The state's leading pharmacy chains yesterday indicated they
might turn over internal drug cost data to a state hearing officer charged with setting a Medicaid prescription
reimbursement rate as long as the information is kept confidential.
The lack of accurate cost data was clearly hampering state
officials yesterday at the start of several days of hearings as they tried to sort through conflicting and often confusing
testimony on what the rate should be.
Linda Ruthardt, the state's commissioner of health care
finance and policy, asked officials from CVS Corp. and Brooks Pharmacy whether they would turn over their internal cost data
if that information was kept confidential, possibly by turning it over to a third party.
James F. Smith, a senior vice president at CVS, said the
company would provide the information assuming confidentiality could be guaranteed and the proper context for the
information was provided. Officials at Brooks Pharmacy indicated a willingness to consider
the offer.
Only a couple of independent pharmacies have turned over
their drug invoices under the terms set by the state, which include posting the information on a state Web site. Most
pharmacies consider the information proprietary.
With no real numbers to scrutinize yesterday, those
testifying retraced familiar ground. Pharmacies noted Massachusetts already has one of the lowest Medicaid
prescription reimbursement rates in the country and would probably end up with the lowest rate if a
reduction contained in the state budget was adopted.
The state pays pharmacies no more than the so-called
wholesale acquisition cost of a drug plus 10 percent plus a $3 dispensing fee per prescription. The budget changed the rate to
wholesale acquisition cost minus 2 percent plus a $3 dispensing fee per prescription.
Pharmacies last month threatened to leave the state's
Medicaid program if the new rate took effect, which prompted Acting Governor Jane M. Swift to unilaterally freeze the rate
until Ruthardt can set a new one next month.
Pharmacy industry officials testified that the $3 dispensing
fee is inadequate, with the actual cost exceeding $7.76. They also said an increase in the patient's copayment from 50 cents
to $2 would cost them more money, since Medicaid patients are not required to pay the
copay. More than 30 percent fail to pay the 50-cent copayment, a figure pharmacists said would
probably rise with an increase to $2.
With all the reimbursement components combined, Steven
Grossman, owner of J.E. Pierce Apothecary in Brookline, said the current level is barely adequate. "If you reduce it at all,
guys are going to drop the business," he predicted.
State Medicaid officials, who have reluctantly become the
chief defenders of the rate cut proposed by the Legislature because they would be the ones forced to find cuts elsewhere in
their budget if it is not implemented, tried to cast doubt on the claims of pharmacies that they
would lose money on every Medicaid prescription if the lower rate takes effect.
The Medicaid officials said their research indicated the
pharmacies could possibly be making significant profits on generic drugs at the current reimbursement rate. Generics
account for only 15.6 percent of the state's overall drug expenditures.
On other drug invoices submitted by Duval's Pharmacy, rough
calculations by the Globe indicated the pharmacist would not even recover his drug expenditure costs with the lower
reimbursement rate proposed by the Legislature.
Several lawmakers opposed to a lower reimbursement rate said
the rate cut contained in the budget was poorly thought out. "It was clear we had no idea what we were doing," said
Representative Daniel E. Bosley, a Democrat from North Adams.
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The MetroWest Daily News
Friday, September 6, 2002
Conserve fuel, get tax break:
Romney's plan would put burden on SUV drivers
By John Gregg
Republican gubernatorial candidate Mitt Romney this week
proposed two tax breaks for motorists who buy fuel-efficient cars - the type of vehicles championed by his automaker
father 45 years ago.
But Romney's plan to reduce pollution could also require
owners of new SUVs and other gas-guzzlers to pay a higher automobile excise tax.
As part of his "commuter bill of rights" package released
Tuesday, Romney said he wants to "rework" the excise tax formula to encourage fuel economy.
The measure, which would apply to cars and trucks from model
year 2003 and beyond, would be "revenue neutral," he said.
That means the discount given to motorists who buy fuel-efficient cars could be offset by a
higher charge for new gas-guzzlers, his campaign acknowledged.
"We felt it was important at this stage to announce Mitt's
support for the notion of using our tax code to promote clean air and a better environment for families in Massachusetts,"
said Romney spokesman Eric Fehrnstrom.
