IPC Ohio Members: KEY Breakthrough on OH MCO Below Cost Payments

Aug 16, 2018

OH Medicaid Orders All Ohio MCOs to Terminate PBMs Using Spread Pricing;
Must Switch to Pass Through Pricing PBM Contracts
Creates Big Improvement Opportunity for MCO Pharmacy Reimbursement

IPC's effort in conjunction with the Ohio Pharmacists Association (OPA) and other pharmacy industry stakeholders, plus unrelenting press exposure from the Columbus Dispatch, and efforts from our OH Legislative allies, has resulted in positive action. This action is geared towards ending the spread between below acquisition reimbursement to Ohio pharmacies for MCO prescriptions claims and the charges to Ohio to pay for those claims, skimming hundreds of millions of dollars off the program through previously-hidden spread pricing tactics.

This week the Ohio Department of Medicaid directed the state's five managed care plans to terminate all contracts with all PBMs. The state will switch to a pass-through pricing model on Jan. 1, 2019, which allows Ohio Medicaid, Ohioans and all market participants to see exactly what is paid out for all pharmacy transactions. Finally, at least in this one program, we will have complete transparency.

"The black box will effectively be eliminated."
- Patrick Stephan, Ohio Department of Medicaid

Next steps require Ohio Medicaid and the plans to now:

  • Design the new pass-through pricing program ahead of the annual Medicaid managed care rate setting process in November;
  • Conduct the actuarial analyses necessary to achieve budget neutrality;
  • Complete Ohio Medicaid's annual survey of pharmacy dispensing costs as required by Ohio Revised Code 5164.752; and
  • Update PBM contracts as needed and provide sufficient time for contract negotiations.

Details as to how this will happen are unclear at this point and IPC will continue to work with OPA to ensure the new contracts provide cost basis payments to pharmacies as occurs under Ohio Medicaid's fee-for-service system and that all formulary and claims reimbursement transitions are seamless to pharmacies and their MCO patients.

Today, the Ohio State Auditor released his own report (click HERE to read) to the Ohio Legislature criticizing Ohio MCO PBMs lack of transparency and spread pricing that negatively affects Ohio Medicaid patients, taxpayers and pharmacy providers. Also Ohio Attorney General Mike DeWine recently announced his intention to sue PBMs in an effort to demand accountability. We have many advocates for cost based MCO prescription payments to pharmacies in the Ohio Legislature led by Rep. Scott Lipps. Please keep contacting your Ohio State Senator and Ohio State Representative with examples of below cost MCO prescription reimbursement by Caremark and Optum. Their continued legislative involvement and oversight is critical to having Ohio Medicaid ensure that these new MCO prescription benefit contracts are truly transparent.   

Click HERE for legislator contact info based on your zip code. 

IPC thanks all Ohio members for their involvement in fighting for this change.

Questions or Concerns? Contact IPC's Government Relations Team at: [email protected].