Rural pharmacies face detrimental impacts from Medi-Cal managed care

Samantha P. Hawthorne
Staff Writer

Due to continued struggle with the change in Medi-Cal’s rate structure, some local pharmacies are anticipating removing the state insurance from their accepted payment methods.

Village Drug pharmacist Kevin Goss said that, in addition to 10 percent Medi-Cal cuts, the implementation of a managed care system caused pharmaceutical reimbursement rates to decrease dramatically. He said they went from the higher-paid “fee from service” rate to a lower managed care rate, which is comparable to the amount a larger urban drug store would receive. Goss said the lower rate cannot support a rural drug store because volumes are lower and costs are higher.

The lower reimbursement rates will have a great impact on all locally owned pharmacies, including Lassen Drug in Chester, Village Drug in Greenville, Quincy Drug and Portola Village Pharmacy.

Lassen Drug owner Harry Lesour declined to comment on his pharmacy’s position on the matter, but did say he will have more information once a new reimbursement rate has been negotiated through the Medi-Cal managed care plan.

Goss said Village Drug, owned by his father, William Goss, may have to decline Medi-Cal coverage for Village Drug clients; however, he does not anticipate it will come down to that.

Quincy Drug and Portola Village Pharmacy owner Mike Kibble said the new rates will essentially result in family pharmacies either shutting down or discontinuing Medi-Cal acceptance all together.

“When (the state) says they are trying to open the doors to provide more services for more people they are doing exactly the opposite — no pharmacy owner can afford to keep their doors open while serving Medi-Cal recipients if a large percentage of their population base is on managed Medi-Cal,” said Kibble.

According to Kibble, more than 99 percent of his clients have insurance. Thirty percent of his patients in Quincy and 45 percent of patients in Portola are on Medi-Cal.

“The recent switch and added managed care plans are forcing me to lose hundreds of dollars daily because the reimbursement is way below what our costs are,” Kibble said.

In a letter he wrote to the Department of Health Care Services’ chief of pharmacy benefits, Harry Hendrix, Kibble said, “The proposed 10-percent cuts to reimbursement rates and claw-back of monies that were ‘overpaid’ back in June 2011 will diminish our rural communities and California all over. It will undermine the healthcare safety net that rural pharmacies provide for Medi-Cal recipients.”

The looming Medi-Cal cuts have plagued the health care system for the last two years, along with the recent conversion to a managed care plan.

Plumas Eastern Health Care was at the forefront of organizations fighting to stop the 10 percent cut, and was able to do so for 30 rural hospitals. Its efforts, however, do not extend to rural pharmacies, which, according to the California Hospital Association, will absorb the cuts and mandatory retroactive claw-backs beginning in January.

Rural pharmacies are working directly with Anthem Blue Cross Partnership Plan and California Health and Wellness — the two insurance providers who represent Plumas County under the managed care plan — to negotiate a higher rural rate. Goss said they have proposed a new rate that is “a little better but is still not great.”

He said, “We don’t want to leave Medi-Cal patients out in the cold with no place to get their prescriptions, so we are working very hard towards finding a rate that we can sustain ourselves on.” In the meantime, pharmacies are “in a holding pattern” until a new rate is agreed upon.

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