MI MEDICAID PBM PHARMACY CARVE-OUT

To reduce costs in its Medicaid Health Plan (MHP), Michigan is carving out pharmacy benefit managers (PBMs) and transitioning to a fee for service (FFS) model for the delivery of prescription drugs. In October, the state's Department of Health and Human Services (MDHHS) revealed that outpatient prescription drug coverage will no longer be a MHP benefit. Beginning December 1, 2019, prescription drugs will be provided through a FFS model and the state will contract with a single PBM to bill its health department.

Michigan hopes to save about $10 million in general funds each year under the FFS model. According to MDHHS, these savings will be achieved "through a combination of increased pharmaceutical rebates and elimination of related MHP administrative capitation costs. The transition to a single formulary will also result in significantly streamlined administration for Michigan's health care providers and coverage consistency for program beneficiaries."

To allow for a smooth shift for recipients, "MDHHS will partner with MHPs and its PBM contractor by utilizing recent MHP PAs and paid claims data to create system edits. The intent of these edits is to continue the beneficiary's medication coverage that was provided by their MHP and to minimize and/or eliminate PA obstacles during the first three-months of the coverage transition."

In addition, the transition will apply coverage limitations and prior authorizations to all program beneficiaries. Members over the age of 21 will incur co-pays beginning the first of December. For Rx services, copays will be $1 for preferred and $3 for non-preferred medications.

Healthcare payers and PBMs oppose the move. They claim that such a move does not align with MHP's objective to provide whole-person integrated care. The decision will increase out of pocket costs and members will not have the necessary overview of their prescriptions.

Click this link to read more. 

MEDICAID SPENDING TO EXCEED MORE THAN $1 TRILLION ANNUALLY

Over the past decade, Medicaid has turned into one of the fastest and largest growing items on state budgets. In 2015, the program made up 20 percent of state budget spending and in 2018 it had grown to 30 percent. Last month, a report from the Foundation of Government Accountability found that Medicaid had cost states over $603 billion in 2018. Moving forward states need to ensure eligibility and address fraud, waste, and abuse in the Medicaid program to decrease costs and protect the program's resources.

The FGA points out that, "ultimately, this means fewer dollars are available for education, corrections, transportation, and other important budget priorities." For example, as Medicaid has expanded, state education spending has dropped by 13 percent and items outside of core budget items have decreased by 12 percent.

In Ohio, Missouri, and Pennsylvania, Medicaid spending has reached as high as 40 percent of their budgets.

The report reveals that in Ohio, Medicaid spending increased 260 percent in eighteen years. In 2000, its Medicaid budget made up 19 percent ($7.3 billion) of the entire budget. Nine years later, it rose to 24 percent ($14 billion) and in 2018 it's grown to 38 percent ($27 billion). That is more than the state's entire general revenue in 2000.

Likewise, Louisiana spent $3.4 billion on Medicaid in 2000 and by 2009 it nearly doubled to $6.2 billion. Three years after program expansion under the Affordable Care Act, Louisiana's Medicaid budget grew again to over $11 billion in 2018. Presently, Medicaid spending in the state sits at 35 percent of the budget. The report cites Medicaid expansion as part of the problem claiming it "has blown the lid off of every state and third-party cost and enrollment projection."

The FGA predicts that in the next ten years Medicaid spending will exceed more than $1 trillion each year.

Nicholas Horton is the author of the report and research director at the FGA. He stated, "States are watching their Medicaid spending climb to extraordinary levels. Hopefully, state leaders will continue to recognize the need to rein in their Medicaid programs and implement commonsense reforms like work requirements and Medicaid expansion enrollment freezes."

The study also includes suggestions geared towards protecting Medicaid's integrity and freeing up resources for other important budget items. One of which is to implement work requirements for non-disabled adults enrolled in Medicaid. The FGA points out that there is evidence that this would aid beneficiaries in becoming more self-sufficient and less dependent on the state.

Groups in opposition to work requirements, like the Center on Budget and Policy Priorities (CBPP), argue that they would limit the access to care for people who rely on it.

According to the CBPP, "State proposals for Medicaid work requirements will cause many low-income adults to lose health coverage, including people who are working or are unable to work due to mental illness, opioid or other substance use disorders, or serious chronic physical conditions, but who can not overcome various bureaucratic hurdles to document that they either meet work requirements or qualify for an exemption from them."

