Bitter pill for pharmacies

Utah's financial woes are filtering into pharmacies across the state, resulting in a little-known multimillion-dollar Medicaid cut that has some businesses — particularly in heavily impacted rural areas — saying they may be forced to close shop. That, in turn, will hit customers with low incomes, who will have to find different places to get their medications.

At issue is a decrease in the reimbursement rate the state pays to pharmacists who fill Medicaid prescriptions — a rate change pharmacists say leaves Utah tied with Montana for last in the nation compared to what other states pay.

Currently pharmacists are reimbursed 85 percent of their costs in covering Medicaid prescriptions, compared to 88 percent before the change.

"This kind of cut does nothing but compromise pharmacies in the state and will not solve the problem in the long run," said Dave Blackham, past president of the Utah Pharmaceutical Association.

The decrease, while commonly associated with December's budget-cutting session by the Legislature, is actually a result of state Medicaid enrollment growth for fiscal year 2003 that far out-paced expectations, state health officials said.

"It's a $5.2 million problem," says Michael Deily, who oversees the Medicaid program for the state Department of Health.

Deily said early estimates predicted a 6 percent growth in Utah's Medicaid enrollment, when the final numbers came in closer to 8 or 9 percent. The result was a funding shortfall that left state health officials scrambling for ways to fill the gap.

Utah is not alone. As the new year gets under way, a national report shows 44 states across the country are looking at freezing or reducing spending in Medicaid programs in upcoming legislative sessions.

Released by the National Conference of State Legislatures, the report said balancing Medicaid budgets is among the top five health-policy areas confronting lawmakers squeezed by tight budgets.

The Kaiser Commission on Medicaid and the Uninsured reports similar figures, with 41 states projected to face Medicaid budget shortfalls in 2003. The commission has seen an upward trend in recent years: In 2000, 30 states faced just such a problem, and 36 did so last year.

In fiscal year 2002, Utah was among 12 states that took action to freeze or reduce provider rates. Some 22 states, Utah among them, implemented increases in co-pays for Medicaid recipients for this year.

Come February, Utahns on Medicaid will go from paying $1 a prescription to $3 a prescription.