More than half of Ohio's Medicaid recipients will lose access to Walgreens pharmacies on Jan 1. CareSource, Ohio's largest Medicaid provider, is cutting ties with the state's second-largest pharmacy retailer.

Walgreens, Ohio's second-largest pharmacy retailer, will no longer service the state's largest Medicaid provider as of Jan 1, raising concerns about creating pharmacy "deserts" in parts of Ohio.

The news, which wasn't announced by the Ohio Department of Medicaid, comes a week before open enrollment in the insurance program is to begin.

It also raises worries about access for Medicaid patients and about the health of the marketplace. And it raises questions about how well the administration of Gov. Mike DeWine has reformed the way the state Medicaid department reimburses Ohio pharmacies as it spends $3 billion a year on drugs.

"CareSource has decided to move forward with a network that does not include Walgreens for Ohio managed Medicaid patients in 2020," Walgreens said in an email Friday, referring to Ohio's largest Medicaid managed-care organization, which serves more than a million recipients. Walgreens remains in the networks of two other managed-care plans: the UnitedHealthcare Community Plan and Paramount Advantage.

State Sen. David Burke, R-Marysville, chairman of the Senate's Health, Human Services and Medicaid Committee, said the move sends a "very strong signal" that serving Medicaid patients is a money-losing proposition for Ohio pharmacies.

Get the news delivered to your inbox: Sign up for our morning, afternoon and evening newsletters

Burke said he has known for weeks that Walgreens was departing.

In a Friday email, state spokesman Kevin Walter said, "Ohio Medicaid has been made aware of a potential change in the CareSource contract, but the change is still under evaluation."

Dayton-based CareSource serves 1.2 million of the 2.2 million Ohioans who are enrolled in Medicaid managed-care plans. The company also serves Medicaid patients in Indiana, Kentucky, West Virginia and Georgia.

Despite promises by CareSource earlier this year of transparency, the company didn't say whether Walgreens was departing its pharmacy network. It also wouldn't say how many of its Ohio clients use Walgreens as their pharmacy. Nor would it say whether Walgreens was leaving its networks in other states.

"CareSource continuously evaluates our provider network to ensure we are offering members excellent access to quality care," Stephen Ringel, president of CareSource's Ohio Market, said in an email after news of Walgreens' departure broke. "We are in the process of reviewing our future plans with Walgreens with the Ohio Department of Medicaid and remain committed to meeting and exceeding all network-access standards while also being good stewards of taxpayer dollars."

Since last year, The Dispatch has written numerous stories raising questions about whether CareSource's current pharmacy-benefit manager, CVS Caremark, was providing lowball reimbursements to the corporation's retail competitors, including Walgreens. In April, CareSource announced that it was dumping CVS Caremark in all the states where it operates and instead was hiring Express Scripts to provide pharmacy benefit manager services such as billing for drugs, reimbursing pharmacies, establishing lists of covered drugs and negotiating rebates from drugmakers.

Despite long-standing complaints that Medicaid reimbursements were so low that they were driving independent pharmacists out of business, Express Scripts in June sent out proposed contracts offering to pay them a dispensing fee of only 15 cents per prescription. The state's own surveys showed that pharmacists needed $10 to break even. Express Scripts quickly withdrew the proposed contracts. The company declined to comment for this story.

A study commissioned by the state determined that in 2017, PBMs CVS Caremark and OptumRx billed the state $244 million more for Medicaid drugs than they paid to pharmacists.

Time is short to notify patients that they need to find a new pharmacy home, and the Medicaid population can be difficult to contact; some are homeless, some move frequently, some frequently switch phone numbers, and some have no phone, said Antonio Ciaccia of the Ohio Pharmacists Association.

And Sen. Burke, who is a pharmacist, said Medicaid patients tend to be sicker than the general population, so if they stop taking their medicines, they are likely to end up in the emergency room or a hospital bed, which can cost orders of magnitude more than their medicines.

"Those people will be blindsided" by Walgreens' departure, Burke said.

It's unclear what might have caused the rupture between Walgreens and CareSource. But if it's because CareSource's new PBM, Express Scripts, isn't offering what Walgreens wants in dispensing fees, that's an ominous sign for pharmacy access in Ohio, Burke said. Community pharmacies, particularly those with a large Medicaid clientele, have been closing in recent years, often blaming reimbursements that are so low that they're losing money.

As pharmacies with lots of Medicaid patients close, pharmacists fear that those patients will move to surrounding pharmacies, plunging them into the red and causing a cascade that will result in pharmacy deserts — places where people with transportation challenges would find it difficult if not impossible to see a pharmacist. With Walgreens no longer serving most of its Ohio Medicaid patients, the problem will become far worse, Ciaccia said.

"The patients don't disappear; they go to other pharmacies," he said. "My fear is that the independents are taking on too much water and are about to get hit by a tidal wave."

Because of network-adequacy rules, Burke said that Walgreens' departure from CareSource might also leave CVS in a position to dictate the prices it wants for Medicaid drugs.

"I don't know where we're going to be five years from now," he said.

mschladen@dispatch.com

@martyschladen