State officials have turned to managed care to reduce Medicaid drug costs, driven by the Patient Protection and Affordable Care Act, according to a USA TODAY report.
Under the PPACA, states can receive drug rebates even if they shift their Medicaid drug benefit to managed care organizations, according to the report. This provision — in addition to a federal request that states remedy wide Medicaid drug dispensing cost disparities — has led to states such as New York making strides in spending reductions.
States have grappled with rising Medicaid spending for decades, trying to contain medication costs with preferred-drug lists, prior authorization requirements, mandatory manufacturer discounts and other tactics, according to the report. However, state officials had worried they would lose federal rebates and wouldn't be able to negotiate lower prices if they changed to managed care.
Supporters say managed care plans — which involve the state contracting its pharmaceutical services to a group that agrees to provide those services at a low cost — can save states billions and allow for spending cuts without reducing benefits, although others warn managed care will prove painful for businesses that lose their markets to out-of-state management firms, according to the report.
Last October, New York switched to a managed pharmacy program for Medicaid. The state was experiencing a 13 percent annual growth rate in Medicaid spending at the time, accounting for 40 percent of the state budget, according to the report. As a result of the change, New York is saving $400 million annually, Jason Halgerson, the state's Medicaid director, told USA TODAY.
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