Apart from work requirements, the report also advised that states make a concentrated effort to deal with fraud. The National Bureau of Economic Research found that over 500,000 people enrolled in the program as a result of expansion were ineligible because of their income. The study also mentioned that the states evaluated only represented 25 percent of the 37 states to expand Medicaid and that the number of ineligible members could be as much as three times more.

Improper payments have also been an enormous cost to the program in the last ten years. In the FY 2018 HHS Agency Financial Report the department discovered that Medicaid improper payments totaled $36.25 billion. DHHS recommended incorporating IT solutions at the state level to address the waste. They feel that by making use of technology solutions, Medicaid will have a more comprehensive data structure and improved oversight.

The Medicaid program is costing states billions of dollars and over the next ten years, that figure will climb to $1 trillion. As it expands, it is also pulling away from other necessary budget items such as education, infrastructure, transportation, and corrections. To remain fiscally solvent while providing healthcare to low-income people, state officials and plan administrators must implement reform and present-day technology solutions.

Continue reading here.

A TIMELINE OF LEGISLATIVE INITIATIVES TO ADDRESS MEDICAID THIRD PARTY LIABILITY

Since Medicaid's inception in 1965, the program has expanded to become the largest provider of healthcare coverage in the country. As the size of the member population has increased, Medicaid third party liability (TPL) efforts and fiscal responsibility have been persisting concerns. To protect Medicaid's solvency, there have been several legislative efforts focused on curbing fraud, waste, and abuse. Unfortunately, these actions have done very little to preserve the program's integrity and Medicaid's improper payment rate has hovered around 10% for the last ten years.

Federal initiatives to fight improper payments fall under the following categories: assessing the risk of fraud; estimating the impact of TPL; requiring more reporting, which in turn creates administrative burden; and efforts to increase data-sharing. Here is a review of legislation aimed at strengthening TPL and decreasing improper payments.

EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (ERISA)

ERISA was directed towards self-insured companies and mandated that they abided by the same health insurance criteria as other large group plans. This was important because self-insured plans were now subjected to Medicaid TPL stipulations.

IMPROPER PAYMENTS INFORMATION ACT OF 2002 (IPIA)

The IPIA concentrated on evaluating and reporting improper payments. It required that agencies, on an annual basis, identify programs and activities susceptible to substantial improper payments. In addition, agencies needed to estimate the amount of overpayments or underpayments and then report on steps being taken to decrease the payments.

DEFICIT REDUCTION ACT OF 2005 (DRA)

In an effort to rein in costs, Congress signed the DRA into law in 2006. It included key Medicaid provisions and broadened the list of entities regarded as third parties. In a similar way to ERISA, the DRA required all third parties to abide by Medicaid TPL processes and to supply beneficiary information to states so as to improve cooperation in data sharing.

The DRA also launched the Medicaid Integrity Program (MIP) under section 1936 of the Social Security Act. The MIP was the first comprehensive Federal effort to deal with fraud, waste, and abuse. It allowed contractors to review provider activities, audit claims, identify improper payments, and educate providers on integrity issues. It also provided assistance to states to address fraud and abuse.

QUALIFYING INDIVIDUAL (QI) PROGRAM SUPPLEMENTAL FUNDING ACT OF 2008

The QI changed state participation requirements for the Public Assistance Reporting Information System (PARIS). Under the legislation, states were required to have in operation a Medicaid eligibility determination system for data matching through PARIS and medical assistance programs operated by other states.

EXECUTIVE ORDER 13520

In 2009, President Barack Obama authorized Executive Order 13520 "to reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government, while continuing to ensure that Federal programs serve and provide access to their intended beneficiaries." A few of the order's notable plans involved identifying Federal programs with the highest dollar value of improper payments, developing reduction and recovery target rates for these programs, guidance for implementation of the order, and reporting on how agencies planned to meet the targeted rates.

IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010

The Improper Payments Elimination and Recovery Act took several steps to further enhance data sharing, coordination between state agencies and third parties, and increase reporting requirements. These included:

• Amendment of the IPIA to require the agency leaders, such as the Secretary of HHS, to review and identify vulnerabilities in their programs that could lead to improper payments.
• Modifications of the criteria for improper payment estimations.
• Requirement of a statement from agencies as to whether it has "sufficient resources with respect to internal controls, human capital, and information systems and other infrastructure to prevent improper payments."

