Because of their frail condition, residents in nursing homes have unlimited prescription drug benefits. Medicare recipients with no supplementary insurance pay on average twice as much for the 10 most commonly prescribed drugs as do favored customers, such as large HMOs and the Veterans Affairs system. Like other large payors, DHS sought to take advantage of its position. Medicaid sought to increase the price break it receives from large corporations, those that own eleven or more pharmacies. Medicaid believed big corporations buy their drugs in volume, at cheaper prices than small independent drug stores.
Large corporations give discounts to private insurance companies.
Therefore, the State felt it should get a discount too. Arkansas Children's Hospital is one of the 10 largest children's hospitals in the United States. By following these principles, the precious limited resources available to the state to care for this population can be extended to the fullest. The effort, which had very broad support, especially among advocates for older Arkansan's, would have saved several million dollars a year without affecting the benefits of any recipient by claiming just the price other lower volume purchasers pay. The judge ruled that, despite HCFA's determination that the plan adhered to Medicaid law, the state could not use market price for claiming discounts from chain pharmacies.