Tag: Prescription Drugs
Currently, Louisiana includes (carves in) the pharmacy benefit in its capitated contracts with Medicaid MCOs. During FFY2017, Louisiana had the nation’s most favorable Medicaid generic dispensing rate at 90.9% and the nation’s 8th best (lowest) cost per prescription. The Menges Group analyzed the impact of legislation proposing a carve-out of the prescription drug benefit. Based on our analysis, transitioning the Medicaid prescription drug benefit back to fee-for-service would be costly for the Medicaid program and Louisiana’s taxpayers. We estimate that Louisiana would experience a State Fund cost increase of $69.3 million in FFY2019 and $395 million across the five-year timeframe FFY2019-FFY2023. Our report also discusses the programmatic advantages of preserving the pharmacy carve-in model.
Over 90 percent of Louisiana’s Medicaid prescriptions are paid for by MCOs. The Louisiana Association of Health Plans engaged us to assess the impacts of a potential policy change to take the preferred drug list (PDL) content responsibility away from the Medicaid MCOs and shift it to a single state-administered and state-determined PDL. Our key finding is that this policy change would be costly to the State and its taxpayers – increasing overall annual Medicaid costs by $40 million and increasing annual State Fund expenditures by approximately $15 million. Our report provides evidence across dozens of states demonstrating that a focus on optimal management of Medicaid’s drug mix at the “front end” produces more favorable net costs than an approach that relies primarily on “back end” rebate maximization.
The Texas Association of Health Plans engaged The Menges Group to prepare an analysis of the impacts of switching from a statewide uniform Medicaid prescription formulary to a model that allows Medicaid MCOs flexibility to develop their own preferred drug lists (PDL). Currently, Medicaid MCOs in Texas must utilize a uniform formulary controlled by the state. In this report, we assessed a model in which Medicaid MCOs have the latitude to manage the covered mix of drugs through their own PDLs. We conducted this assessment using multiple analyses, including a cost per prescription analysis, therapeutic class analysis, and quantitative and qualitative survey of Texas MCOs. This approach is estimated to result in total annual Medicaid savings of $236 million and annual general revenue savings of nearly $100 million. For this reason, a policy change towards the PDL latitude model is recommended. In addition to the report, a presentation summarizing the findings can be found in the Executive Summary hyperlink.