Judge freezes Medi-Cal cuts

LOS ANGELES —A federal district court here has stanched the bleeding at many pharmacies in the Golden State by ordering the state to halt a 10-percent cut in Medi-Cal payments to healthcare providers.

Ruling in favor of professional and retail groups that filed suit to stop the cuts, U.S. District Judge Christina Snyder found that pharmacies, and other Medi-Cal providers and patients, were being hurt by the cutbacks, which went into effect July 1. Other suits still are pending against the state.

While not a permanent injunction, the ruling is a key victory for pharmacy. “Pharmacies were losing money on nearly every Medi-Cal transaction, and many pharmacies have been forced to turn away Medi-Cal patients,” asserted the California Pharmacists Association.

In addition to pharmacies, the court order includes relief for physicians, dentists, adult day healthcare centers, clinics, health systems and other healthcare providers, and it applies to services on or after July 1.

“This case has been a rollercoaster ride since the beginning,” said Lynn Rolston, chief executive officer of the California Pharmacists Association. “The California Pharmacists Association applauds Judge Snyder for recognizing the damage the cuts were having on pharmacy and the patients they serve.”

Many pharmacy and retail groups joined the suit, including the National Association of Chain Drug Stores, the National Community Pharmacists Association, the California Pharmacists Association and other groups. “This fight is not over, and the fight is not over in states nationwide,” NACDS president and chief executive officer, Steve Anderson, told pharmacy leaders last month in San Diego. “But this is progress…and a major win for the concept of collaboration among pharmacy advocates.”

If the Medi-Cal cuts are eventually implemented, said Longs Drug chairman, president and chief executive officer, Warren Bryant, “pharmacies can lose an average of $30 or more on every brand Medi-Cal prescription they filled.”

“One study in California compared what 1,000 pharmacies paid for the 278 most common drugs and how much they cost to dispense. After the 10-percent cuts, Medi-Cal reimbursement for 275 of the 278 drugs is below the break-even cost,” Bryant noted at the NACDS’ 2008 Pharmacy and Technology Conference. “Fortunately…[the court] stepped in to block the cuts, in its ruling citing what we warned all along: that pharmacies…and patients were being ‘irreparably harmed’ as a result of the cuts.”

Bryant said he understood “the difficulty of balancing state budgets in a tough economy, [but] that doesn’t change the fact that in pushing for these cuts, state lawmakers ignored all the evidence out there about the value of pharmacy services and the importance of these services for the state’s neediest patients.”