Medicaid cuts, pharmacy discount changes could mean financial squeeze
By MAURY THOMPSON Contributing writer
SALEM, N.Y. In its first four months of operation, Salem Family Health has been fulfilling its mission of making health care services more accessible to people in southern Washington County.
From its opening on May 22 through Sept. 16, the new health center, part of the Hudson Headwaters Health Network, saw nearly 2,000 patient visits, including more than 100 walk-in visits. The center is filling a void in a rural town where many patients in recent years had to rely on a mobile health care van for care.
But big changes in federal health care programs could mean financial pressures for the new Salem center in the years ahead. Congress in July approved massive cuts to the federal Medicaid program beginning in late 2026 [see the Observer’s August-September cover story].
And a new Trump administration initiative supported by the drug industry could mean reductions or delays in funding for a pharmacy discount program that helps hospitals and health centers that, like Salem’s, serve a large share of Medicaid recipients among their patients.
Pam Fisher, the director of external affairs for Hudson Headwaters, said the Salem center’s patients commonly are Washington County residents who haven’t had a regular primary care provider for many years.
“Many of these patients have chronic issues and are now working with Hudson Headwaters providers to prevent future illness,” she said.
Salem Family Health has narrowed a longstanding gap in health care services in Washington County, which is designated by the federal government as a Health Professional Shortage Area.
In 2022, the most recent year for which statistics are available, Washington County had 3.4 primary care physicians for every 10,000 residents,
Jillian Herrington, a pediatric nurse practitioner, tends to a patient at Salem Family Health. The new health center is helping to offset a shortage of medical services in rural Washington County.
compared with a statewide ratio of 8.1 physicians per 10,000 residents, according to a report released in August by the office of state Comptroller Thomas DiNapoli. (Across the nation, there are 8.4 physicians per 10,000 residents.)
Washington County also has significantly low ratios of pediatricians, ob-gyn specialists, physician assistants, and nurse practitioners, according to the report.
There is no hospital within the county limits, and many medical practitioners in the wider region are located near hospitals in the population centers to the west and east. Salem in particular is about a 45-minute drive from each of the nearest of these medical hubs — in Saratoga Springs, Glens Falls and Bennington, Vt.
Years of discussion, planning
The new health center offers primary care, pediatric care and mental health and nutrition counseling. All 14 of the center’s employees are Washington County residents, many of whom previously commuted to health care jobs outside the county.
The center, at 1830 County Route 64, has nine exam rooms for primary care and three for pediatric care, and Fisher said it still has plenty of capacity for new patients.
Its facilities include an on-site lab operated in collaboration with Glens Falls Hospital and a kitchen, funded by Stewart’s Shops and the Dake Family Foundation, to provide demonstrations of nutritious cooking. An on-site pharmacy is planned.
The center’s creation is the result of an effort started by Salem Supervisor Sue Clary soon after she was first elected in 2017. At the time, Glens Falls Hospital was in financial crisis and was sharply curtailing the hours and services at its local health center.
Clary recalled in an interview this summer that she began to focus on improving Salem’s healthcare access after a constituent stopped her on the street and reported hearing that Glens Falls Hospital was planning to close its local health center.
“You understand in rural communities that the grapevine often has a grain of truth on it,” Clary said.
Plans for the new facility emerged through a lengthy series of meetings involving Clary, the area’s state legislators and hospital and Hudson Headwaters officials.
Clary said she began by contacting state Sen. Elizabeth Little, R-Queensbury, who has since retired. Little arranged a meeting at her office with officials from the hospital and Hudson Headwaters along with Clary and Assemblywoman Carrie Woerner, D-Round Lake.
The group continued to meet regularly, even gathering in the midst of the Covid-19 pandemic in Clary’s back yard, where they could remain socially distanced.
“There were a lot of bumps along the way,” Clary said.
Ultimately the hospital agreed to keep its local clinic open two days a week with limited services, and in 2021 Hudson Headwaters began serving Salem with a mobile medical care van until the new center opened.
Dr. Tucker Slingerland, the chief executive of Hudson Headwaters, visited the property of Albert and Margaret Sheldon, longtime Salem residents who hoped their land could be used to benefit the community — particularly by improving area residents’ access to health care. Salem Family Health was built on that property.
Medicaid, drug funding changes
The new health center could face challenges ahead from major federal funding cuts to Medicaid that will be implemented in the years ahead as a result of President Trump’s signature domestic policy bill, which Congress passed and the president signed on July Fourth.
The center also faces the threat of delays or reductions in funding under a pharmacy discount program that assists health centers and hospitals providing services to a large volume of Medicaid patients.
This program, known as the 340B program, allows health centers, hospitals and contracting pharmacies to buy outpatient medications at discounted prices while billing insurers at the regular price. The hospital or health center keeps the difference in price.
“340B funding was instrumental for the development of Salem Family Health, as it has been at other Hudson Headwaters properties,” Fisher said.
In the case of Salem Family Health and its other health centers, Hudson Headwaters contracts with participating pharmacies to dispense prescriptions, and then Hudson Headwaters buys medications at discounted rates to replenish the pharmacies’ stock.
Participating health centers must meet strict guidelines for serving those with limited access to health care, must demonstrate that funds derived from the discount are invested in patient care, and must undergo routine audits.
“Since 2018, it’s estimated that Hudson Headwaters has invested $68 million from 340B savings in capital investments into the communities we serve,” Fisher said.
On July 31, the federal Health Resources and Services Administration, or HRSA, announced a voluntary demonstration program to test the feasibility of restructuring the 340B program from one that provides up-front discounts to one that would provide after-the-fact rebates.
PharmaView, a pharmaceutical industry trade journal, called the announcement a “policy win” for the drug industry. Some pharmaceutical
companies had been attempting to restructure the program independently but were prohibited by law from doing so without federal approval.
Fisher said the switch to a rebate model would be detrimental to Hudson Headwaters.
“In this pilot program, rebates make the program much more complex, with less oversight given by HRSA and much greater authority given to drug manufacturers,” she said. “A rebate would increase Hudson Headwaters’ upfront cost of drugs, sometimes up to 1,200 percent.”
In September, a bipartisan group of more than 160 House members wrote to U.S. Health and Human Services Secretary Robert F. Kennedy Jr. urging cancellation of the demonstration program.
“Congress intended the 340B program to enable the nation’s safety-net providers to stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services,” explained the
letter, whose signers included area U.S. Reps. Paul Tonko, D-Amsterdam, Josh Riley, D-Endicott, and Becca Balint, D-Vt.
“An unchecked rebate model would severely undermine that purpose,” the letter continued. “We urge you to abandon the Rebate Model Pilot Program, or if the program must move forward, to proceed with the utmost caution and impose stronger guardrails to ensure the 340B program is not entirely dismantled.”
In New York, state legislation has been introduced in the Assembly and Senate to prevent pharmaceutical companies from restructuring, adding additional requirements or restricting utilization of the 340B pharmacy discount program.
Co-sponsors of the Assembly version (A6222) include Assembly members Matt Simpson, R-Lake George and Carrie Woerner, D-Round Lake. Co- sponsors of the Senate version (S1913) include state Sen. Michelle Hinchey, D-Saugerties.