A group of VA hospitals are in trouble after they lost an affiliation agreement with CVS, according to a report from Axios.
In an internal memo, a senior VA official warned that if CVS Healthcare Inc. does not come to an agreement with the agency, VA hospitals would likely face a $200 million loss.
The memo came as VA hospitals across the country are struggling to deal with the fallout from the fallout of a CVS decision to sell off a majority stake in its pharmacy chain.
The VA Health Care Services (VASH) contract was a last-minute acquisition in April that was meant to provide VA healthcare providers with access to Medicare and Medicaid.
The agreement was announced months before CVS announced its intention to close more than a dozen of its locations across the US.
At the time, CVS said it was making the decision to reduce its presence in the US, including from its biggest markets like Ohio, Michigan and Tennessee.
However, the agreement was contingent on CVS reaching a $400 million agreement with its hospital partner.
“While we are disappointed to have missed this opportunity, we are committed to working together to address the impact of the transaction on our healthcare delivery network,” the hospital operator said in a statement at the time.
However that was not the end of the problem.
After the agreement fell through, CASH hospitals across Tennessee began to lose access to federal money for drugs.
The National Hospitals Association (NHSA) said in an October report that in the four states where VA hospitals were not able to access Medicare funds, the cost of caring for those patients was double the national average.
It added that the average price for the drugs they needed rose from $14,400 per patient in 2016 to $37,200 per patient this year.
That was a $1,400 increase from the year before.
CVS responded to the report by announcing that it would end its participation in the VA Hospital Affiliate Program (HAP).
In a statement, CUSA CEO John McDonough said the deal was a mistake.
“The HAP agreement was designed to give us access to the best drugs in the country, but instead, the HAP program has forced our hospital to become a hospital to treat CVS pharmacies and other vendors, not to the VA,” McDonuff said.
“That is wrong.
CASH Hospitals have not been treated equally under the HAPS program, and we are asking the agency to immediately reverse its decision and make VA Hospitals and the millions of CVS customers that depend on us a priority in the next round of negotiations.”
The VA said it had no comment on the Axios report.
In a separate report, Axios reported that the VA has had problems with drug delivery for a number of years.
In 2012, the agency suspended some operations at VA hospitals in Maryland, Virginia and Florida due to a shortage of drugs.
At that time, the VA said that it had been “misleading” its patients.
At least two other VA hospitals have also struggled with drug shortages.
In December, the Baltimore Sun reported that VA hospitals had been having to send more than 100,000 patients to Baltimore’s Mount Vernon Memorial Medical Center due to shortage of critical drugs.
In January, a report by the Associated Press reported that Baltimore’s VA hospital had a shortage in several critical drugs including the antipsychotic and sedative amitriptyline.