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Judge blocks Medicaid fee cut to pharmacies

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A federal judge in Indianapolis has temporarily blocked the state from cutting the fees it pays to pharmacists for dispensing Medicaid prescriptions.

On July 8, U.S. Judge Tanya Walton Pratt in the Southern District of Indiana granted a temporary restraining order against the Indiana Family and Social Services Administration and its Office of Medicaid Policy and Planning. Her decision came a week after the non-profit Community Pharmacies of Indiana and Williams Brothers Health Care Pharmacy in southern Indiana filed a suit challenging the new policy that would have taken effect July 1.

Specifically, the lawsuit challenges a 38 percent cut in the Medicaid pharmacy-dispensing fee; meaning pharmacies would receive $3 instead of $4.90 for preparing and dispensing any particular drug under the Medicaid program.

The lawsuit alleges the cut violates the federal Medicaid law because the state FSSA secretary didn’t approve the fee reduction as required and that runs contrary to the Supremacy Clause of the U.S. Constitution. The suit also alleges the fee reduction violates Indiana Code 12-15-13-2, which states that Indiana Medicaid providers must offer services to program recipients similar to what the general population might receive.

The plaintiffs argue that if imposed, the cut could result in pharmacies closing and patients being unable to access their needed medications.

But the state disagreed, saying the reduced rate was aimed at making sure Indiana met the $212 million budget reduction mandated by the General Assembly. In a brief filed July 6, the Indiana attorney general’s office also contended that the non-profit group representing 170 local pharmacies statewide isn’t a Medicaid recipient and shouldn’t be able to challenge a federal program designed for patients, not pharmacies.

“Requiring the State to continue to reimburse Plaintiffs under the old rate would negate the purpose of the Medicaid Act and would not in any way serve the poor and aged – the intended beneficiaries of the Medicaid Act,” the state’s brief says.

Judge Pratt ruled in favor of the plaintiffs, but noted in her grant of the temporary restraining order that both sides present compelling arguments and she still has some question about whether a private cause of action exists here.

Caselaw dictates that the Supremacy Clause doesn’t create rights for Medicaid Act providers to sue for enforcement, and Judge Pratt agreed that no authority supports the notion that the statute includes right-creating language directed at those providers.

But those arguments weren’t enough to persuade her to the state’s side.

In her decision, Judge Pratt determined the IFSSA acted prematurely in cutting the dispensing fee before the reduction was approved by the U.S. Department of Health and Human Resources. That reduction is irreconcilable to the federal statute and would cause many pharmacies to “continue to hemorrhage dollars” and affect their ability to continue providing Medicaid services, she wrote.

The judge wrote that precedent from both the U.S. Supreme Court and the 7th Circuit Court of Appeals recognizes the availability of injunctive relief to enjoin state officers from implementing a rule or regulation that’s preempted under the Supremacy Clause, and the plaintiffs don’t have to show the Medicaid Act confers a private right of action for injunctive relief.

“Obviously, this harm could trickle down to Medicaid patients who constitute the poor, the elderly, the disabled and families with children, many of whom reside in rural areas with a dearth of other pharmacy options within close proximity,” she wrote.

A briefing scheduled is being worked out with U.S. Magistrate Judge Denise LaRue, and Judge Pratt has set a hearing on the preliminary injunction for Aug. 24.

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  1. The practitioners and judges who hail E-filing as the Saviour of the West need to contain their respective excitements. E-filing is federal court requires the practitioner to cram his motion practice into pigeonholes created by IT people. Compound motions or those seeking alternative relief are effectively barred, unless the practitioner wants to receive a tart note from some functionary admonishing about the "problem". E-filing is just another method by which courts and judges transfer their burden to practitioners, who are the really the only powerless components of the system. Of COURSE it is easier for the court to require all of its imput to conform to certain formats, but this imposition does NOT improve the quality of the practice of law and does NOT improve the ability of the practitioner to advocate for his client or to fashion pleadings that exactly conform to his client's best interests. And we should be very wary of the disingenuous pablum about the costs. The courts will find a way to stick it to the practitioner. Lake County is a VERY good example of this rapaciousness. Any one who does not believe this is invited to review the various special fees that system imposes upon practitioners- as practitioners- and upon each case ON TOP of the court costs normal in every case manually filed. Jurisprudence according to Aldous Huxley.

  2. Any attorneys who practice in federal court should be able to say the same as I can ... efiling is great. I have been doing it in fed court since it started way back. Pacer has its drawbacks, but the ability to hit an e-docket and pull up anything and everything onscreen is a huge plus for a litigator, eps the sole practitioner, who lacks a filing clerk and the paralegal support of large firms. Were I an Indiana attorney I would welcome this great step forward.

  3. Can we get full disclosure on lobbyist's payments to legislatures such as Mr Buck? AS long as there are idiots that are disrespectful of neighbors and intent on shooting fireworks every night, some kind of regulations are needed.

  4. I am the mother of the child in this case. My silence on the matter was due to the fact that I filed, both in Illinois and Indiana, child support cases. I even filed supporting documentation with the Indiana family law court. Not sure whether this information was provided to the court of appeals or not. Wish the case was done before moving to Indiana, because no matter what, there is NO WAY the state of Illinois would have allowed an appeal on a child support case!

  5. "No one is safe when the Legislature is in session."

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