MEDICAID MANAGED CARE PHARMACY BENEFITS HELP STATES
Medicaid prescription drug spending has been on the rise and some states have elected to carve out prescription drug benefits and switch to a Fee-For-Service (FFS) model. In theory, this delivery system helps states leverage their purchasing power to lower costs and increase oversight. However, recent data indicates that when compared to FFS models, managed care prescription services save significantly more on brand name and generic drugs while also improving the quality of care.
In a 2018 report, the Association for Community Affiliated Plans (ACAP) studied Medicaid prescription drug spending in between 2011 and 2017. The trade association concentrated on key expenditure trends and dynamics linked to Medicaid's prescription drug benefits. Here is what the report discovered:
Over a six-year period, managed care drug benefits produced significant savings despite the increase of prescription drug costs. "The average net (post-rebate) cost per MCO-paid Medicaid prescription during 2016 was $37, 73 percent of the average net cost of Medicaid prescriptions paid in the fee-for-service (FFS) setting during 2017, which was $50.”
The report also found that managed care prescription services had higher utilization of generic drugs which aided to reduce drug expenses. "In 2017, generic drugs represented 88.1 percent of MCO-paid Medicaid prescriptions versus 83.7 percent in the FFS setting."
Six states that shifted to managed care prescription benefits only had a 1 percent increase in net costs per prescription between 2011 and 2014. Meanwhile, seven states that carved out pharmacy benefits saw a 20 percent surge in net costs per prescription during the course of the same period. Compared to the six states that transitioned to a managed care model, these seven states missed out on an estimated $307 million in savings in 2014.
Finally, including prescription drug services improves the quality of care. Since Medicaid health plans manage all of a patient's benefits, the plan can coordinate and communicate with providers more effectively. This makes care less complex and also reduces unnecessary hospitalizations and emergency room use.
Due to skyrocketing prescription drug costs and the increased size of the Medicaid population, some states have carved out pharmacy benefits and shifted to FFS models to rein in costs. However, data shows that Medicaid plans can save more when pharmacy and medical benefits are integrated together. Not only are plans able to save money on prescription drug costs, but they also improve the quality of care for their members. To conserve the program's resources and ensure its longevity, states may want to reevaluate carving out prescription drug benefits.
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