Medicaid orders new Medicaid managed care contracts with PBMs

The Ohio Department of Medicaid directed the state's five managed care plans Tuesday to terminate contracts with pharmacy benefit managers using “spread pricing,” a secretive pricing method, and move to a more transparent pass-through pricing model effective Jan. 1 (Source: “Ohio firing pharmacy middlemen that cost taxpayers millions,” Columbus Dispatch, Aug. 14, 2018).

"It will provide volumes of transparency," said Patrick Stephan, director of managed care for the Department of Medicaid. “The black box will effectively be eliminated.”

The state's leading PBM, CVS Caremark, "is working with our clients (the managed care plans) to update our contracts moving forward," said company spokeswoman Christine Cramer. CVS uses pass-through pricing in several other state Medicaid programs.

Auditor Dave Yost on Thursday released the results of a separate investigation that concluded that the state should hold off on changes to PBM contracts (Source: “Ohio Medicaid drug audit calls for transparency, highlights pharmacy closures,” Columbus Dispatch, Aug. 16, 2018).

"I'm not sure that the remaining cost controls in the long term will be effective and that's why I'm calling for today a freeze for a few months and a robust analysis," Yost told the Joint Committee on Medicaid Oversight. "We would be foolish indeed to discard the current system, which is providing some measure of cost control, for greater transparency — but significantly higher costs."