Pharmacists Say Lower Payment Rates Could Push Them Out of Business

Payment rates that slash reimbursements for many Medi-Cal prescriptions could push independent pharmacies out of business and make it harder for low-income people to find medications, according to pharmacists across Ventura County.

“Definitely, this will put us out of business,” said Alondra Arias, a supervisor at Hueneme Family Pharmacy in Port Hueneme, where about half of the business involves Medi-Cal prescriptions. “We can probably sustain one more year.”

The pharmacists say the lower rates were triggered by changes involving the Gold Coast Health Plan. The publicly funded agency administers Medi-Cal health insurance to more than 200,000 low-income people across Ventura County.

A year ago, the commission that governs Gold Coast awarded its contract for managing its medication program to pharmacy giant OptumRx. A Gold Coast lawyer said at the time that the three-year deal was worth more than $100 million a year, with much of that consumed by the cost of medications.

OptumRx, part of the massive UnitedHealth Group, launched its program for Gold Coast in June. Independent pharmacists say their reimbursement for generic drugs — the cornerstone of their Medi-Cal business — was slashed to half, or even less, of what was paid under Script Care, the previous pharmacy benefit manager.

In some instances, pharmacies are being paid $1.25 above cost for each generic prescription, said Kent Miles who owned or had an interest in pharmacies in Simi Valley, Thousand Oaks and Oxnard that are now run by his children. He cited a survey suggesting pharmacies need far more — at least $10 above cost — to run their businesses.

“Who can live on $1.25? Nobody can,” said Miles, noting that the prices will force businesses to consider dropping their Medi-Cal contracts, meaning patients would have to go elsewhere.

“They’re going to have a hard time finding stores,” said Miles, one of several pharmacists who expressed concerns at a Sept. 25 meeting of the Ventura County Medi-Cal Managed Care Commission. That group governs Gold Coast.

Gold Coast officials said they’re aware of the pharmacists’ fears and visited several of the stores on Friday with OptumRx.

But the situation is complicated because the pharmacies don’t contract directly with Gold Coast. They have a contract with OptumRx through intermediaries known as pharmacy services administration organizations.

That relationship reduces Gold Coast’s role to one of a facilitator, said Villani.

OptumRx responded to questions with a statement released late Friday afternoon.

“Our approach ensures a broad network of pharmacies provides access to prescription drugs at affordable prices for consumers, the Gold Coast Health Plan and California taxpayers,” said company spokesman Drew Krejci.

Pharmacists say their contract with OptumRx — one of many companies they deal with through the intermediaries — came well before the pharmacy giant won the Gold Coast contract. Their volume of business with OptumRx was slight, meaning reimbursement rates for generics carried less impact.

But Gold Coast and Medi-Cal represent as much as 60 percent of the business for some pharmacies. So Optum’s new role as manager of Gold Coast’s program means payment rates are now vitally important, pharmacists said.

Andonian’s pharmacy is on Oxnard’s south side, frequented by locals who walk there because they don’t have cars. They don’t have the option of going to the large drugstore chains for Medi-Cal prescriptions.

It means Andonian could face a dilemma.

“If I stop taking Gold Coast, most of these patients are going to be very upset,” he said, noting that continuing with Gold Coast could jeopardize his ability to keep employing his six-person staff.

Gold Coast’s network has more than 140 pharmacy providers. More than 50 are independent pharmacies.

The numbers mean the independent stores are a component of the pharmacy network but not the entire network, said Villani. If stores dropped out of the network, the pharmacy benefit manager would have to make sure access to medication wasn’t compromised.

“It would be up to OptumRx to come up and find other suitable and accessible pharmacies to serve our members,” Villani said.

Pharmacists say they want the contract changed. Andonian said pharmacists negotiated a direct contract with Gold Coast’s previous pharmacy benefit manager, suggesting a similar arrangement could be made with OptumRx.

Noting that initial conversations with Gold Coast and OptumRx have been positive, Andonian is also calling for a town hall type meeting where all the players — the pharmacists, Gold Coast and OptumRX — are in the same room.

Villani said Gold Coast will do as much as it can, but emphasized it can act only as a facilitator.

“The contract relationship is between the pharmacies and OptumRx,” he said.

Pharmacists say time is an issue.

Miles said his family’s Oxnard pharmacy is losing $8,000 a month because of the lower rates. Chris Platt, co-owner of Medical Arts Pharmacy in Ojai, said his business has already made cuts to make ends meet and may have to make more.

“In three months, we’ve lost a dramatic amount of money,” he said.

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