The size of the rebate, and what vehicles would be subject
to a discount - or a higher excise tax - has yet to be worked out, said Fehrnstrom, who emphasized that SUVs already in
driveways and garages would not be affected.
"We're not changing the rules of the game if you are
currently on the road in an older-model car," he said.
Massachusetts motorists currently pay 2.5 percent of the
value of their car each year in excise taxes. Cities and towns across Massachusetts collect about $500 million a year, which
is used for local government.
Romney also called for a 10-year moratorium on sales taxes
for low-emission hybrid vehicles, which run on both gasoline and electricity but cost several thousand dollars more
than similarly sized conventional cars.
Waiving the 5 percent sales tax, for instance, could save a
consumer more than $1,000 on a hybrid such as the Toyota Prius.
"This is a substantial tax savings for the buyers of these
vehicles," Fehrnstrom said. "We want to encourage their purchase."
The proposals may also be a political move by Romney, who is
not bound by the anti-tax pledge taken by this three Republican predecessors.
Lou DiNatale, a political analyst for the University of
Massachusetts at Boston, said Romney is trying to appeal to environmentalists, many of whom tend to be registered
independents.
"The key to Romney's election in November is the perception
by independents that he's a moderate to liberal on social and environmental issues, and he's clearly playing to both these
audiences," DiNatale said. "This is another example of him taking a traditional Democratic
issue off the table."
And even though the suburbs are home to many SUV owners,
DiNatale said, "No one is going to run around and say, 'I have a right to burn gas.'"
Seth Kaplan, a senior attorney for the Conservation Law
Foundation active in Clean Air legislation, said the type of plan offered by Romney is known as a "fee-bate."
"For some people it's a rebate, and for some people it's a
fee. It's an extremely popular idea in some environmental circles," said Kaplan. "It makes an enormous amount of sense to
reward what is good behavior from a societal point of view."
The Romney plan was also declared "sensible" by state Sen.
David Magnani, the Framingham Democrat who previously proposed a similar plan geared to the sales tax.
"Conceptually, it makes a lot of sense. It's a good
Democratic idea, a good environmental idea," said Magnani, who is supporting Senate President Thomas Birmingham's Democratic
gubernatorial campaign.
Magnani faulted Romney for failing to address toll equity in
his commuter plan. But the MetroWest lawmaker also said Romney would not lose significant support from suburban
neighborhoods full of SUVs because of the excise-tax plan.
"While it is true that folks drive SUVs in the 495 corridor,
you find one of the highest concentrations of environmentally conscious voters are also in that corridor, so I'm not sure
there would be a lot of opposition," Magnani said.
But SUVs continue to gain in popularity. General Motors sold
a record 132,826 SUVs last month, and Ford sold 51,021 Explorers in August, according to reports this week.
State and national spokesmen for the National Automobile
Dealers Association declined comment on Romney's proposal, saying they did not have enough information.
But while Detroit traditionally has battled governmental
efforts to raise fuel-economy standards, Romney's move follows a legacy set by his father, the late George Romney, who
served as chairman of American Motors Corp. from 1954 to 1962.
The elder Romney dropped AMC's Nash and Hudson lines to
focus sales on the Rambler, one of the first mass-market compacts.
"Who wants to have a gas-guzzling dinosaur in his garage?"
George Romney, who later served as governor of Michigan, once said. "Think of the gas bills."
Nonetheless, his son's efforts were criticized by two key
potential allies in Massachusetts.
Barbara Anderson, the head of Citizens for Limited
Taxation, said the likelihood of a higher excise tax for new SUVs, even
under the guise of revenue neutrality, "would be a tax increase, and that is certainly unacceptable."
Anderson, who drives a Honda Civic, said many motorists
prefer SUVs because they do not want their children riding in lighter cars.
"I don't think they have thought this through," she said of
the Romney plan. "To penalize the rest of us because we are going to put our family safety ahead of an experimental (car)
or environmental activism, then that would be wrong."
And Concord businessman James Rappaport, who is battling
Romney running mate Kerry Healey for the GOP lieutenant governor nomination, also questioned the wisdom of the
excise-tax proposal.
"That creates a slippery-slope loophole that you know our
aggressive Democratic state Legislature will go racing through," said Rappaport. "There is already a tax benefit from
fuel-efficient behavior, because you pay significantly less in gasoline tax at the pump."
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