FRAUD REDUCTION AND DATA ANALYTICS ACT OF 2015

The Fraud Reduction and Data Analytics Act required the Office of Management and Budget to develop new guidelines for Federal agencies. Under the act, Federal agencies needed to "establish financial and administrative controls to identify and assess fraud risks," and they were also required to submit annual reports to Congress regarding their progress on these efforts.

FEDERAL IMPROPER PAYMENTS COORDINATION ACT OF 2015

After the Fraud Reduction and Data Act of 2015, Congress successfully passed the Federal Improper Payments Coordination Act. This authorized the judicial branch, legislative branch, and also state government agencies managing Federal programs to utilize the U.S. Treasury Department's Do Not Pay (DNP) Program. The DNP is a "no-cost robust analytics tool which helps Federal agencies detect and prevent improper payments made to vendors, grantees, loan recipients, and beneficiaries." Through the Fraud Reduction and Data Act and The Federal Improper Payments Coordination Act, Congress focused on administrative procedures, reporting requirements, and data-sharing; all of which were devised to improve cost-avoidance and address TPL.

CHIP REAUTHORIZATION ACT OF 2015 (MACRA)

MACRA included a variety of sections relating to Medicaid programs, including a section affecting TPL issues. Sec. 510 "requires the Secretary to study and detail incentives for states to work with the Secretary under the Medicare-Medicaid Data Match Program to coordinate appropriate actions to protect the Federal and state share of expenses under the Medicare and Medicaid programs."

TECH SOLUTIONS FOR MEDICAID THIRD PARTY LIABILITY

The identification of Medicaid third party liability has become difficult for program administrators and is costing plans billions of dollars in improper payments. Medicaid plans agree that cost avoidance makes more sense than pay and chase, but until now the ability to execute it successfully has not been widely available. With the help of Syrtis Solutions and their exclusive ePrescribing data, payers of last resort are now able to cost avoid pharmacy and medical claims on the front end. EPrescribing data surely was not originally intended for these purposes. However, its ability to mitigate the need for recovery and the associated expenses while cost avoiding payments is undeniable. Those involved in the process of Medicaid claims payments have been working with the best tools they had available. Now, they have new and superior tools through Syrtis.

To keep reading, click here.

MEDICAID THIRD PARTY LIABILITY REVIEW FROM THE GAO

Identifying third party liability continues to be a challenge within the coordination of benefits for Medicaid. By law, plans are payers of last resort so whenever beneficiaries have other active coverage (OHI), those third parties should pay first. Presently, plans are required to incorporate new payment procedures to aid in ensuring that they do not pay more than they should. Despite the requirement, CMS is unsure as to whether or not plans have implemented the new procedures and the GAO is advising that the agency determines compliance.

The new payment procedures were enacted as part of The Bipartisan Budget Act of 2018. Before the legislation, Medicaid plans would regularly pay providers for services and then look for reimbursement from any liable third parties. This retrospective approach is known as Pay and Chase. Additionally, the law included a provision for the GAO to evaluate the potential impact of the legislation.

In August, the GAO released their report which included their discoveries and recommendations. They found that nine of the states reviewed are in various stages of implementing the law's third party liability changes. These changes affect whether providers must seek payment from a liable third party before the Medicaid plan pays for services. The new procedures apply to prenatal care services, pediatric preventive services, and services for children subject to child support enforcement. The report went on to point out:

"Officials from four of the nine selected states reported having fully implemented the changes for prenatal care services, which were required to be implemented starting in February 2018. Officials from the remaining five states were discussing the changes internally, researching how to implement the changes in their Medicaid payment systems, or waiting for additional guidance from the Centers for Medicare & Medicaid Services (CMS), the federal agency responsible for overseeing states' Medicaid programs."

"None of the nine states had implemented the changes to pediatric preventive services and services for CSE beneficiaries, which must be implemented starting in October 2019. Officials from six states told GAO that they were in the early stages of exploring how they would make the changes, while the remaining three states had not developed such plans."

