Washington State plan aimed to lower Medicaid pharmacy payments is rescinded


Shane Ersland


CMS rescinded approval of a Washington State Medicaid amendment that aimed to dramatically lower pharmacy reimbursement rates.


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The Washington State Pharmacy Association (WSPA), the National Community Pharmacists Association (NCPA), and the National Association of Chain Drug Stores (NACDS) voiced support for the CMS decision that they say will help maintain reliable patient access to care and pharmacy viability in Washington. 

“Pharmacies provide essential care and access to medications,” WSPA CEO Jenny Arnold said. “Adequate reimbursement for safe patient care is essential. Our pharmacies should not have to choose between taking care of their patients and keeping their doors open, so we are relieved by this outcome.”

On Jan. 19, 2021, the last day of the Trump administration, the acting CMS administrator approved a plan to reimburse pharmacies for Medicaid patients far below the actual cost of dispensing prescriptions. The decision was a sharp departure from CMS’ previous position, which was that the state’s reimbursement was unlawful primarily because it failed to consider the cost of dispensing. 

WSPA, NCPA, and NACDS sued CMS, accusing CMS of violating its own rules. As a result, the Department of Justice—which represented CMS in the case—filed a motion to remand the matter back to CMS, agreeing with the pharmacy groups that the final decision approving the amendment was unsupported by the administrative record before CMS and would not survive the legal challenge. 

“This is a win for patients and pharmacies not only in Washington, but around the country,” NCPA CEO Brian Douglas Hoey said. “Unfair pharmacy reimbursement rates must not stand. We are celebrating the outcome of this fight and will continue working to protect essential health care services provided by pharmacy teams.”

CMS reconsidered the Jan. 19, 2021, decision and determined that the amendment—which would have reimbursed pharmacies of all sizes well-below cost—would be disapproved. Specifically, CMS determined that the amendment is inconsistent with the requirement that “States have a State plan that provides such methods and procedures to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available to the general population of the geographic area.” 

CMS also found that the amendment was inconsistent with federal regulations “which provide that payments for drugs are to be based on combined examination of the ingredient cost of the drug and a professional dispensing fee.” 

“Pharmacies have a vital role to play in health care delivery, and CMS’ decision will go a long way in helping to ensure that the most vulnerable Americans continue to have access to the pharmacy-based services they rely on and expect,” NACDS President and CEO Steven C. Anderson said. “We commend CMS for doing the hard but necessary work to reverse its approval of Washington State’s flawed pharmacy reimbursement plan, which has for many years jeopardized the ability of pharmacies to meet patients’ health and wellness needs. This is not only a victory for Washington pharmacies and their patients, but also for pharmacies and the vulnerable patients they serve across the nation.”

This press release was provided by the Washington State Pharmacy Association.