Health-care reform will bring with it many more mandates, including a limit on much much the government will reimburse providers of medical care, services and products for patients receiving subsidized insurance.
But what happens if health-care providers refuse to accept patients because it deems those government reimbursements too low?
We might find out very soon.
Walgreens drugstores in Washington state announced last week it will stop taking new Medicaid patients as of April 16. The company, which operates 121 stores in the state, contends that providing prescription medication to Medicaid patients is a money-losing proposition, The Seattle Times reported.
In a news release, Walgreens said its decision to not take new Medicaid patients stemmed from a "continued reduction in reimbursement" under the state's Medicaid program, which reimburses it at less than the break-even point for 95 percent of brand-name medications.
Walgreens, which has a store in Walla Walla, is not alone. Bartell Drugs, which has 57 stores in Washington, stopped taking new Medicaid patients last month. And it doesn't take any of Medicaid patients at 15 of its stores.
Safeway and Fred Meyer said their pharmacies would continue to serve existing Medicaid patients and to take new ones, The Times reported, although both of the chain stores expressed concern the reimbursement rate is too low for pharmacies to make a profit.
But the state's director of Medicaid, Doug Porter, apparently didn't see these decisions as a concerning trend. He said the state's 1 million Medicaid recipients should be able to readily find another pharmacy because "we have many more pharmacy providers in our network than we need."
It's not that simple. Pharmacies are in business to make money and turn a profit for their owners. If a business loses money when it sells its product it will eventually go under.
Now, we understand why Washington state has reduced its Medicaid reimbursement. The state is in a financial pinch and lowering the reimbursement to 84 percent of the average wholesale cost is expected to save the state $10 million.
That, of course, is $10 million the pharmacies would have to cover costs and as profit.
"Washington state Medicaid is now reimbursing pharmacies less than their cost of participation," said Jeff Rochon, CEO of the Washington State Pharmacy Association, adding that pharmacies that continue to fill Medicaid prescriptions at the current state reimbursement rate are "at risk of putting themselves out of business altogether."
If other pharmacies follow Walgreens lead, big problems will follow.
State Medicaid officials should take this trend seriously and take steps to reverse it. If not, the cost to fix the problem could be far greater than the $10 million in estimated savings.