Medicaid is a joint federal-state program that provides health coverage to certain categories of low-income persons including children, pregnant women, parents of eligible children, and persons with disabilities. One of its most important benefits is prescription drug coverage. Outpatient prescription drug coverage under Medicaid is an optional benefit; however all state Medicaid programs cuurently provide coverage for prescription drugs, although there are differences in state policies with regard to copays, types of drugs that are covered, and the number of prescriptions that can be filled. While Congress and the Centers for Medicare and Medicaid Services (CMS) set out the general rules under which Medicaid operates, each state runs its own program.

As the result of the Affordable Care Act, Medicaid will expand to cover all persons under 65 with incomes up to 133% of the poverty level. The Federal Government will pay 100% of the cost of the expansion for three years; and after that time reduce its funding to 90%. Despite this federal funding, most states will need to upgrade their administrative and IT capabilities which will require significant financial outlays. This comes at a time when many states are looking to cut Medicaid provider reimbursements and shift their Medicaid population into managed care. In addition, a number of states are now looking to shift the Medicaid pharmacy reimbursement benchmark to Average Acquisition Cost (AAC)—similar to what Alabama and Oregon have done

Medicaid Managed Care

Although many states are considering shifting their Medicaid populations into managed care, NCPA cautions that such a dramatic shift is not necessarily a "cure-all" and that in some cases, could result in reduced beneficiary access to services and disruptions in care.

Use of Average Acquisition Cost (AAC) as a Medicaid Pharmacy Reimbursement Benchmark

The use of AAC for the purposes of Medicaid pharmacy reimbursement, can be appropriate but only when it is considered together with an enhanced pharmacy dispensing fee and other criteria.

Pharmacy Partnership with States in Identifying/Implementing Cost-Saving Measures

NCPA provided input to Secretary Sebelius on how the pharmacy community can be an effective partner with the states in implementing many cost saving options such as increased generic substitution and Medication Therapy Management (MTM)—that do not jeopardize provider participation and corresponding beneficiary access to services.

Regulatory Comments