independent pharmacists' concerns as chief Senate sponsor of House Bill 3479, which passed the House with the support of State Reps. Dan Brady, R-Bloomington, and Bill Mitchell, R-Forsyth, and is working its way through the Senate. The bill would boost what Medicaid managed care organizations pay pharmacies.

But some legislators and others are concerned the legislation would increase costs to the state without benefiting people on Medicaid.

Illinois has been transitioning to Medicaid managed care, meaning private insurers administer Medicaid benefits for the state; the program went statewide on April 1. One goal is to save the state money.

The challenge for pharmacists is that Medicaid managed care organizations reimburse pharmacies for medications at lower rates than traditional Medicaid. While that affects all pharmacies with Medicaid managed care customers, independent pharmacies are more keenly impacted.

Jim Graham, senior manager of media relations for Walgreen Co., declined comment.

But Taveggia said, "This is a huge deal."

Previously, when he would fill a prescription for someone on Medicaid, he would make $3 to $6 on each order.

Taveggia said during one week in early April, he filled 210 prescriptions for people on Medicaid managed care, lost money on 35 of those prescriptions and made less than a dollar on 110 of them.

For one couple, Taveggia fills 18 prescriptions each month. "Since the switch to Medicaid managed care, I lose $19.12 each month when I fill their prescriptions and that's an hour of my time," he said.

Taveggia said he's able to stay in business because his customers include a couple of long-term care facilities. But he's concerned long term whether his pharmacy and other independent pharmacies can stay open.

"Community pharmacies support communities," he said. "We provide jobs. We support our towns."

Young said that, prior to April 1, the average dispensing fee that Dale's and Colee's would receive for a Medicaid managed care patient was $6.77. Now it's 89 cents.

"We offer free delivery," she said. "That will have to change."

Part of the problem, independent pharmacists said, is that pharmacy benefit managers (PBMs), who are contracted by health plans, employers and governments to manage prescription drug programs, determine which pharmacies to include in drug plan networks, how much pharmacies are paid for their services and which drugs are covered.

While PBMs say they reduce drug prices, pharmacists question whether they are making money on the backs of patients and pharmacists.

"They are setting the pricing and where that pricing comes from is unknown to me," Martin said. "These PBMs are squeezing the providers and the insurance companies, too. The problem is there is no transparency."

Declining reimbursement means pharmacists may reconsider filling some prescriptions, Martin said.

"To stay in business, you have to make wise choices," he said. "What saved me is I got into the medical equipment side of the business."

House Bill 3479 would require Illinois Medicaid managed care organizations to provide fair and reasonable reimbursement to pharmacists and would require more transparency from PBMs.

Independent pharmacists support the legislation. "Anything they do to make these PBMs more open is advantageous," Martin said.

What if the legislation doesn't pass?

"Well, I've been in business for 50 years," Martin said. "You look at the big picture and you'll survive."

Contact Paul Swiech at (309) 820-3275. Follow him on Twitter: @pg_swiech

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