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U.S. Court In Michigan Says State Policy May Not Allow Pharmacists To Refuse To Fill Prescriptions Of Medicaid Beneficiaries With Past-Due Balances


U.S. Court In Michigan Says State Policy May Not Allow Pharmacists To Refuse To Fill Prescriptions Of Medicaid Beneficiaries With Past-Due Balances

A state policy that allowed pharmacists to refuse to fill prescriptions of Medicaid beneficiaries with current or past due cost-sharing amounts violates federal law, the U.S. District Court for the Eastern District of Michigan held February 17.

While current federal law does not prevent participating providers from charging cost-sharing amounts, it does not allow them to withhold medical services or medication as a means of collecting that amount from those who are unable to pay, the court said in granting plaintiff Medicaid recipients a permanent injunction.The court refused to address what, if any, effect the recently enacted Deficit Reduction Act (DRA) would have on the questions at issue.

Plaintiffs, current Medicaid beneficiaries living in Michigan, filed an action under 42 U.S.C. � 1983 against the directors of the Michigan Department of Community Health and the Department of Human Services, which administer and provide information on the state's Medicaid program.

Plaintiffs take a number of medications for various serious conditions and contended that Michigan�s policy allowing pharmacists to refuse to fill prescriptions for Medicaid recipients who are unable to pay co-payments and have delinquent balances for past prescriptions violates federal Medicaid law.

Plaintiffs also charged that the state had failed to inform Medicaid beneficiaries about their rights to receive services when they cannot pay contrary to federal requirements. Both parties moved for summary judgment.

The U.S. District Court for the Eastern District of Michigan held the state policy violated federal law and enjoined the state from authorizing pharmacists to engage in such practices. The court denied plaintiffs' request, however, that the state be prevented from charging any co-payments to Medicaid recipients until it supplies information on the right to receive services when a recipient is unable to pay.

As a threshold matter, the court found all but one of the four named plaintiffs had standing to bring the challenge. In so holding, the court rejected each of defendants� three arguments that plaintiffs lacked standing.

First, defendants contended that the plaintiffs were not injured because in most cases they eventually were able to obtain their prescriptions. Finding this argument without merit, the court found that having to search around for a pharmacy to fill a prescription and switching providers regularly amounted to a disruption in the continuity of care�an injury sufficient to support standing.

Second, defendants argued that, even if plaintiffs were injured, the injury was not caused by state action but by �renegade pharmacists� violating state law. But the state policy itself allowed Medicaid providers to deny �services based on a history of bad debt, including unpaid co-payments,� the court noted. Although state law required pharmacies to give �appropriate verbal notice and a reasonable opportunity for payment,� defendants failed to explain what actions meet this standard, the court said.

Finally, defendants said that plaintiffs were not in �imminent danger� because they would have the money to make the co-payments if they managed their finances better. Rejecting this argument, the court pointed out that two of the plaintiffs had incomes below $8,000/year, while a third had an income of around $10,000/year.

Turning to the merits of the � 1983 action, the court found the particular Medicaid provision at issue, 42 U.S.C. � 1396o(e), created a privately enforceable right. Section 1396o(e) requires state Medicaid plans to require participating providers not to deny services based on an individual�s inability to pay cost-sharing amounts.

In so holding, the court noted that � 1396o(e) was clearly intended to benefit Medicaid recipients like plaintiffs, that the statute imposes binding obligations on the states in terms of what their Medicaid plans must require, that the rights plaintiffs sought are not too vague, and that the statute does not otherwise foreclose enforcement by the plaintiffs.

Next, the court held that Michigan�s polices at issue violated federal requirements.

Applicable federal law and regulations are clear and unambiguous�stating that Medicaid participants remain liable for non-payment of cost-sharing charges, but at the same time prohibiting providers from withholding medical or prescription services based on the inability to pay. The court found the state�s interpretation�that pharmacists could refuse to fill prescriptions based on a history of past due charges�clearly at odds with what federal law requires.

In the court�s view, pharmacists are protected from substantial losses because the requirement applies only to those Medicaid recipients with an inability to pay.

The court noted that certain cost-sharing provisions in the recently enacted DRA may have some impact on � 1396o(e), but declined to express any view on what the effect may be at this time. �Neither party has addressed the question of whether Congress intended to jettison the safety-net protection section 1396o(e) affords, and the Department of Health and Human Services has not issued regulations that interpret the legislation,� the court observed.

The court rejected the other relief plaintiffs sought, finding no provision of the Medicaid Act �that confers a right �in clear and unambiguous terms� to require the State to publish and distribute� information regarding a Medicaid recipients rights regarding co-payments

Beeker v. Olszewski, No. 05-10089-BC (E.D. Mich. Feb. 17, 2006).

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