MEDICAID MANAGED CARE RX BENEFITS HELP STATES

Medicaid prescription drug spending has been on the rise and some states have elected to carve out prescription drug benefits and shift to a Fee-For-Service (FFS) model. In theory, this delivery system helps states leverage their purchasing power to reduce costs and increase oversight. However, recent data reveals that when compared to FFS models, managed care prescription services save significantly more on brand name and generic drugs while also improving the quality of care.

In a 2018 report, the Association for Community Affiliated Plans (ACAP) studied Medicaid prescription drug spending between 2011 and 2017. The trade association focused on key expenditure trends and dynamics related to Medicaid's pharmacy benefits. Here is what the report discovered:

• Over a six-year period, managed care drug benefits produced significant savings despite the increase of prescription drug costs. "The average net (post-rebate) cost per MCO-paid Medicaid prescription during 2016 was $37, 73 percent of the average net cost of Medicaid prescriptions paid in the fee-for-service (FFS) setting during 2017, which was $50."

• The report also identified that managed care prescription services had higher usage of generic drugs which helped to minimize drug expenses. "In 2017, generic drugs represented 88.1 percent of MCO-paid Medicaid prescriptions versus 83.7 percent in the FFS setting."

• Six states that shifted to managed care prescription benefits only had a 1 percent increase in net costs per prescription between 2011 and 2014. Meanwhile, seven states that carved out pharmacy benefits saw a 20 percent surge in net costs per prescription during the same period. Compared to the six states that switched to a managed care model, these seven states missed out on an approximated $307 million in savings in 2014.

• Finally, including prescription drug services improves the quality of care. Since Medicaid health plans handle all of a patient's benefits, the plan can coordinate and communicate with providers more effectively. This makes care less complicated and also decreases unnecessary hospitalizations and emergency room use.

As a result of skyrocketing pharmaceutical drug costs and the increased size of the Medicaid population, some states have carved out pharmacy benefits and shifted to FFS models to rein in costs. However, data shows that Medicaid plans are able to save more when pharmacy and medical benefits are integrated together. Not only are plans able to save money on prescription drug costs, but they also improve the quality of care for their members. To preserve the program's resources and ensure its sustainability, states may want to reevaluate carving out benefits.

Click the link to read more. 

SUPREME COURT TO WEIGH IN ON PBM REIMBURSEMENT RATES REGULATION

Recently, the Supreme Court announced that it would review the verdict from Rutledge v. PCMA, a case from Arkansas dealing with the state's legal right to regulate reimbursements from pharmacy benefit managers (PBMs). Their decision could significantly affect pharmaceutical drug costs and PBM business models. The initial briefing and oral arguments should occur between March and April.

The case under review is from the 8th U.S. Circuit Court of Appeals where the court ruled in favor of PBMs and denied Arkansas the regulatory authority (Arkansas Act 900) to raise reimbursement rates for prescription drugs. According to the Court of Appeals, the Employee Retirement Income Security Act of 1974 (ERISA) prevents states' from regulating PBM's reimbursement rates.

The Supreme Court's decision to review the case comes at a time when soaring health care costs are a major issue for states and PBMs have been criticized for adding to the problem. Critics argue that PBMs are benefiting from spread pricing by keeping the difference between what they charge plans for medications and what they reimburse to pharmacies. According to the petition to the Supreme Court, below-cost reimbursement rates have "driven more than 16% of independent rural pharmacies from the healthcare marketplace, and in many communities, nothing has replaced them".

The National Community Pharmacists Association's (NCPA) vice president, Mustafa Hersi is hopeful about the judgment. He stated, "We feel that this matter has national implications. PBMs have been relying on ERISA preemption to avoid meaningful oversight by states, and states like Arkansas have taken it upon themselves to draft well-tailored legislation-- that does not implicate or involve ERISA-- to regulate PBMs that operate within their state. The implications are that, if the court were to not only grant the request but rule in the favor of Arkansas, that states would be empowered to make more decisions to regulate PBMs and the role that they have in our health care system so that their citizens can make informed decisions with the respect to the choices that they have in health care."

The Pharmaceutical Care Management Association (PCMA) opposes the petition. In response to the Supreme Court's decision, the lobbying group stated, "The Employee Retirement Income Security Act (ERISA) has long enabled employers to provide consistent, nationwide health care benefits due to its preemption of state laws. We are committed to federal preemption, which is a vitally important issue to ensuring high quality health care for patients. Unique state laws governing the administration of pharmacy benefits are proliferating across the country, establishing vastly different standards. These inconsistent and often conflicting state policies eliminate flexibility for plan sponsors and create significant administrative inefficiencies. These inefficiencies divert funds from where they should be spent: providing access to the health care services on which employees of plans across the country rely. We are confident in the merits of our arguments in this case and look forward to presenting them before the U.S. Supreme Court."

Continue reading here.