Pharmacies back new tax to boost Medicaid money

JEFFERSON CITY, Mo. -- Pharmacies are supporting an effort to tax themselves as a way to boost Medicaid funding and their own state subsidies for serving the poor and disabled.

The proposed tax is similar to an existing tax on hospitals and nursing homes.

Because of the way the federal-and-state Medicaid program works, the new state tax revenues would trigger new federal revenues -- and some pharmacies would get back more than they paid in taxes.

For years, pharmacy owners have complained about the state's low reimbursement rates for serving Medicaid patients. They see the tax as a way to boost the payments they receive for dispensing prescriptions.

"We support it as long as the governor takes the tax that he collects from the pharmacists and the dollars that he draws down from the federal government ... and puts that back into the pharmacy program," said Jorgen Schlemeier of the Missouri Pharmacy Association.

If approved by lawmakers, pharmacies would pay a 2 percent net revenue tax, which is estimated to bring in $55 million a year for the state, said Linda Luebbering of the state budget office. That money would trigger $83 million in federal Medicaid funding for a total of $138 million, she said.

The governor's budget proposes to return about $60 million of that to pharmacies in the form of higher subsidies. Pharmacy dispensing fees under the Medicaid program would rise to about $8 for each prescription from $4.09.