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News & Press: WSPA News

Legal Challenge of Unlawful Medicaid Cuts

Tuesday, April 4, 2017   (0 Comments)
Posted by: Jeff Rochon
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Legal Challenge of Unlawful Medicaid Cuts


WSPA Members,

Eight years ago, our profession faced a huge threat to the livelihood of our pharmacies and the patients they serve. Washington State Medicaid made a rule that would have drastically cut reimbursement from AWP-14% to AWP-20%. Our members stepped up and generously contributed to the legal defense fund to support a legal challenge. The WSPA, NACDS and NCPA and several pharmacy owners challenged the rule in the 9th Circuit Court.On March 31, 2009 (eight years to the day), the Judge granted a temporary restraining order stopping the implementation of the reimbursement cut. The state ultimately decided to pull the rule and keep the previous rate. We rallied together and fought. Justice prevailed.

Déjà vu? Let’s see if history can repeat itself....

On March 1, 2017, the Health Care Authority announced that they are cutting reimbursement for medications from AWP-16% to National Average Drug Acquisition Cost (NADAC) while keeping the same dispensing fee effective April 1, 2017. NADAC is generally considered to be approximately AWP-20%. Sound familiar?

However, the circumstances slightly differ this time around. Due to the passage of the federal Covered Outpatient Drug Rule in 2016, all Medicaid programs are required to convert their current reimbursement methodology to Actual Acquisition Cost (AAC) or NADAC. But they are also required to change their professional dispensing fee to reflect the actual cost of dispensing. Washington Medicaid is not complying with that component of the requirement. The current dispensing fee of $4.24-$5.25 is approximately half the actual cost of dispensing to Medicaid patients in Washington State. A recent cost of dispensing study commissioned by NACDS and NCPA found the cost to be $10.48. To date, no other state Medicaid program in the country has implemented AAC/NADAC without increasing the professional dispensing fee to reflect actual cost of dispensing.

Yesterday, the WSPA, along with the National Association of Chain Drugstores (NACDS) and the National Community Pharmacists Association (NCPA), filed an emergency motion against the Washington State Health Care Authority to stop the implementation of their unlawful proposed rule. This is an effort to get the professional dispensing fee increased accordingly.

In our efforts to fight this legal battle, we would appreciate contributions to the WSPA Legal Fund. These contributions will be used specifically in legal efforts on behalf of our membership.

For more information about the lawsuit and the WSPA, go to

If these proposed medication reimbursement rates are implemented, we are deeply concerned about our member’s ability to continue to provide care to their Medicaid patients. This unlawful slashing of medication reimbursement rates by Washington State Medicaid will result in the worst rate in the nation. Coupled with egregious PBM contracts, pharmacy practice continues to be threatened.

It is time again to stand together united for our profession and our patients. Thank you for your support of the WSPA and your profession!



Jeff Rochon, Pharm.D.
Chief Executive Officer
Washington State Pharmacy Association

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