The GAO also found issues with the guidance that CMS issued to states for implementation of the third party liability changes. CMS's guidance incorrectly informs plans that providers are not required to seek payments from OHI before plans pay for some prenatal services.

The report also reveals that CMS is not adhering to its oversight responsibilities. It specifies that the agency has not effectively determined whether plans are complying with the updated third party liability requirements. CMS expects plans to comply, yet it does not verify that the changes have been implemented unless informed of non-compliance.

The GAO also discussed the impact of the changes with Medicaid specialists and stakeholders. According to the stakeholders, the new requirements could possibly result in a reduction in beneficiary access to care because providers would be less willing to see Medicaid patients. The two primary reasons are:

1. "The changes may increase administrative requirements for providers by requiring them to identify sources of coverage, obtain insurance information, and submit claims to third-party insurers before submitting them to Medicaid."
2. "The changes may result in providers waiting longer to receive Medicaid payment for certain services to the extent that states require providers to seek third-party payments before paying the providers' claims."

Lastly, the GAO report featured two recommendations to CMS. One of which was to ensure that the agency's guidance on third party liability requirements reflects current law and the other was to figure out the extent to which plans are complying with third party liability requirements.

Click here to learn more. 

CONCERNS RELATING TO CA's PHARMACY CARVE OUT

California's Governor, Gavin Newsom, signed an order at the beginning of 2019 to transition all pharmacy services for Medi-Cal from managed care to a FFS model. The consolidated purchasing power would make use of the state's population size to negotiate drug prices with pharmaceutical manufacturing companies. Private payers and insurance providers would also be allowed to participate in the public health system and negotiate prices.

The state's plan to take control of the pharmacy benefits for all of Medi-Cal's recipients has been controversial. There are concerns over its likely impact on MCOs, PBMs, pharmacies and the coordination of care. Currently, California's pharmacy benefit for Medicaid managed care is administered by ten separate PBMs. They are responsible for 90 percent of the state's Medicaid beneficiaries.

L.A. Care CEO, John Baackes, believes that the carve out will make coordinating care more challenging. He stated, "I think one of the advantages of a managed Medi-Cal plan like ours is that for people who are in very difficult circumstances health-wise, we do provide an element of care management that's important and if there's an element of the benefit that we don't control, then it's awkward."

In addition, critics are concerned about the impact that the pharmacy benefit carve out could have on pharmacies. While purchasing in bulk directly from manufacturers could drive down costs, it's unclear as to how drugs will be dispensed and how local pharmacies will maintain a profit.

Find out more here.

MEDICAID'S IMPROPER PAYMENT RATE FOR FY 2018

DHHS has published its annual Agency Financial Report for FY 2018. The report provides an overview of improper payments in the Medicaid program, root causes for the payments, and corrective actions. In line with the agencies goal of reforming, strengthening, and modernizing the nation's healthcare system, HHS cites improved processes and technology solutions to strengthen the integrity of Medicaid and lower the program's improper payment rate.

IMPROPER PAYMENTS REDUCED 

Each year DHHS has set targeted improper payment rates. Despite not achieving their goal in the previous two years, the review does indicate a reduction. The improper payment rate in FY 2017 was 10.10 percent and in FY 2018 it was lowered to 9.79 percent. HHS says that the reduced rate is a result of the department's implemented strengthened reduction and recovery efforts.

MEDICAID'S CALCULATIONS AND FINDINGS

The report estimates that Medicaid improper payments made by recipients of federal funding amounted to $36.25 billion in 2018. The root cause categories for payments made in error included the inability to authenticate eligibility and access data ($11.6 billion), administrative or process errors ($16.6 billion), and insufficient documentation ($7.6 billion).

• National Medicaid gross improper payment estimate = 9.79 percent ($36.25 billion)
• National Medicaid net improper payment estimate = 9.63 percent ($35.67 billion)
• Medicaid FFS improper payment rate = 14.31 percent
• Medicaid managed care improper payment rate = 0.22 percent

ELIGIBILITY DISCOVERIES AND CORRECTIVE ACTIONS

To prevent future improper payments and improve eligibility verification processes, states found vulnerabilities in their systems and procedures with Eligibility Review Pilots. After evaluating Medicaid plans, the pilots identified eligibility errors stemming from caseworker and system vulnerabilities. The most notable discoveries were that states did not properly establish income of beneficiaries and there was insufficient documentation to make eligibility determinations. Much of the documentation needed was missing.

