Walgreens, Delaware reach short-term deal in temporary truce over Medicaid payments

7/8/2009

DEERFIELD, Ill. In an 11th-hour, temporary truce in its ongoing impasse over a cut in Medicaid pharmacy reimbursements by the state of Delaware, Walgreens agreed Monday to continue filling prescriptions for Medicaid beneficiaries in the state for several weeks while negotiators for both sides continue negotiating for a solution to the standoff.

At issue: a steep cut beginning July 1 in Medicaid prescription payments by the state’s Medicaid program. That reduction — which cut reimbursement levels to 84% of the April average wholesale price of drugs dispensed under the program — would have forced many Walgreens pharmacies in Delaware to operate at a loss, said SVP pharmacy Kermit Crawford.

In response, the chain signaled it would stop filling scripts for patients covered by Delaware Medicaid as of July 6 — and the company predicted its “difficult” decision would lead to major disruptions in state Medicaid pharmacy services, since roughly half of all Medicaid prescriptions in the state are filled by Happy Harry’s drug stores owned by Walgreens.

Both sides agreed to a temporary compromise late last week, however, averting an immediate crisis over Medicaid reimbursements in Delaware but leaving unanswered longer-term questions about how states faced with budget shortfalls will spread the pain of financial cutbacks, and what other solutions Walgreens and other pharmacy providers could provide to alleviate the funding crisis in health care.

Under terms of the agreement worked out by the chain and Delaware's Department of Health and Social Services, Walgreens will continue serving Medicaid patients through early August at a rate of 85% of AWP, according to a report from Reuters news service.

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