State Medicaid Issues

Medicaid is a joint federal-state program that provides health coverage to certain categories of 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 currently 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.

Recent years have demonstrated that many states are looking to cut Medicaid provider reimbursements and shift their Medicaid population into managed care. Many state policymakers have been sold on the often misleading approach that turning over the management of their Medicaid prescription drug benefit program to a contracted entity will result in notable savings. 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. NCPA has made efforts to work with its state partners to ensure that when a state chooses to transition to a managed care model, they do so in a manner that ensures appropriate patient access to pharmacy providers, and proper pharmacy reimbursement models. Community pharmacy knows that these goals can be achieved while noting cost savings to the system. State's should not simply "sign over" management of the Medicaid prescription drug benefit program and assume their contractor will properly institute a program that best serves a state's Medicaid population and its needed healthcare providers. CMS released a proposed rule in 2015 in an attempt to modernize Medicaid and Children's Health Insurance Program (CHIP) managed care regulations. NCPA submitted comments to CMS in order to convey community pharmacy's perspective regarding the modernization of Medicaid managed care regulations. Independent community pharmacy is ready and willing to work with the Agency to address rising costs in Medicaid programs in meaningful ways without compromising beneficiary access or quality of care. Please see the resources below for NCPA's complete comments to CMS.

States have also began to reassess pharmacy reimbursement benchmarks within Medicaid programs themselves. This trend will continue as states now must revisit pharmacy reimbursement as required by the Affordable Care Act (ACA) and the Centers for Medicare and Medicaid Services (CMS). Many states have recently moved towards or are considering a pharmacy reimbursement model based on the acquisition cost of the drug, referred to as an Actual/Average Acquisition Cost or AAC benchmark. Such benchmark data are compiled either federally through a national survey standard referred to as the National Average Drug Acquisition Cost (NADAC) or by states themselves utilizing their own acquisition cost survey method. Such benchmarks base their data on pharmacy submitted, invoice pricing figures and therefore theoretically represent a more realistic sample of pharmacy costs. However, a properly determined pharmacy Cost of Dispensing (COD) fee is therefore vital to ensuring that an AAC benchmark appropriately reimburses a pharmacy for their costs.

The coming year(s) will prove to be an extremely active one in regards to state Medicaid programs revisiting and altering their management of the prescription drug benefit. New and innovative reimbursement benchmarks will be coming on-line and it will be vital for state pharmacy interests, working collaboratively with NCPA, to ensure that such programs are developed and instituted properly for the benefit of Medicaid beneficiaries and the pharmacy providers who interact with them each day.


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