Tag: Policy
Some Virginia policymakers have indicated an interest in moving to a pharmacy “carve-out” within the Medicaid managed care program, whereby the state would instead manage the pharmacy benefit for MCO enrollees, including paying directly for drugs made available in the program. Virginia’s Association of Health Plans engaged The Menges Group to estimate the fiscal impacts of Virginia switching to a carve-out model as well as the programmatic advantages and disadvantages of this potential change. We estimate that a change to a pharmacy carve-out would result in a 20.2% increase in net (post-rebate) Medicaid pharmacy expenditures across the five year timeframe SFY2020 – 2024, increasing net state fund costs by $12 million in the first year of implementation and by $157 million over five years.
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.
Legislation has been proposed in Louisiana to take the Medicaid preferred drug list (PDL) content responsibility away from the MCOs and shift it to a single state-determined PDL. The Menges Group assessed the impact of this policy option and estimated by transitioning to a PDL, Louisiana would experience a 13.5% increase in Medicaid pharmacy expenditures, with State Fund costs growing by $23 million in FFY2019 and $121 million across the five-year timeframe FFY2019-FFY2023. The non-financial programmatic dynamics of MCO latitude relative to a uniform Medicaid PDL are also discussed.