By: Anne E. Wagstaff
As tomorrow’s midnight deadline approaches, it appears more and more likely that Congress will be unable to agree on the 2011 budget before the federal government is forced to shut down. One of the many unintended and lesser known consequences of a lengthy government shutdown is the potentially devastating impact a delay in Medicare and Medicaid payments could have on our country’s pharmacies.
During a government shutdown, the federal government still provides essential services. As a result many of the nation’s health-related services will continue during this time. For instance, the National Institute of Health’s ongoing clinical studies will continue, although no new studies will begin. VA hospitals will keep their doors open, since the majority of their funding was previously awarded in advance appropriations in a two-year budget cycle. Medicare will pay doctors and hospitals from its trust funds. However, these payments could be delayed in the event the shutdown continues for several months, and it is this delay that poses a serious threat to pharmacies.
In the current healthcare environment, pharmacies receive a significant portion of their money from the federal programs, Medicare and Medicaid. In many cases, pharmacies depend upon these government payments to pay their suppliers and wholesalers. Todd Evers, BPharm, President-elect of the Illinois Pharmacists Association explained to the American Pharmacists Association that “unlike other medical providers, pharmacy must pay for products, not just services, and these bills are due weekly or biweekly.” According to Mr. Evers, state Medicaid programs, which receive matching federal dollars, often take at least 7 to 14 days to provide payments to pharmacies. Some states take much longer.
A brief government shutdown may be manageable; but if payments from the federal government to the states are delayed, and the states delay their payments to the pharmacies, it could impact the ability of some pharmacies to make required payments to their wholesalers. Although a shutdown might not have a significant impact on the large retail pharmacy chains, smaller pharmacies or pharmacies located in rural areas might be forced to ask patients to pay in cash or even close their doors.