Pharmacists can help reduce 
Medicaid costs


As states grapple with tight budgets, rising Medicaid costs and the anticipated expansion of Medicaid following the Supreme Court’s decision to uphold the Patient Protection and Affordable Care Act, policy-makers should consider how community pharmacists can help reduce expenses. In addition, new evidence offers a fresh reminder of the perils of managed care in Medicaid and the need for proper oversight of managed care entities.

Recently, Bloomberg government released a study of managed care plans in the nation’s five most populous states. It found the plans are delivering substandard care, characterized as “significantly and consistently worse than the national median.” It added that lower-quality care can lead to higher health spending through more costly medical interventions.

This comes on top of earlier questions about Medicaid managed care. The New York Times has drawn national attention to the diminished pharmacy access of Texas patients after a new managed care plan slashed pharmacy reimbursements by some 80%, forcing some pharmacies to close in the Rio Grande Valley. Separately, the state of Connecticut banished private insurance companies from its Medicaid program, citing “a diminishing confidence in the value of what they are providing.” In the Sunshine State, an examination by Georgetown University’s Health Policy Institute of Florida’s managed care pilot program found “no clear evidence that the pilot programs are saving money, and if they are, whether it is through efficiencies or at the expense of needed care.”

Alternatively, community pharmacists can help reduce Medicaid costs in a number of ways:

  • Drive greater use of low-cost generic drugs. Community pharmacies are already leading the way to maximize the appropriate use of generic medications — the most effective means to lower prescription drug costs without harming patients. Medicaid could save more than $600 million for every 1% increase in generic use. The Massachusetts fee-for-service Medicaid program has the highest generic dispensing rate in the nation, at 79.3%. If all other states achieved that rate, the Medicaid program could save $5.14 billion. States may forfeit savings from generic drugs if they rely on mail-order pharmacies owned by pharmacy benefit managers, commonly a part of managed care. PBM-owned mail pharmacies dispense generics 10% less often than local pharmacies, partly because they receive large manufacturer rebates for dispensing brand-name drugs.

Incorporate medication therapy management. Pharmacists provide one-on-one attention and prescription counseling to Medicaid beneficiaries with often-complicated health conditions and medication regimens. One percent of all beneficiaries account for 25% of expenditures. Expanding the use of low-cost MTM programs can help make a much greater dent in the $290 billion annual cost to the health system of poor medication adherence. Plus, community pharmacies afford patients access to low-cost immunizations and health screenings, in addition to receiving their prescriptions.

A state utilizing or implementing managed care into Medicaid should, at minimum, adopt some common-sense steps:

  • Transparency. Properly implementing aggressive transparency measures into contracts will result in savings that stay in the state, not funneled to an out-of-state corporation.

Patient choice and pharmacy competition. Allow all community pharmacies eligible to participate in federal health plans to participate in a state plan’s pharmacy network provided that the plan’s costs will be comparable or the same. This also assures that patients have choice and more taxpayer dollars remain in-state at local businesses.

Ensure fair compensation. While reducing costs, reimbursement must be fair and reflective of all aspects of providing prescriptions to Medicaid patients so that community pharmacies can continue to participate in the program. This should include accounting for Medicaid patients unable to afford their co-pay. In rural communities in particular, an independent pharmacy may be the only one for miles around, and loss of access can be devastating to patients.

Community pharmacists are committed to being part of the solution to reduce Medicaid costs. Managed care programs will not deliver the promised savings unless proper oversight is conducted and patient access to quality care is maintained.

B. Douglas Hoey is CEO of the National Community Pharmacists Association.

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