Policymakers are considering moving Medi-Cal to a pharmacy “carve-out” – that is, shifting the pharmacy benefit out of managed care to instead be administered by the state in fee-for-service (FFS). The carve-out proposal is motivated, in part, by the potential for the state to collect more drug manufacturer rebates. This report, commissioned by Local Health Plans of California, provides strong evidence that a pharmacy benefit carve-out will not achieve its intended cost savings and will have an adverse impact on the integrated, whole-person approach to care the Medi-Cal program has embraced.
The Pennsylvania Coalition of Medical Assistance MCOs engaged The Menges Group to estimate the fiscal impacts of switching to a uniform PDL in Pennsylvania and to assess the programmatic advantages and disadvantages of this policy change. Our analyses indicate that the Commonwealth of Pennsylvania and its taxpayers would incur significant costs if Pennsylvania adopts a uniform, state-determined Medicaid PDL. The state fund cost of this policy change is estimated at $81 million in the first year (FFY2020) and $442 million across the five-year timeframe FFY2020 – FFY2024. The programmatic dynamics of switching to a uniform PDL are also unfavorable. We encourage Pennsylvania policymakers to preserve the PDL latitude model within HealthChoices.
The May edition outlines a pilot program we encourage Medicare policymakers to adopt. It involves testing Medicaid’s key design features in the Medicare arena, which if successful could evolve into a fundamental transformation of Medicare as has occurred with Medicaid (whose transformation also began with pilot testing of this approach). We will be releasing a full paper on this framework with a couple months.