WHAT IT MEANS AND WHY IT'S IMPORTANT — If it's good for the goose, then it's good for the gander. That's what was in a recent letter from the Ohio Department of Job and Family Services to the National Association of Community Pharmacists. In place of mandatory mail order and competitive bidding in covering diabetic test strips, Ohio Medicaid is opting to employ a manufacturer rebate model, where manufacturers exchange discounted pricing for a listing on Ohio's preferred drug list. Sound familiar?
(THE NEWS: Ohio Medicaid program: Beneficiaries can continue getting diabetes testing supplies from local pharmacies. For the full story, click here)
Except in this quasi-PBM model, community pharmacy are the beneficiaries, because it means a potential increase in appropriate reimbursements.
Go ahead. Read that last sentence again. We'll wait.
According to the letter from Ohio state Medicaid director John McCarthy, this approach will achieve the same approximate 50% savings in the cost of diabetes testing supplies that the Office of Inspector General tied to competitive bidding and mandatory mail. Only this approach not only maintains that Medicaid patient's access to a community pharmacist, but also sets the stage for increased reimbursements to that community pharmacist. "In fact, we intend to change reimbursement to the pharmacy to be consistent with published pricing," McCarthy noted. "In many cases, this will result in a higher payment to pharmacies. After rebates, Ohio's new cost for the supplies will be lower than current expenditures."
To summarize, you have a publicly-funded health services provider that in recent years has seen its membership rolls significantly increase (Ohio's Medicaid spending was up 5.3% FY2007 through FY2010, though that's compared with a 6.8% national average). And more people are expected to be eligible for Medicaid coverage through the Affordable Care Act. And many are suggesting extra federal funds to help accommodate the economy-related newly Medicaid eligible is not expected to be renewed come FY2014.
Yet, Ohio is figuring out how to help mitigate those rising cost concerns and at the same time support its community pharmacy base. More states need to pick up on this Ohio example.