Glasgow Daily Times, Glasgow, KY

State News

February 14, 2012

Kentucky pharmacists unhappy with rates

FRANKFORT — A roomful of Kentucky pharmacists Monday made clear their dissatisfaction with some of their reimbursement rates under the newly implemented Medicaid managed care system before a legislative committee.

Representatives of the three managed care organizations — Coventry Healthcare, Kentucky Spirit and Wellcare — and the pharmacy benefits management companies they employ appeared before the General Assembly’s Program Review and Investigations Committee.

They told lawmakers they have processed thousands of claims with few appeals or complaints and are working diligently to address concerns expressed by pharmacies, especially the small, independent pharmacies which claim they are being reimbursed at rates lower than their costs for some prescriptions.

Jim Giardina, vice president of Pharmacy Services for Coventry Healthcare, told the committee his company processes more than 100,000 prescription claims per week out of which it has received only 1,100 requests for appeal or exception. Of those, Giardina said, 60 to 70 percent are approved. Marty White of Kentucky Spirit and Mike Minor of WellCare gave similar accounts.

Each assured lawmakers they had no objection to a bill now passing through the legislature which would allow pharmacies to charge Medicaid customers a direct, nominal co-pay. And each said his company is working to resolve any problems facing smaller pharmacies.

Those managed care organizations contract with pharmacy benefit managers (PBM) for an administrative fee to process claims by pharmacies. And some lawmakers and pharmacists weren’t happy with the PBM’s performance or answers.

William Strein of Medco, the PBM employed by Coventry, said the maximum allowable cost for generic prescription drugs should be “reasonably” set between the pharmacists’ costs and a reasonable cost to the payer, in this case Coventry.

Rep. John Will Stacy, D-West Liberty and a co-owner of two independent pharmacies, asked Strein why if that is the case, why Medco is paying pharmacies less than the cost of some drugs.

Strein responded that Medco makes no money on those transactions because it is paid an administrative expense by Coventry and thus has no incentive to deny pharmacies a “reasonable” profit.

“I don’t believe anything you’ve said is factual,” said an obviously agitated Stacy.

Sen. Vernie McGaha, R-Russell Springs, then asked for a show of hands by those in the audience who were representing pharmacies. Then he asked how many had been paid less than their costs by each of the three PBM companies. Most lowered their hands when he asked about US Script which contracts with Kentucky Spirit, most people lowered their hands.

But when McGaha asked how many had been reimbursed less than costs by Medco (Coventry) and by Catalyst (WellCare) nearly everyone raised a hand.

The committee didn’t get to everyone who wanted to testify. The committee convened at 2 p.m. but had to adjourn by 4 p.m. when the two chambers of the General Assembly convened. That didn’t leave time to hear from the pharmacists.

Committee Chair Sen. Jimmy Higdon, R-Lebanon, said the committee would schedule another meeting for that purpose.

“Obviously, we’ve got a problem here and we have barely scratched the surface,” Higdon said as the meeting adjourned.

Gov. Steve Beshear got lawmakers last year to approve the move to managed care to hold down the spiraling costs of Medicaid and in the face of declining state revenues. But several lawmakers, especially some Republican senators, have said the system was being implemented without sufficient preparation.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at Follow CNHI News Service stories on Twitter at

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