Medicaid changes threaten small Texas pharmacies

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by MARK WIGGINS

KVUE

Posted on November 28, 2011 at 8:45 PM

AUSTIN — At the Lamar Plaza Drug Store in Austin, business goes on in much the same way it has for decades. Owner Dorinda Martin oversees a steady stream of prescriptions making their way out the door with the patients who need them.

"We try to make life easier for them," Martin said. "Keeping them healthy is a huge thing."

Martin is also worried.

"We're faced with the decision of staying in business or not," she said.

Under a new state law, Medicaid reimbursements once handled by the state will be administrated by managed care organizations and pharmacy benefit managers. Pharmacy owners say those organizations would cut reimbursement for some medications by up to 80 percent.

It's a scenario Martin fears would force local pharmacies to choose between serving Medicaid patients and staying in business. "They can't do it. Nobody can do it," she said. "I've done this 35 years; I can't do it."

On Monday, Martin and dozens of pharmacy owners from across Texas packed a small meeting room beneath the State Capitol to warn lawmakers that unless something is done, hundreds of pharmacies could close and hundreds of thousands of Medicaid patients could have to leave their local pharmacies for a major chain — sometimes dozens of miles away.

"The reimbursement is so low that even if I let go of several employees, cut back on expenses, and do not even pay myself a salary, I will still lose money," said Dallas pharmacy owner Louis Rumsey.

Rumsey says about 85 percent of his customers are Medicaid patients — many of them children with asthma.

"If I go out of business, where will these patients go?" he asked.

How much is reimbursed is just the starting point. Pharmacists pay up-front for medication, which can often be expensive. Under the current program, Martin says pharmacies are reimbursed in about a week, but once the law goes into effect, it could take up to a month or more.

With pharmacies dealing with multiple employees, many fear that a longer lag in reimbursement could force them to take out loans just to cover payroll.

The law was intended to save money, with many questioning whether the state's current reimbursement rates were too high. Texas Pharmacy Business Council Chairman Bruce Rogers said he recognizes what lawmakers were attempting.

"Being a small businessman, I can understand the need for the state to control expenditures, and I applaud them for doing that," said Rogers.

But Rogers and others say most pharmacies already have a difficult enough time being profitable, and the new law could be a fatal blow to many.

"Thirty-eight thousand jobs that the state of Texas will not have," warned Rogers.

At Lamar Plaza Drug Store, Martin's concerns are equally pressing.

"How will we take care of people, Medicaid or otherwise, if we're not here?" Martin asked.

The rule is set to go into effect March 1.

Representative and House Human Services Committee member Naomi Gonzalez says the emphasis will be on communication, and lawmakers intend to work with all parties to make as smooth a transition as possible.

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