Friday, March 16, 2018

Senate bill to shed light on Medicaid prescription costs and help small druggists moves to House for a vote with price tag removed

By Melissa Patrick and Al Cross
Kentucky Health News

FRANKFORT, Ky. -- A new version of a Senate bill to put the state back in direct charge of its Medicaid drug program, with a big price tag removed, went to the House floor in a specially called committee meeting March 16.

Sen. Max Wise
Senate Bill 5, sponsored by Sen. Max Wise, R-Campbellsville, has evolved into a "transparency bill" that, if passed, will allow the state to find out how pharmacy benefit managers are spending the $1.7 billion a year they get for Kentucky Medicaid prescriptions.

Wise told the House Banking and Insurance Committee that he filed the bill because independent pharmacies are being paid such low fees for dispensing Medicaid prescriptions that many are at risk of closing, despite a 2016 bill aimed at price transparency. The fees are as low as 85 cents per prescription, though the federal Centers for Medicare and Medicaid Services says it should be around $10.64.

Wise's original bill would have mandated that amount, but to get it through the House, he had to overcome objections of the Cabinet for Health and Human Services, which said it would cost $36 million a year. The committee substitute bill would let the Department for Medicaid Services set the fee.

Deputy Medicaid Commissioner Anne-Tyler Morgan told the committee that any rate increase will largely be determined by what the department finds in its investigation and by what the budget allows. Wise, who is on the budget committee, said it is addressing the issue.

The bill would require pharmacy benefit managers (PBMs) to report their average reimbursement and fees paid to their affiliated pharmacies and to those with more than 10 locations and 10 or fewer locations. The state's current contracts with the managed-care organizations (MCOs) that handle Medicaid don't allow access to such information.

The bill would give the Medicaid department and the Department of Insurance authority to penalize the MCOs and PBMs for noncompliance.

Wise said lawmakers in other states are considering similar legislation. He said CVS Caremark, which contracts with four of Kentucky's five MCOs and has a chain of retail pharmacies, has been found in other states to reimburse them at a much higher rate. "We don't know if that's happening in Kentucky or not, but we need to find out," he said.

He said CVS Caremark has been sending letters to independent pharmacies across the state offering to buy them out. CVS did not make an appearance at the committee meeting.

Rep. Jeff Greer, D-Brandenburg, suggested that CVS was able to buy health-insurance company Aetna Inc. by taking advantage of the taxpayers.

Greer, an insurance agent who chaired the committee when Democrats controlled the House, told Morgan, "I hope you guys are able to get answers and get 'em fast."

"So do we," Morgan replied.

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