AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• Pharmacists, represented by Starko, Inc. and Jerry Jacobs, challenged the reimbursement rates for dispensing prescription drugs to Medicaid recipients under New Mexico's managed care system. They argued that the New Mexico Human Services Department (HSD) and managed care organizations (MCOs) should reimburse them according to a statutory formula that was established when New Mexico only operated under a fee-for-services model. This formula stipulates payment of the wholesale cost of the generic brand plus a dispensing fee of at least $3.65 (paras 3-5).

Procedural History

• District Court and Court of Appeals: Held that the statutory reimbursement formula applies in both fee-for-services and managed care settings (para 2).
• Supreme Court of New Mexico: Reversed the lower courts' decisions, holding that the statutory formula only applies to the fee-for-services context (para 2).

Parties' Submissions

• Plaintiffs-Respondents and Cross-Petitioners: Argued that New Mexico law requires pharmacists to be reimbursed for dispensing prescription drugs as part of the Medicaid program at the same rate, whether under a fee-for-services model or a managed care model (para 3).
• Defendants-Petitioners and Cross-Respondents: Contended that the statutory reimbursement formula applies only to the fee-for-services Medicaid model and does not apply to MCOs (para 4).

Legal Issues

• Whether pharmacists who dispense prescription drugs to Medicaid recipients must be paid under the formula set forth in NMSA 1978, Section 27-2-16(B), in both fee-for-services and managed care settings (para 1).

Disposition

• The Supreme Court of New Mexico reversed the lower courts' decisions, holding that the statutory reimbursement formula applies only in the fee-for-services context (para 2).

Reasons

• The Supreme Court reasoned that the statutory formula was enacted before the advent of the Medicaid program’s managed care system and was intended to apply only to the fee-for-services system. The Court found that applying the formula to managed care would be contrary to the Legislature's intent to control Medicaid costs through the managed care model. The Court also noted that the managed care system is a risk-based system where MCOs bear the risk of loss, which is a departure from the fixed rate imposed by the fee-for-services model. The Court concluded that requiring MCOs to comply with the statutory formula would undermine the cost-saving and efficiency purposes of the managed care system (paras 16-42).