A Wall Street Journal Editorial (May 30) outlined some pitfalls when states provide certain Medicaid benefits. This will sound complicated, but it needs to be carefully considered by Virginia as the Commonwealth moves down the path toward expanding Medicaid services.
States contract with managed-care organizations to administer Medicaid benefits. Obamacare requires MCOs to spend at least 85 percent of all taxpayer dollars on medical claims and care improvements. The rest is for overhead, marketing and profits. Most often, however, MCOs outsource the drug benefits management to a pharmaceutical benefit manager. The PBM decides which drugs are listed on a formulary, how much pharmacies are reimbursed and how much insurers pay. PBM drug payments are not transparent to the state or to the MCO. Contracting with PBMs allows MCOs to off-load administrative costs and thus take more profits. In the case of Ohio, which the WSJ highlighted, there are five MCOs and four of them outsource drug management benefits to the just one PBM.
The payment framework is taking a toll on the very clients intended to be served by the Medicaid expansion — those living in many rural areas. In Ohio, pharmacies serving locals have seen drug payment rates cut to below their wholesale costs while Ohio is charged at rates well above wholesale costs. Many pharmacies have sold their businesses to the same PBM, which in turn closes the local pharmacies.
The outcome over time: diminished healthcare access for low-income patients. To quote WSJ, “that at the very least should concern politicians.”
James City County