Independent pharmacies in the Philadelphia area say they are being driven out of business by low reimbursements for Medicaid prescriptions, and have sued to force higher payments.

All Medicaid patients in the Philadelphia area are in HealthChoices, a state-administered managed care organization that contracts with four HMOs to provide services. In suits filed in state and federal courts, the pharmacies say that they have been forced to accept rock-bottom rates to fill prescriptions for Medicaid recipients and, partially as a result, nearly half of the region's 480 independent pharmacies that operated when HealthChoices began in 1997 have been shuttered.

The state claims it has no say in payment rates and that pharmacists decide whether to accept rates set by the HMOs.

This crisis has been building for more than a year, and it's not just independent pharmacies that say they are suffering. Last year, two of the area's three major drug-store chains, CVS and Eckerd, began turning away enrollees of three of the four Medicaid HMOs, citing low payments from Eagle Managed Care, which is the pharmacy benefit manager for the three HMOs. Interestingly, Eagle is owned by Rite Aid — the third major chain in the area. The fourth HealthChoices HMO contracts with PCS Health Systems for PBM services. Interestingly again, Rite Aid recently purchased PCS.

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