Kentucky Political News Headlines

Tuesday, July 30, 2019

July Medicaid Oversight and Advisory Committee

The Medicaid Oversight and Advisory Committee met in Frankfort for the first working meeting of the Interim. Senator Meredith chaired the meeting and the agenda included an update on pharmacy reimbursement issues and a presentation by Department for Medicaid Services (DMS) on SB 5 implementation and new MCO contracts. Here are the takeaways:

Throughout her comments, Commissioner Steckel focused on the positive steps that DMS has taken to work with independent pharmacies. She said that the Department has a “new found spine” and will not let the MCOs and PBMs “run us over”.  Steckel referred to “predators” during parts of her testimony, referring to PBMs and on several occasions stressed that she does indeed have authority over the MCO subcontractors, a different position from her predecessor.

Additionally, Steckel shared that DMS’s next priority is to begin looking into acquisition costs balanced with dispensing fees.

See the summary below by issue:

Carve-out – It’s still a topic of discussion among legislators. There were several comments that there’s still time to consider ahead of the new contract start date of July 1, 2020. DMS does not intend to weigh in on this issue.  They are working on a study similar to West Virginia to determine if savings would be realized if pharmacy is managed by the state. Myers and Stauffer and the DMS FFS PBM, Magellan, are working together to assist with the study. It will be complete by early fall at the latest. According to the Commissioner, it will be objective and DMS will “stand down” on this issue.

If DMS authority is not sufficient under SB 5, the pharmacists suggested that DMS could directly administer the pharmacy benefits and/or comprehensive PBM reforms.

Fees – There was lengthy discussion on post adjudication fees – DIR, GER, etc. The new MCO contracts will prohibit these fees but we should anticipate legislation to the do the same. The pharmacists told members that since 2013 these fees have increased 45,000 percent. They are being described as a money grab by the PBMs and it’s clear that some sort of education effort is needed to properly explain the processes and reasoning behind each fee.

Contracts – There was a fair amount of discussion by both DMS and pharmacists about PBM requirements related to national contracting and the mandatory participation in Medicaid networks. Both pharmacists and DMS want to prohibit this practice

Specialty Drugs – The pharmacists made claims that in OH, CVS dramatically increased reimbursement for specialty drugs because they benefit through the ownership and mandated use of their specialty pharmacy. Mail order was also mentioned.  Both are issues that have been discussed for years.

MLR – DMS intends to recoup back to 2016 pharmacy funds that were not included as part of claims for purposes of the MLR.

SB 5 MAC rate approvals – Jessin Joseph walked through the process that DMS is working through to monitor and approve rate changes per SB 5. He commented that the intent is to move back to an aggregate approval process in the future.

Other – DMS stated they are looking to move to a preferred drug list to streamline formularies among the MCOs.

A few positives from the meeting:

The pharmacists acknowledged that through working with DMS on SB 5 implementation, reimbursement issues are being addressed.

They acknowledged the positive steps the General Assembly took with the increase in dispensing fees and seemed pleased with the contract requirements included in the RFP for the new MCO contracts to begin on July1, 2020.

The pharmacists shared that in 2017, 9 independents closed, but in 2018 there were 26 new independent pharmacies that opened and 13 more in 2019. This contradicts  previous statements that low reimbursements are continuing to drive independents out of business.

Meeting materials can be accessed HERE