The corrective actions to help resolve these program weaknesses concentrate on training, system solutions, and improved processes for managing documentation. Specifically, the efforts include:

• Conducting provider training sessions and meetings with provider associations
• Issuing provider notices, bulletins, newsletters, alerts, and surveys
• Implementing improvements and clarifications to written state policies highlighting documentation requirements
• Performing additional provider audits to determine areas of vulnerability and target solutions

PROVIDER DISCOVERIES AND CORRECTIVE ACTIONS

The department's financial report shows that errors as a result of non-compliance involving provider screening, enrollment, and national provider identifier (NPI) requirements have been a major contributor to Medicaid's improper payments. The majority appeared either in instances where the information required from a claim was absent or states did not enroll providers with the appropriate process.

However, state compliance has improved and the program's FFS improper payment rate lowered 2.06 percent last year. The report also found that improper payments cited on claims of revalidated providers who were not properly screened at revalidation was a new major contributor to the rate. HHS will measure all states for provider revalidation compliance in FY 2020.

In order to reduce these process or system errors, state corrective actions consist of:

• Implementing new claims processing edits
• Switching to a more advanced claims processing system
• Continuing to implement provider enrollment process improvements to make it easier for ordering and referring providers to enroll in the program

HHS CITES THE NEED FOR MEDICAID IT SOLUTIONS

In order to reduce Medicaid's improper payments, the report recognizes the value of implementing IT solutions at the state level. States will need to update and improve their program's systems in order to be more efficient and strengthen integrity. HHS has authorized federal funding in nine states to implement analytics technologies that will be integrated into the state Medicaid Enterprise Systems. The state systems workgroup will also routinely meet to review program vulnerabilities and how they affect measuring improper payments.

HHS has also established a plan to update the data systems for Medicaid to alleviate state burden and improve the quality of data. The agency's hope is that by making use of technology solutions, Medicaid will have a more comprehensive data structure and improved oversight.

One effort, specifically, is the development of the Transformed Medicaid Statistical Information System (T-MSIS). T-MSIS will obtain high-quality data and minimize data requests from states. The system will aid in the submission of timely claims data, expand the MSIS dataset, and enable HHS to review the quality of submissions in real-time. Since August 2018, 48 states, Washington D.C., and Puerto Rico have started submitting T-MSIS data.


While DHHS is working to reform, strengthen, and modernize the nation's healthcare system, their recent report identified vulnerabilities that compromise the Medicaid program's integrity. Improper payments are costing billions of dollars and continue to occur due to obsolete systems, processes, and low-quality data. To achieve reduced improper payment rates in the future, the Medicaid program will need to implement innovative technology solutions.

To learn more, click here.

CA RFP FOR FFS RX BENEFIT MANAGEMENT

In January, California's newly appointed Governor  Governor Gavin Newsom authorized an executive order to significantly reform health care in the state. Executive Order N-01-19 introduced a number of actions and budget proposals to decrease the cost of prescription drugs and health care. One proposal, specifically, shifts all pharmacy services for Medi-Cal managed care to a fee-for-service (FFS) model.

Pharmaceutical drugs are one of the key drivers of growing health care costs. Last year the state's individual market experienced a 10% increase in health care costs and reports suggested the drug manufacturers planned to increase pricing in 2019.

FFS RX BENEFIT

At the moment, Medi-Cal acquires drugs with the aid of public and private purchasers that negotiate with manufactures independently. Under the FFS model, California would become the largest single payer of pharmaceutical drugs and the state would have increased bargaining power to negotiate prices with manufacturers.

Governor Newsom stated, "We will use our market power and our moral power to demand fairer prices for prescription drugs. And we will continue to move closer to ensuring health care for every Californian."

RFP # 19-96125

In July, DHCS sent out a request for proposals for managing the FFS pharmacy benefit. RFP # 19-96125 is requesting proposals for the takeover, operation, and ensuing turnover of administration of the FFS pharmacy services. Entities including commercial businesses, nonprofit organizations, state or public universities that fulfill the qualification criteria are eligible for submission.

Click here to keep reading.