Medicaid stepping up oversight of pharmacy benefit program

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Curator summary

OH will scrap the PBMs chosen by the MCOs and replace them with a single pharmacy operational support vendor (POSV) chosen by the state.



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The Ohio Department of Medicaid on Thursday started the process of hiring a private administrator to oversee its $3 billion pharmacy benefit program.

The department requested proposals for a pharmacy operational support vendor to help design its program and provide financial oversight once it’s up and running.

Medicaid created the new post as part of a broader overhaul of its managed care program. In addition to rebidding contracts with private managed care organizations that oversee the program, the state agency is also replacing five pharmacy benefit managers hired by those private organizations to process claims with one company hired by the state and monitored by the administrator.

“The POSV (pharmacy operational support vendor) will ensure monetary incentives are properly and fairly aligned, eliminate self-dealing and steering, and monitor and close potential pricing or rebate loopholes,” said Medicaid Director Maureen Corcoran.

“In short, the POSV ensures that the fox is no longer guarding the chicken coop.”

The administer will operate independently from the pharmacy benefit manager, providing oversight and ensuring pharmacists are paid accurately for the prescriptions they fill.

The added oversight comes after a report showed PBMs billed the state far more than they paid pharmacists and kept the difference, allowing them to receive $224 million in one year — an amount generated by PBMs charging three to six times the standard rate, according to an independent analysis.

Ohio Pharmacists Association Executive Director Ernie Boyd applauded state officials “for taking this important step in Ohio’s cleansing of the PBM problem.”

“The proposal would position Ohio as a national leader in rooting out dysfunction in the drug supply chain. With proper execution of implementation of this vision, provider access can be stabilized, incentives can become better aligned, and taxpayer dollars can be deployed more effectively and efficiently,” Boyd said.

“One thing that’s extremely noteworthy in the RFP is that ODM has effectively stripped PBMs of their price-setting capabilities. That is a major marketplace shift, and is a complete rebuke of what PBMs have been doing. Essentially, the text of the RFP is ODM’s way — through action — to completely pull the rug out from under the many shell games that PBMs were engaging in. Pretty incredible 180 from where we were.”

The tax-funded health insurance program provides coverage to more than 3 million poor and disabled Ohioans.