A Smarter Medicaid Pharmacy; as Enrollees Increase, Cost Efficiencies Should, Too
Byline: Mark Merritt, SPECIAL TO THE WASHINGTON TIMES
Over the next decade, Medicaid expansion under Obamacare will add millions more people to the program, doubling its current cost and bringing the number of enrollees to 84 million by 2022, according to the Congressional Budget Office. Policymakers need solutions that reduce costs but avoid draconian cuts to patients, hospitals and physicians.
One place to look is the Medicaid pharmacy benefit, which tends to cost much more than pharmacy benefits in Medicare and the commercial sector. A new report by the Menges Group, Medicaid Savings Opportunities, National and State-Specific Estimates, finds that if Medicaid pharmacy benefits operated more like those in the popular Medicare Part D program and commercial plans, costs could be reduced by $74.4 billion over the next 10 years, with $43 billion in federal savings and $31.4 billion in savings for states.
State Medicaid programs vary widely in their abilities to restrain costs. While each state employs different degrees of pharmacy-benefit management best practices, there are some recurring challenges:
? Pharmacy payments in most state Medicaid programs are set by state officials who are subject to political pressure from drugstore lobbying groups. Medicare Part D and commercial plans negotiate market-based rates with pharmacies on a case-by-case basis.
? State-administered Medicaid programs are often less aggressive than other programs in terms of promoting generics and preferred-brand drugs.
? Various state laws and regulations hinder the use of affordable pharmacy networks in Medicaid. That's unfortunate since there are more drugstores in the United States than McDonald's, Burger Kings, Pizza Huts, Wendy's, Taco Bells, KFCs, Domino's Pizzas and Dunkin' Donuts combined, creating a highly competitive environment.
As policymakers prepare for Obamacare's Medicaid expansion, this report finds a number of savings opportunities in Medicaid pharmacy, including: