A study sponsored by Medicaid Health Plans of America (MHPA) released by The Lewin Group finds large-scalesavings can be achieved if 13 states abandoned their current pharmacy carve-out model in favor of a carve-in approach -- including prescription drugs in health plans' capitation payments. In 'Projected Impacts of Adopting a Pharmacy Carve-In Approach Within Medicaid Capitation Programs,' Lewin researchers reported that these states where prescription drugs are not part of the Medicaid capitated rate but instead are 'carved-out' - paid separately through the traditional fee-for-service (FFS) program - could collectively save $11.1 billion over 10 years through the carve-in model. These carve-out states are Connecticut, Delaware, Illinois, Iowa, Missouri, Nebraska, New York, Ohio, Tennessee, Texas, Utah, West Virginia and Wisconsin (see also Medicare and Medicaid).
'We commissioned this research to show that health plans' management of the Medicaid pharmacy benefit is more efficient than in the fee-for-service setting and how much these states might actually save if they switched to the carve-in model,' said Thomas L. Johnson, President and CEO of MHPA, the leading trade association solely focused on representing Medicaid health plans.
Joel Menges, a Vice President at Lewin and the report's principal author, explained: 'The Federal rebate on Medicaid prescription drugs, previously available only for the fee-for-service program, was the main reason states opted for the pharmacy carve-out. But the recently passed health reform law included equalization provisions that gave Medicaid health plans the same rebates as the fee-for-service program. This effectively removed the primary incentive for states to use the pharmacy carve-out model.'
Keywords: Health Policy, Medicaid, Medicaid Health Plans of America, Medicare and Medicaid.
This article was prepared by Managed Care Weekly Digest editors from staff and other reports. Copyright 2011, Managed Care Weekly Digest via NewsRx.com.
