Comparison of Medicaid Pharmacy Costs and Usage in Carve-In Versus Carve-Out States
This study examined 35 states and DC that used the Managed Care Organization (MCO) model in their Medicaid program and either included (carved-in) or excluded (carved-out) pharmacy benefits from coverage. The report found that carve-in states outperform carve-out states by a wide margin, saving Medicaid $2.06 billion in state and federal expenditures in 2014 alone.
Key findings of the report include:
Across 28 states using the carve-in model, the net cost per prescription was 14.6% lower than the average net cost per prescription in states not carving in pharmacy.
- This 14.6% differential created a $2.06 billion net savings in state and federal expenditures in FFY2014 for states deploying the carve-in model.
- The seven carve-out states had a 20% increase in net costs per prescription from FFY2011-FFY2014 — in stark contrast to the 1% increase in net costs per prescription experienced by the 6 states that recently switched from a carve-out to a carve-in model.
- The seven carve-out states “missed” a total of $307 million in savings in FFY2014 which would have occurred had they used a carve-in model.