Navigation Links
States, Federal Government Could Save $30 Billion by Managing Medicaid Pharmacy More Like Medicare and Commercial Sector Programs
Date:12/6/2010

WASHINGTON, Dec. 6, 2010 /PRNewswire-USNewswire/ -- A new study from The Lewin Group finds that Medicaid pharmacy could save more than $30 billion over the next decade by transitioning from the current approach used by state Medicaid fee-for-service (FFS) programs to the more efficient approaches used by Medicare Part D plans, Medicaid managed care organizations (MCOs), and the commercial sector, including typical state employee plans. 

 The study notes that Medicaid FFS pharmacy programs use fewer generic drugs and pay pharmacies higher dispensing fees and ingredient costs than other programs.  The findings from this groundbreaking report challenge the assumption that Medicaid pharmacy can only reduce costs by cutting benefits, limiting eligibility, demanding deeper manufacturer rebates, or paying drugstores higher dispensing fees in exchange for more pricing transparency.

"Medicaid is one of the few pharmacy benefit programs that still relies heavily upon a fee-for-service approach.  By operating more like Medicare and commercial market plans, Medicaid could increase the use of generics and save billions without cutting benefits," said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt. 

Currently, three-fourths of Medicaid pharmacy dollars are administered using a fee-for-service approach in which public officials play a role in determining how much to pay drugstores for each prescription filled (dispensing fees) and ingredient costs (the reimbursement for the cost of the actual drugs).   The other one-fourth of Medicaid pharmacy is managed more like pharmacy benefits in the commercial sector, where third-parties use proven utilization management tools and negotiate pharmacy payments directly with chain drugstores and the drug wholesalers that represent independent pharmacies.

The Lewin study also finds that although state Medicaid programs pay widely varying Medicaid dispensing fees, these decisions seem largely unrelated to the level of ingredient cost reimbursements a state pays or the level of generic utilization a state achieves.  For example, Texas pays the nation's highest dispensing fees ($7.50) and New Hampshire pays the lowest ($1.75), but they both pay about the same for ingredient costs and generate similar rates of generic drug utilization. 

Many Medicaid pharmacy discussions begin and end with the issue of the drug manufacturer rebates.  However, the statutory and supplemental rebates paid to Medicaid by brand name drug manufacturers are determined separately from pharmacy dispensing fees and ingredient costs. This means that manufacturer rebates have no impact on the savings that more active management of dispensing fees and ingredient costs could achieve.  Likewise, these savings also do not assume any additional cost sharing for Medicaid beneficiaries.

 Key Findings

 Savings Opportunities Exist In Four Key Areas

While Medicaid FFS programs and costs vary greatly state-by-state, The Lewin Group identified four key areas where pharmacy benefit management could generally be improved:

Generic Drug Dispensing: Medicaid FFS is less effective at encouraging the dispensing of generic drugs in place of brands. The generic dispensing rate in Medicaid FFS averages 68%, compared to an average 80% generic dispensing rate in Medicaid MCOs.

·Dispensing Fees: At $4.81 per prescription, the national average dispensing fee that Medicaid FFS programs pay to retail pharmacies per each prescription is more than double the average dispensing fees paid by Medicare Part D payers, Medicaid MCOs, or health plans in the commercial sector.

·Ingredient Costs: The rate at which retail pharmacies are reimbursed for the actual medication ingredients (pills, capsules, etc.) is also higher, on average, in Medicaid FFS programs than in Medicare Part D or the commercial sector.

·Drug Utilization: The number of prescriptions dispensed per person is typically higher in Medicaid FFS programs than in Medicaid MCOs due to less effective controls on polypharmacy, fraud, waste, abuse, and other factors in the FFS setting.

Estimated Federal and State Medicaid Savings

If all state Medicaid programs used a market-based approach such that dispensing fees, ingredient costs, drug utilization, and generic drug dispensing were brought in-line with norms for Medicaid MCOs, Medicare Part D, and commercial payers, Lewin estimates that:

·Combined federal and state savings to the Medicaid program would total $30.3 billion over the next decade.

·Medicaid FFS prescription costs could be reduced by 14.8%.

