Change is always difficult but in today's healthcare marketplace, especially pharmacy, change seems to be coming at us at the "speed of light!" Larry the Cable Guy says "Change is inevitable, except from vending machines!" 

We had barely finished celebrating CMS' delayed approval of the 2007 Texas Medicaid dispensing fee increase to $7.50 when I read the state has a projected budget shortfall of $16 billion. I swallowed hard and braced myself.

And as expected, last week change came at us very quickly in the form of a proposal from the Texas Health and Human Services Commission to reduce all Medicaid provider reimbursements by 1 percent. This is in response to a directive from the "big three"--the governor, lieutenant governor, and speaker of the House--to all agencies to cut their budgets by 5 percent.
 
 At 11 a.m. Wednesday, Feb. 10, I received an e-mail from HHSC with their proposal for budget reduction options attached. We had barely 24 hours to respond at a public hearing and 48 hours to respond in writing with our formal comments.

I went to page 10, provider rate reductions, and found that HHSC is proposing an across-the-board 1 percent reduction in provider reimbursement rates. In the Vendor Drug Program, that translates to a 1 percent reduction in the "just approved" $7.50 dispensing fee and the 2 percent inventory management factor. If this proposal is approved, and we're not there yet, the new fee would be $7.43 or $7.42 depending on rounding, and the new inventory factor would be 1.98 percent.

At first glance that looks like a modest decrease considering the projected shortfall and the national economic situation. But upon further analysis, there are other factors unique to pharmacy that might make this reduction larger than 1 percent. In fact, many of our members are reporting significant erosion in their gross margin on Medicaid prescriptions. Those two factors are

1. the AWP lawsuit settlement and rollback, and
   
2. the aggressive method by which Texas Medicaid prices drug products.
   

TPBC as an organization, submitted formal comments to HHSC in opposition to the reimbursement and suggested more significant savings could be achieved without reimbursement cuts. We pledged to work with the agency to find those alternatives.

Perhaps the saving grace in all of this is Commissioner Tom Seuhs' statement at the hearing Thursday, saying the dialogue will not end with the draft proposal submitted to the legislative leadership Monday, Feb. 15. TPBC suggested the formation of a Vendor Drug Cost Reduction workgroup made up of pharmacy stakeholders and  VDP staff.

This is just the beginning, so stay tuned!

Richard E. Beck, RPh
Executive Director, Texas Pharmacy Business Council

By Amanda C. Fields
General Counsel

You've probably been following TPBC's success in utilizing the Texas Department of Insurance as an oversight agency to help the independent pharmacy profession submit and resolve complaints against health maintenance organizations, insurers and the entities they contract with to process and pay claims--pharmacy benefit managers.  

We have more good news to report about this initiative!  

You will remember that TPBC recently submitted a complaint on behalf of its members to TDI against Humana in response to the 25 cent adjudication fee it proposed via its new Pharmacy Provider Agreement. TPBC complained that this adjudication fee violated a portion of the Texas Insurance Code that applies to electronic health care transactions, and states that a health care plan may not directly or indirectly charge or hold a health care professional, health care facility, or person enrolled in a health benefit plan responsible for a fee for the adjudication of a claim.  

TDI representatives indicated to TPBC that it agreed with the merits of TPBC's complaint and Humana may not charge the adjudication fee. Click here and scroll down to the Frequently Asked Questions to read TDI's opinion of the complaint. Be sure to bookmark this pharmacy-specific page, where you can find valuable information and file your own complaints online!

TDI continues to be proactive in assisting TPBC with a swift processing of this complaint. TDI recently contacted TPBC to tell us that it achieved a final resolution to the complaint:

1. Humana has taken action to discontinue assessing the fee;
   
2. Humana will send you written notification that the fee will no longer be applied; and
   
3. Most importantly, Humana will issue a credit of all fees that have been assessed, and the credit will appear on the next electronic remittance for each of the impacted pharmacies (dating from the fee's effective date of Dec. 8, 2009)!

To read the letter from TDI to TPBC resolving the complaint, click here.

TDI's enforcement of an existing law translates to more money in your pocket, and we appreciate TDI being so proactive and responsive. Utilizing TDI as your dispute adjudicator can save you time and money!