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Kansas proposes tiered pharmacy dispensing fee aimed at helping rural independents; KDHE says change costs about $8 million
Summary
KDHE recommended a tiered Medicaid dispensing fee after a 2025 cost survey: a $11.38 global fee and $15.85 for independent (non‑chain) pharmacies to shore up rural access; the department estimates a $8.4M total impact (federal/state split).
KDHE Secretary Christine Stanic told the Health and Human Services Committee the agency will recommend a tiered Medicaid dispensing fee to better reflect pharmacy operating costs and protect independent pharmacies in rural areas.
"The survey done in August of 2025 found that the $10.50 dispensing fee was lower than average," Stanic said. KDHE cited a third‑party rate study that produced a Medicaid volume‑weighted average dispensing cost of $13.15 and a median of $11.65. Based on that study KDHE proposed a two‑tier approach — a statewide professional dispensing fee of $11.38 and a higher $15.85 fee for non‑chain independent pharmacies to help cover higher operating costs in rural markets.
KDHE estimated the change would increase overall pharmacy spending tied to dispensing fees by about $8.4 million: roughly $3.28 million in state general funds and about $5.1 million in federal matching funds.
The proposal followed questioning about recent OIG testimony related to dispensing‑fee waste. Inspector General Steve Anderson told the committee earlier that his office had documented roughly $16 million in dispensing‑fee expenditures over three years tied to over‑the‑counter scripts that produced a dispensing fee but little clinical value. Stanic said the department is coordinating with OIG findings and with the Managed Care Organizations on policy and utilization management to reduce inappropriate dispensing.
Lawmakers pressed KDHE officials on practical details: how the tier will be defined (chain vs. independent), the effect on rural pharmacies, and whether over‑the‑counter scripts that generate a $10.50 dispensing fee can be limited. Stanic said KDHE will follow federal rules on cost‑based rate setting and will provide more detailed crosswalks of the dollars to legislators, including payment splits and which chains meet the new thresholds.
What’s next: KDHE said it will refine the proposal, publish the underlying cost study, and provide follow‑up information to the committee about chain definitions, estimated state/federal shares for different scenarios and the interaction with utilization controls and MCO oversight.
Attribution: Secretary Christine Stanic (KDHE) and staff.
Sources: KDHE presentation and committee Q&A, May 2026 hearing.