·Per member per month (PMPM) costs for Medicaid FFS pharmacy benefits could be reduced by $12 in 2011 under optimal management.

PCMA represents the nation's pharmacy benefit managers (PBMs), which improve affordability and quality of care through the use of electronic prescribing (e-prescribing), generic alternatives, mail-service pharmacies, and other innovative tools for 210-plus million Americans.

The full report can be obtained at: http://www.lewin.com/content/publications/Medicaid_Pharmacy_Savings_Report.pdf


'/>"/>
SOURCE Pharmaceutical Care Management Association
Copyright©2010 PR Newswire.
All rights reserved

Related medicine technology :

1. An Acute Migraine Therapy That is Not Contraindicated in Patients With a History of Vascular Disease Would Earn a 45 Percent Patient Share in the United States, According to Surveyed Neurologists
2. Novel Radiation Therapy to Treat Lung Cancer Used for the First Time in United States, at New York Hospital Queens
3. United States, Canada and Mexico Agree to Mutual Assistance During Public Health Emergencies
4. Epeius Biotechnologies Awarded Federal Grant Advancing Tumor-Targeted Cancer Therapy
5. GeoVax Awarded Federal Grant Under the Qualifying Therapeutic Discovery Project Program
6. Cardiogenesis Receives Research Award From Federal Government
7. Indiana Life Sciences Start Ups Garner More than $1.5 Million in Competitive Federal Funding
8. Federal Panel Grants Lanier Law Firm Motion for Hearing on National Coordination of DePuy Hip Implant Lawsuits
9. Parents Bring Federal Lawsuit After Tainted Baby Formula Injures Newborn
10. Federal Government Selects Thomson Reuters to Build Tool That Streamlines Comparative Effectiveness Research
11. Ziehm Imaging Provides Germanys Federal Armed Forces (Bundeswehr) With Mobile X-Ray Systems
Post Your Comments:
*Name:
*Comment:
*Email:
(Date:2/27/2017)... Period October – December 2016 Revenues amounted to SEK ... million Result after tax amounted to SEK -16.3 (-6.5) million, ... Cash flow from operating activities amounted to SEK -8.3 (-7.3) million ... Period full year 2016 ... result amounted to SEK -39.5 (-29.5) million Result after tax ...
(Date:2/24/2017)... , Feb. 24, 2017 Zimmer Biomet ... in musculoskeletal healthcare, will present at the Cowen and ... the Boston Marriott Copley Place on Tuesday, March 7, ... A live webcast of the presentation can be accessed ... for replay following the conference via Zimmer Biomet,s Investor ...
(Date:2/24/2017)... Feb. 24, 2017  In conjunction with DURECT Corporation,s ... results press release, you are invited to listen to ... the internet on Tuesday, March 14, 2017 at 4:30 ... A live audio webcast of the presentation will be ... and clicking "Investor Relations."  If you are unable to ...
Breaking Medicine Technology:
(Date:2/27/2017)... ... February 27, 2017 , ... New Jersey ranks among the top ... and genders. And the need for advanced services is growing. , Project WE ... care program, in collaboration with their non-profit partners in their fight against cancer and ...
(Date:2/26/2017)... ... 2017 , ... NuevaCare, a leading home care agency based in San Mateo, ... is proud to announce an important upgrade to its geographic information pages, starting with ... to home, and by having city-specific pages, NuevaCare is answering that information need. , ...
(Date:2/26/2017)... ... ... ODH, Inc.™ announced today it will exhibit and speak at the ... in Arlington, VA. ODH’s director of medical strategy, Candace Saldarini, M.D., will present on ... health management. , ODH will also have an exhibit booth where attendees may speak ...
(Date:2/24/2017)... ... February 24, 2017 , ... HealthPostures, expert ... Core benefits and advantages built into the home office sit stand solution are ... feel. Ability to gain the benefits embedded in the TaskMate Go are available ...
(Date:2/24/2017)... ... 24, 2017 , ... An in-depth computational analysis of genetic variants implicated in ... eight genes that may explain why susceptibility to one of the disorders could place ... published today in the journal npj Schizophrenia. , “There is a wealth of ...
Breaking Medicine News(10 mins):