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DSHS, Pharmacists Working on New Process to Pay Medicaid Clients’ New Federal Fees

For Immediate Release: February 17, 2006

Governor Gregoire will continue to work with Congressional delegation to repeal co-pay requirement

OLYMPIA – Governor Chris Gregoire today announced that the Washington Department of Social and Health Services is working with the state’s pharmacists to set up a new process to pay the new federal drug co-pays for low-income disabled and elderly Medicaid clients.

These clients were charged co-pays between $1 and $5 for each of their prescriptions, beginning January 1, when the new Medicare Part D drug benefit program began. Medicaid clients who also are Medicare beneficiaries were switched over automatically to the federal system on that date.

“Many Medicaid clients live on less than $600 per month and have up to 20 prescriptions each month,” said Governor Gregoire. “Requiring that they pay a co-pay on each prescription amounts to a staggering new expense for these individuals and their families.”

Governor Gregoire announced in early February that the state would begin paying that cost as soon as these new procedures are in place.

The change is scheduled to go into effect on February 21, according to DSHS.

Funding for the state’s move came after Governor Gregoire was assured by federal officials that the state would not have to pay as much as estimated earlier for the new Part D benefit. Although the new federal benefit is not administered by the state, the federal government still plans to charge the state about half the cost of administering the benefit to its Medicaid client. The Governor and legislative leaders agreed those “savings” would be best spent covering the new drug charges.

“I will continue to work with Senators Cantwell and Murray and the entire Washington delegation to repeal the co-payment requirement for dual eligibles from the federal statute, as well as any other section of the Medicare drug program that is serving as a barrier to Washingtonians receiving the health care they need and deserve,” said Governor Gregoire. “Our pharmacists have been great, and truly, the heroes through all of this. I commend and thank them for helping this population through this transition.”

DSHS representatives said the new system will let pharmacists simply charge the state, not the individuals, for the co-payments.

With the new process, pharmacies will bill the state for the co-pays through the computerized point-of-sale system all pharmacies in the state are using.

Under the new Medicare drug benefit, pharmacies had to stop using the Medicaid billing system for “dual-eligible” clients – i.e., those covered by both Medicare and Medicaid. Prescriptions for those clients are now billed to newly created Medicare drug plans – private insurance plans that each have their own formulary and reimbursement schedules.

The state’s dual eligibles were automatically enrolled in so-called “benchmark” drug plans, where they do not have to pay monthly premiums and face co-pays no higher than $5. They have the right to switch to more expensive plans, but then would have to pay premiums and higher co-pays. In those cases, the state will only pay up to the $5 limit.

An additional complication is that the Medicare drug law specifically prohibits the use of Medicaid funds to pay for Medicare clients’ drug benefits, so only state dollars can be used to reimburse the pharmacies. The Medicaid program is normally funded by both state and federal funds.

“We had to rebuild the system to some degree, because we have to be able to show an audit trail that not only links the co-payments to specific clients but also to the prescriptions they are getting filled. That information is being sent to the Medicare drug plans, not the state,” according to Doug Porter, Assistant Secretary for the Health and Recovery Services Administration.

Eventually, the state hopes the Part D drug plans will send states the same information that Medicare currently receives on each drug transaction. That way, pharmacies will have to send the billing information only once.

Porter said pharmacies would be issued full billing instructions and numbered memos on the new changes by the end of the week. The documents also will be available on the Provider Publications page on the administration’s computer site.


On the web:
Federal information about the new Medicare Part D benefit

Medicare help in Washington:
Statewide Health Insurance Benefits Advisors (SHIBA) HelpLine