Pallone pledges support on Medicaid, health reform

PALM BEACH, Fla. As Congress grapples with an economy and a health system in crisis, pharmacy advocates must redouble their efforts to reach federal lawmakers through grassroots lobbying and direct contact with their representatives if they’re to win a seat at the health reform table, an influential member of the House of Representatives told chain pharmacy leaders in Palm Beach, Fla.

Addressing the final business session of the National Association of Chain Drug Stores’ 2009 Annual Meeting April 21, Rep. Frank Pallone urged NACDS members to ramp up their campaign for a fair Medicaid payment system and a bigger role as community health providers — particularly over the next few months as Congress mulls the budget crisis and health reform. Pallone, a New Jersey Democrat who chairs the House Energy and Commerce Subcommittee on Health, pledged to work on their behalf.

NACDS president Steve Anderson called Pallone, who has served in Congress for more than two decades, “one of the nation’s foremost health care experts and a great friend of NACDS.”

Pallone is the primary sponsor of the Fair Medicaid Drug Payment Act of 2007, which Anderson said, “establishes an accurate benchmark for pharmacy reimbursement for generic drugs in the Medicaid program, and ensures continued Medicaid beneficiary access to pharmacy services. Perhaps one of his greatest challenges…comes this year, as Congress works to develop and pass a bill reforming the nation’s healthcare system.”

Pallone’s legislation would eliminate a plan by the Centers for Medicare & Medicaid Services to shift to a new and controversial payment system for reimbursing pharmacies for dispensing generic medications to patients enrolled in Medicaid. That system, based on the average manufacturer’s price of the drug as defined by CMS, would drastically reduce reimbursements to pharmacies and actually discourage the use of lower-cost generics, according to pharmacy advocates.

Addressing NACDS members, Pallone agreed. “We are trying to encourage not only health reform but the use of generics, and the last thing I would like to see is for us to move away from generics — which obviously save the federal government and the system money — back to name brand drugs, which could result if what you can charge for generics falls too low.”

Nevertheless, Pallone cautioned that the lack of understanding among most lawmakers of health and pharmacy issues creates a big obstacle to reform.

“A lot of my colleagues do not understand this,” he admonished industry leaders. “In this atmosphere, we have a million things going on… and in the context of all this, although this might be a perfect time to look at the AMP issue, a lot of members are not focusing on it because they have so many other things going on.”

For that reason, said Pallone, “I would stress that your role as an organization — doing grassroots, contacting members of Congress, taking them to the local pharmacy and explaining to them what this is about — is very crucial over the next few months. The members need to be educated.”

Pallone said the Fair Payment bill would soon be reintroduced in the House and Senate.

“We’re working with Sen. Baucus, and hopefully within the next few weeks, we will introduce the legislation, and the two bills, mine and Sen. Baucus’ bill, will hopefully be the same,” he said.

The biggest hurdle other than educating lawmakers about the need for a fair Medicaid reimbursement, added the congressman, is money. “It can be expensive to correct this, and we need to figure out how to pay for it. But we understand this has to be done, and it has to be done legislatively.”

As things stand now, said Pallone, the retail pharmacy industry is on borrowed time as far as the current Medicaid prescription payment structure goes. “The Medicare Improvement Act extended the deadline for the Deficit Reduction Act to go into effect until September of this year, and you have a court challenge still out there. But we want to fix this legislatively, possibly in the context of the larger health reform effort, and if not, as a standalone bill.”

Either way, that larger health reform effort will go forward, said the lawmaker. “The problem with the healthcare system now is many-fold, but in part it’s the lack of coverage for 46 or 47 million Americans who have no insurance at all. But beyond that, the costs continue to rise. They’re rising so rapidly that they’re not sustainable.”

Indeed, he said, “Right now, 16% of the gross national product is spent on health care. Over the next 20 years, it could go as high as 26% if health inflation continues. Obviously, that’s not sustainable.”

Pallone called that situation “a crisis that has to be addressed.”

One result of the rising costs, he added, is that fewer employers are providing health insurance.

“The numbers have been going down. It used to be about 76% of people got their health insurance from their employers,” Pallone said. “Now, it’s only about 60%. So we have to look at how we can craft this health reform — whether it’s some kind of tax incentive or other approach — to try to make sure we don’t continue to lose more employer-sponsored health insurance.”

Another key part of health reform, said Pallone, is to set up some kind of “healthcare marketplace” that consolidates cost-effective coverage for uninsured and underinsured Americans who can’t afford coverage.

“In other words, the federal government would entertain private group plans, standardize the policies, and perhaps negotiate a price… so there would be large group plans that people could buy into through the federal government, even though their private,” he explained. “The costs would go down because these would be large group plans. We would subsidize it for people who can’t afford it. And that’s where the biggest cost comes.”

The issue is controversial, Pallone added, because it could entail the creation of “a public, government-run insurance plan that competes with the private insurers. And most of the Democrats, including myself, support that because we think it’s a way of keeping costs down and creating competition.”

Underlying all health reform efforts on Capitol Hill, Pallone said, is a search for new solutions and new, more cost-effective models for health care delivery — including the nationwide adoption of standards for health information technology and electronic patient recordkeeping.

The Obama administration’s fiscal stimulus package includes money for health IT, as well as prevention, wellness and “comparative effectiveness” programs, Pallone reminded his audience.

“We’re looking at different models,” he said. “One is called the ‘medical home’ model, where a primary care provider is responsible for coordinating a patient’s care among different providers and different care settings.

“Pharmacists can play a major in coordinating patient care,” Pallone said. “In that context of looking at new models of patient care, we can look at different things [for pharmacists] other than just dispensing drugs – like coordinating patient care, making recommendations, and possibly being reimbursed.”