Independent pharmacies were unable to win protections in the recently adjourned legislative session against what they see as predatory business practices and misuse of state dollars in the state’s Medicaid managed-care program, HealthChoice Illinois.
But they hope to pass legislation in the General Assembly’s fall veto session that requires disclosure of information from the often-secretive dealings between managed-care organizations, subcontracting companies known as pharmacy benefit managers (PBMs), and pharmacies that depend on PBMs for payment.
The new information, pharmacies and their supporters say, could unveil what they suspect are profit padding and unnecessarily steep reductions in what pharmacies receive for serving Medicaid patients compared with what pharmacies received under “fee-for-service” rates.
Pharmacy owners say cuts in payments for the medicines they dispense and per-prescription “dispensing fees” aren’t saving the state money on health care for low-income Illinoisans.
But the reductions threaten to push many pharmacies out of business with no backup plan for patients, especially in rural and downstate areas, pharmacy owners say. The impact of those cuts mandated by PBMs has grown with the reboot of the managed-care program this year and its expansion to all 102 counties on April 1.
“We had a tough lift with getting the bill as far as we did,” Garth Reynolds, executive director of the Illinois Pharmacists Association, said of House Bill 3479, which passed the Illinois House but never received a vote by the full Senate.
“We will continue to work on this over the summer,” he said last week. “It’s the political process. This is going to be a long fight.”
Samantha Olds Frey, executive director of the Illinois Association of Medicaid Health Plans, said the association was opposed to the original bill and also is opposed to a recently amended version, which passed the Senate Executive Committee on May 29.
But Olds Frey said the amended bill is “much closer” to an acceptable form. “As Medicaid health plans, we are not opposed to transparency,” she said.
The national Pharmaceutical Care Management Association, which represents pharmacy benefit managers, previously issued a statement that said PBMs reduce prescription drug costs for employers and government programs by 30 percent or more.
A spokesman for the association didn’t respond to a request for comment for this story.
Independent pharmacies in Illinois will continue to face financial pressure while waiting for a legislative fix, Reynolds said.
He said the impact could be reduced somewhat by $10 million in payments to “critical-access pharmacies” that state Sen. Andy Manar, D-Bunker Hill, worked to get inserted into the fiscal 2019 state budget. The budget, which takes effect July 1, was passed by the legislature and signed into law by Gov. Bruce Rauner.
Supporters of independent pharmacies said the version of HB 3479 that passed the House in April would have forced the Illinois Department of Healthcare and Family Services to pay pharmacies “fair and reasonable” reimbursement rates, or rates at least equal to the former fee-for-service Medicaid rates.
Reynolds said pharmacies have seen their dispensing fee drop from $5.50 for generics and $2.40 for brand-name drugs under fee-for-service Medicaid to the current 45 cents per prescription under managed care networks operated by pharmacy benefit managers.
PBMs such as CVS Caremark, Prime Therapeutics and Meridian RX have contracts with the state’s seven managed-care organizations, most of them for-profit companies.
Manar said the Illinois Pharmacists Association presented compelling evidence that managed care is hurting independent pharmacies.
But Manar, the bill’s Senate sponsor, said there’s a lack of statewide data to justify majority support in the General Assembly for what could be seen as more intrusion by government into the private sector. The original version of HB 3479 also had technical problems, he said.
Lack of data also could be a problem if the General Assembly takes steps that prompt private companies to sue the state, Manar said.
“I want to expose these contractual relationships to complete transparency,” he said, adding that public hearings will be held on the issue in coming months.
An amendment to HB 3479 removes the previously proposed boost in reimbursement rates but adds requirements for public disclosure of financial dealings among MCOs, PBMs and pharmacies.
Information required to be reported to the state, and available to the public, would include “the average reimbursement per contract by drug ingredient cost, dispensing fee and any other fee paid by a pharmacy benefits manager to licensed pharmacies.”
Manar said the legislation, if enacted, could produce data that leads to public outrage and political will in the General Assembly.
“Shining a light on these things will drive public policy in the future,” he said.
Reynolds has said at least one PBM, CVS Caremark, which works with the huge CVS Pharmacy chain, appears to be conspiring with CVS Pharmacy to put smaller pharmacies out of business.
CVS spokesman Mike DeAngelis told The State Journal-Register that Reynolds’ claim “makes no sense.”
DeAngelis said independent pharmacies are reimbursed by CVS Caremark at a higher rate, on average, than chain pharmacies, including CVS pharmacies. This higher rate, he said without providing specifics, “reflects the importance we place of having independent pharmacies in our network.”
The amended legislation also includes protections against “gag clauses” so pharmacists are free to share more information about a patient’s coverage, medication prices and cheaper alternatives, Reynolds said.
The original bill, according to Olds Frey, “would increase the cost of the Medicaid program by hundreds of millions of dollars.”
The amended version, she said, still could allow pharmacies to withdraw from Medicaid managed care networks while remaining in private insurance networks serving state workers and other employer groups.
The potential for certain patients to see their pharmacy choices dwindle is a concern, Olds Frey said.
Manar said it’s likely that the legislation will be tweaked yet again before it is considered for final passage.
Reynolds said it appears that the systemic problems independent pharmacies are facing with Medicaid managed care won’t be addressed for at least a year. In the meantime, he said, some may face closure, though the critical-access payments could help.
David Falk, a Maroa resident who owns 12 downstate Sav-Mor pharmacies, including those in Virden, Nokomis and Mount Pulaski, said the pharmacists association “didn’t necessarily lose” when a bill failed to pass both chambers of the legislature this spring.
“I don’t think we’re done by any means,” he said. “Long term, something’s going to have to be done.”
The information disclosure requirements in the amended bill would be a positive step, Falk said.
“We want to see what the middleman is keeping,” he said.
Falk, 48, said he doesn’t know whether he would qualify for the critical-access payments. Budget document say the payments could go only to owners of fewer than 10 brick-and-mortar pharmacies.
Wole Adeoye, a pharmacist living in Decatur, said he closed his two pharmacies in Decatur and laid off his 15 employees in 2016 because of low dispensing fees in an earlier version of Medicaid managed care.
About 70 percent of the pharmacies’ patients were insured by Medicaid, said Adeoye, 61, who testified in favor of HB 3479 in a House committee in April.
Lawmakers should protect pharmacies from “bullying” by pharmacy benefit managers, he said.
“They need to do the right thing and let us have our dignity,” Adeoye said. “It’s not that we can’t compete. It’s because these people are allowed to do whatever they want. PBMs don’t do anything. They take money away from us to make their bottom line look good.”
Contact Dean Olsen: dean.olsen@sj-r.com, 788-1543, twitter.com/DeanOlsenSJR.