Pharm Econ Exam 2- Medicaid Drug Benefits

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missed first 2 slides

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what were "clawback payments"?

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Clawback payments for 2006 were 90% of the estimated state savings from no longer providing drug coverage for dual eligibles-

Clawback payments will phase down over the next 9 years to 75% of estimated savings

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why are clawback payments frustrating for states? (3)

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Clawback payments are frustrating for states since they are outside the states’ control.

States that had high 2003 drug costs are penalized forever.

if in state with very high rx drug costs you are out of luck

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siloing of dual eligibles (2) why?

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- dual eligibles are more siloed than everyone else- have part A/B then part D for drugs

then some shit covered by medicaid

so lots of conflicting goals- disconnect in control over their healthcare

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state cost control efforts of medicaid- is it easy?

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States struggle to balance cost control with access to necessary medications

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states flexibility in designing medicaid programs

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states must follow some federal Medicaid guidelines, they have quite a bit of flexibility in designing their Medicaid programs.

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Deficit Reduction Act (DRA) of 2005 - intent

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intended to give states more flexibility in managing costs of state medicaid programs

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trends in rx drug cost control strats in state medicaid programs over the last ten years

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Use of most prescription drug cost control strategies in state Medicaid programs has increased in the last ten years

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medicaid cost sharing requirements what is allowed?

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States are allowed to have “nominal” cost sharing requirements for some Medicaid recipients.

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cost sharing rules for medicaid- amount limits, cost sharing limitations in what groups (3 groups, 3 services)

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A “nominal” copayment used to be defined as between $0.50 and $3.00 per prescription.
Slight increase due to DRA of 2005.
No cost sharing for some groups (e.g. pregnant women, children).
No cost sharing for some services (e.g. family planning, emergency care, hospice).

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prior to DRA- if pt couldn't afford copay- what would pharms have to do

what happened after DRA (change in fed policy)

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Under previous CMS policy, pharmacies could not deny service if the patient can’t afford to pay the copayment.

The DRA of 2005 changed this to say that states may allow prescriptions to be withheld by a pharmacy due to non-payment- up to the state (most states have not changed)

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Medicaid DUR requirements

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All states are required to have a DUR program with both prospective and retrospective review

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For retrospective DUR, most states monitor what.

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occurs behind the scenes: look at claims data and ID trends in utilization and costs by drug and by medical condition

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PAs can be used in what way (to accomplish what) (2)

which is the primary goal for medicaid

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PA may be used to restrict access to high cost drugs, or as a mechanism to extract additional manufacturer rebates (primary reason for medicaid)

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Prior authorization required for

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drugs not on the preferred drug list

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medicaid PA program- describe it (3)

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has preferred drug list- either pay rebate or be only drug in that class (some brands cheaper than generic...)

Long term prior authorization program for several prescription drug classes and for multi-source brand name drugs.

Larger PA program that began on 1/15/05 to extract supplemental rebates from the manufacturers. (didn't talk about this really...)

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Iowa medicaid preferred drug lists- cost savings

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A Results Iowa Report said that the 2009 PDL savings was 34.7% of prescription drug spending - so substantial savings (just know that)

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pharmacy issue with medicaid PDL- result

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A pharmacy issue is that some brand name drugs are preferred instead of their generic equivalents.

Increases pharmacy inventory costs.

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issue with medicaid PDL for patients

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Some reports of delays in time to receive approval or denial of PA request.

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who sets pharmacy reimbursement rates for medicaid?

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Each state Medicaid program sets their own pharmacy reimbursement rate

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Reimbursement formulas for brand name drugs

3 things used to calculate formulas

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vary widely across states.

formulas using AWP for brand name drugs varied from AWP minus 5% to AWP minus 17%. --> historically use AWP but moving away from this

Many states have switched to WAC and a few have switched to AvAC, with more coming soon.

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dispensing fees are highest in states that use what to calculate formula

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Dispensing fees ranged from $1.75 to $15.11 (highest one is in a state with AvAC reimbursement).

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Reimbursement for multi-source drugs (generic version available) is based on

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maximum allowable cost (MAC).

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For Medicaid, drugs subject to MAC reimbursement are those on what list

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the “Federal Upper Limit” (FUL) list: a list of drugs where the states are supposed to use MAC reimbursement (instead of AWP-%, whatever)

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FUL prices have been based on

but now are based on

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150% of the lowest published price (was AWP, but switching to AMP).

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state dispensing fee payment for generics vs. brand

who sets MAC reimbursements- condition to setting MAC reimbursements

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States can set their own MAC reimbursements (SMACs: state max allowable costs), but they must be less than the FUL MACs (federal MACs)

Some states pay higher dispensing fees for generic drugs (not super common)

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Basing FULs on AMP- what was the original purpose

controversy? results?

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Basing FULs on AMP was supposed to greatly decrease pharmacy reimbursement for generics in Medicaid under initial CMS rules.

Lawsuits by pharmacy associations delayed implementation of the change.

As a result of pharmacist lobbying, ACA of 2010 changed the AMP definition and FUL formula

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AMP reimbursement for generic drugs: changes to AMP definition/FUL formula- are changes good?

may not be as important if what

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Changes are positive, but still concern about impact.
May not be as important if many states switch to AvAC reimbursement

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AWP Rollback (2)

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there was a rollback on AWPs in 2009 as lawsuit settlement- saying AWP being artificially inflated

but if you didn't adjust the formulas- pharmacies would be making less

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AWP rollback- who adjusted reimbursement formulas? who didn't?

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Most private PBMs adjusted their reimbursement formulas to neutralize the effect on pharmacies.
Most state Medicaid programs did not, resulting in a decrease in Medicaid reimbursement rates.

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“triple threat” reduction in Iowa Medicaid pharmacy reimbursement: what was changed (3)

how was this remedied

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Decrease in dispensing fee as a result of the state budget cuts.
SMAC reduction
AWP rollback and no formula adjustment

2011 increase in dispensing fee (from $4.34 to $6.20) to offset these cuts

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AvAC Reimbursement: iowa medicaid- when will the switch occur

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Beginning in January of 2013, Iowa Medicaid will switch to using AvAC in determining Medicaid reimbursement for prescription drugs, since they have to move away from AWP

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how iowa medicaid will determine new dispensing fee for medicaid products

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Iowa Medicaid also conducted a mandatory COD survey. The COD information will be used to determine the new dispensing fee for Medicaid prescriptions

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how will the AvAC be calculated for iowa medicaid

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AAC surveys sent to pharmacies to get their invoices

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AWP to AvAC will do what to reimbursement?

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decrease it

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key questions to ask of AvAC switch (6)

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How often will costs be updated for AvAC?
Will increase in dispensing fees be sufficient?
What if some pharmacies can’t purchase drugs at the AvAC rates?Will there be an exception process?
Will it be used for generic drugs, or will current MAC lists be used?
Will there be gaming of the system? YES but not sure what gaming will be.
At some point, will Iowa switch over to the NADAC rather than conducting their own AvAC surveys.

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medicaid: managed care (2)

what did ACA implement for MCO?

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Some states are switching Medicaid patients to managed care plans

Under ACA of 2010, states now may obtain rebates for drugs used in Medicaid managed care programs; this should increase use of managed care

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main concerns with switch of medicaid to managed care (2)

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restricted networks- reduces opportunities for indie pharmacists

worried about lower reimbursements that MCOs take, which can run pharmacies out of business

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More private managed care in Medicaid may do what to reimbursement rates? (3)

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decrease pharmacy reimbursement rates.

Private plans typically pay lower dispensing fees than state Medicaid programs.

Not susceptible to lobbying influence

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summary

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