Federal Judge Rules on Washingtons Below-Cost Medicaid Pharmacy

The Washington State Pharmacists Association, the National Community Pharmacists Association, and the National Association of Chain Drug Stores are pleased that the U.S. District Court for the Western District of Washington has approved a motion filed last week by the Department of Justice seeking to remand back to the Centers for Medicare & Medicaid Services an unlawful, below-cost Medicaid pharmacy reimbursement plan in Washington state. The pharmacy groups had filed a lawsuit challenging the plan, saying it may jeopardize both reliable patient access to care and pharmacy viability alike. The court order also dismisses the matter without prejudice, which would allow the litigants back into court should CMS falter again in its approach.
In a sharp departure from CMS’ previous position, the Trump administration’s acting CMS administrator had approved this flawed scheme on Jan. 19, 2021, the last day of the previous administration. CMS’ previous position was that Washington’s reimbursement was unlawful primarily because it failed to consider the cost of dispensing. WSPA, NCPA and NACDS sued CMS for the inexplicable and unsupported about-face, accusing CMS of violating its own rules.
With this week’s court order, CMS will reconsider its January decision to approve the Washington state plan, contrary to its own rules and prior determinations. If CMS reverses itself, as it should based on the law and record before it, and disapproves the plan, Washington state should then be required to submit to CMS a new Medicaid state plan amendment, which the pharmacy organizations say should reflect the true cost of dispensing in the state and/create a reimbursement rate consistent with federal Medicaid rules.
“Pharmacies are essential sources of health care, ensuring the safe and appropriate use of medications through their highly trained pharmacists and technicians. The Medicaid pharmacy dispensing fee must support patient care for our state’s most vulnerable population,” noted Jenny Arnold, CEO of the WSPA. “We celebrate CMS upholding the importance of patient access to quality care by remanding the state plan agreement.”
“Pharmacy reimbursement rates can’t be haphazard shots in the dark; they must consider the actual pharmacy costs associated with filling patients’ prescriptions,” said NCPA CEO B. Douglas Hoey. “The federal government formally rejecting this plan is a terrific development for patients and pharmacies in Washington and across the country. Officials should be on notice that you cannot get away with an unfair reimbursement rate.”
“This is a precedent-setting fight that we have engaged in to protect vulnerable Medicaid patients and the viability of pharmacies’ work on their behalf,” said NACDS President & CEO Steven C. Anderson. “The court’s swift action is an extremely positive step in reversing a completely unjustifiable approach to Medicaid pharmacy reimbursement in Washington state and to the Trump administration’s response to it in one of its final actions. This sends a vivid message throughout the nation.”