Sen. Hinojosa: HMO shift forcing pharmacies out of business

PHARR A low reimbursement rate for Medicaid patients is crippling independent pharmacies in the Rio Grande Valley to the point that most will go out of business, state Sen. Juan Chuy Hinojosa said Wednesday while standing inside a small drugstore that closed its doors last week.

About a dozen Valley pharmacies went out of business since the Health and Human Services Commission placed 400,000-plus Medicaid beneficiaries into its managed care program March 1 in an effort to more efficiently deliver health care to the poor and to those with disabilities. But Hinojosa, D-McAllen, said the profit-driven companies that are now managing Medicaid dramatically cut reimbursement rates for small, independent pharmacies while paying a higher fee to the chains.

Quite frankly, the dispensing fee and the reimbursement rates are unacceptable, Hinojosa said at a news conference surrounded by dozens of pharmacists at Sam Houston Pharmacy, a Pharr-based drugstore that shut down the first day of managed care. They were never intended to be that low.

The Valley made the long-delayed switch to managed care March 1 despite opposition from local legislators, who successfully delayed its rollout here for about a decade. Under managed care, the state contracts the coverage for its 3.2 million Medicaid beneficiaries to health maintenance organizations, or HMOs. The HMOs contract with healthcare providers from physicians to pharmacies to hospitals who care for Medicaid beneficiaries in a controlled environment.

Managed cares supporters say it will save taxpayers millions by eliminating unnecessary duplication of services, stressing preventive care and finding other wasteful healthcare spending. But its detractors say those savings often come by restricting patient access to care and hurting small businesses with tight profit margins.

The Valleys independent pharmacists which still outnumber chains 3-to-1 here have been outspoken about the change since the March 1 rollout, with two major complaints: low reimbursement and slow reimbursement.

Before managed care, the state paid pharmacies a $6.35 per prescription dispensing fee that covered rent, pharmacy technician salaries and other business overhead, but that dispensing fee was slashed to about $1.35 under the HMOs. Independent pharmacists who dont receive the same wholesale drug rates as large chains are also squeezed by lower reimbursement for the actual medication.

Compared to the state, independent pharmacists also say, HMOs process reimbursements slowly, which works against companies that dont have lots of cash resources.

(Managed care) doesnt make sense, said John Calvillo, a Med Aid pharmacist who is president of the Rio Grande Valley Independent Pharmacy Association. Youre putting two for-profit companies (the HMOs and the pharmacy benefit managers that process and pay prescription drug claims) and claiming that will save money.

Hinojosa and state Rep. Sergio Muoz Jr., D-Palmview, called for the states Health and Human Services Commission to force the HMOs to raise reimbursement rates to make them equitable. They also want the state to audit the HMOs to ensure there is a level playing field.

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Sen. Hinojosa: HMO shift forcing pharmacies out of business