California and North Dakota to Carve Out Medicaid Managed Care Prescription Drug Coverage

Dec 23, 2019
Starting in January with California announcing it would carve out its Medicaid prescription program from their Medicaid managed care program, more states acted throughout 2019 to address MCO PBM abuses that affect patients, taxpayers and pharmacy providers. In May, North Dakota also carved out its Medicaid prescription benefit back into its fee for service program with a budgeted net savings.

This fall Michigan became the third state this year to consider a carve out of prescription claims coverage from Medicaid managed care after a finding that over $64 million in PBM “spread pricing” costs were charged to taxpayers. The change initially was scheduled to go in effect December 1st, but the Medicaid Department has temporarily postponed its implementation. Louisiana and North Carolina also enacted legislative protections against PBM price manipulation by mandating MCO prescription claims be paid and charged to the state at the same Medicaid FFS rate (NADAC and a professional dispensing fee), representing a true Medicaid prescription parity payment system.

New York State, in its enacted budget this year, prohibited MCO PBM spread pricing and has considered Medicaid prescription carve-out legislation, while Texas nearly passed a full Medicaid MCO prescription carve-out bill. Ohio and Pennsylvania are  working on administrative contract changes to move MCO prescription benefits to a more transparent system that eliminates spread pricing. In 2019, at least six other  states (FL, IN, MA, MD, NM and NV) moved to examine or consider legislative or  administrative action to carve out or create a claim “payment parity” structure for  Medicaid managed care prescriptions.

IPC has partnered with pharmacy stakeholders in many of these states to identify the  scope of PBM spread pricing, educate policymakers and bring public attention to the  cost of MCO PBM pricing schemes. It is time we modernize state Medicaid programs  by advocating for transparent and accountable models such as Medicaid prescription
carve outs and payment parity mandates.


  1. 5 Ray Carvajal, R.Ph. 11 Apr
    Please send more information on the cost savings or the projected cost saving that state would save if they where to simply reimburse Medicaid prescriptions on a NADAC plus a professional fee.
    Appreciate you good work..
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