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Medicaid Prescription Drug Benefit Management: Performance Comparison Across Different State Policy Approaches
Mar 2022

Summary

States that employ Medicaid managed care organizations (MCOs) to pay for prescription drugs outperform states that rely on the fee-for-service (FFS) setting to control drug costs.  Despite larger rebates in FFS, MCOs’ effective strategies to encourage use of less expensive drugs contribute to lower net costs per prescription.

Capitation contracting with Medicaid MCOs is the nation’s primary approach to delivering Medicaid coverage.  Within the pharmacy benefit, over 70% of Medicaid prescriptions nationwide were paid by MCOs in the past several years.  Medicaid MCOs more effectively steer prescription volume to low-cost, generic drugs.

In FFS, states encourage use of brand medications with the largest manufacturer rebates. Yet, states can still achieve the greatest savings through MCOs’ management of the drug benefit. While this report focuses on cost-effectiveness, it is just one factor states may consider when deciding how to manage the Medicaid drug benefit. Clinical outcomes, quality, and provider and beneficiary experience are also important considerations, but are outside the scope of this study.

 

Powerpoint Summary Presentation

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Assessment of Kentucky’s Medicaid Managed Care Program Impacts
Nov 2021

Summary

Introduction The purpose of this study is to assess the impacts of Kentucky’s Medicaid managed care program. The key components of this assessment include:
  • Cost impacts of the Medicaid managed care program across the past two decades
  • Performance on key quality measures
  • Opioid and medication-assisted treatment (MAT) prescription drug usage trends
  • Kentucky’s recent experience with COVID-19 vaccinations
  • Minimum contract requirements for managed care organizations (MCOs) to participate in Kentucky’s Medicaid program
  • Competitive procurement dynamics

Powerpoint Summary Presentation

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Assessment of Medicaid Expansion Impacts
Sep 2021

Summary

The purpose of this study is to compare the US states that have adopted the Affordable Care Act’s (ACA) Medicaid Expansion to the states that have not done so. The Medicaid Expansion makes people with incomes up to 138 percent of the federal poverty (FPL) line eligible for Medicaid. The US Supreme Court ruling in June 2012 made the Medicaid Expansion, originally intended to be nationwide, optional for states. To date, 37 states and the District of Columbia have implemented this Expansion.   We compare a group of states that adopted the Medicaid population, excluding a few states that had, pre-ACA, already covered most or all of this Expansion population, to those states that had not adopted this Expansion through the end of 2019. We compare these groups of states across the Medicaid Expansion timeframe that was available for analysis (typically 2014-2019). Some of the key components of our assessment included: • Health Coverage -- particularly impacts on the size of the uninsured population • Medicaid Costs – overall and at the state and federal level • Deaths in the under-65 population • Employment Levels and Unemployment Rates   This study is an objective analysis of the observed impact of Medicaid Expansion on the number of uninsured, Medicaid costs to both states and the federal government, deaths, employment, hospitals’ financial situation, and other key outcomes. The intent is to help inform the states that have not yet implemented the Expansion about its likely impact, as well as to demonstrate for Expansion states the aggregated impacts that have occurred.

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Assessment of New Jerseys Medicaid Prescription Drug Management Performance and Policy Options
Feb 2021

Summary

The New Jersey Association of Health Plans enlisted the Menges Group to evaluate New Jersey’s Medicaid prescription drug costs and assess the potential impacts of a pharmacy carve-out approach, whereby the prescription drug benefit would be removed from the MCOs’ responsibility and paid for in the fee-for-service (FFS) setting. We also assess the impacts of two potential policy changes, including maintaining MCO responsibility for the prescription drug benefit but requiring the use of the same preferred drug list (PDL) and MCOs’ mandatory use of a single Pharmacy Benefits Manager (PBM) subcontractor.

We estimate that carving pharmacy benefits out of the MCO benefit package will cost the State of New Jersey $51 million in the first year, with cumulative state costs across the first five years of the carve-out totaling $454 million. Additionally, we find that due to a weakened ability to manage drug mix at the “front end,” moving to a uniform DHS-driven PDL will cost the State of New Jersey $3 million in the first year, with cumulative state costs across the first five years totaling $26 million. Finally, our analyses show that a policy approach of requiring all MCOs to use the same PBM is also unlikely to yield savings.

Full Report


Assessment of Common Core Formulary Impacts on Virginia Medicaid Managed Care Drug Spending
Jan 2020

Summary

Virginia began implementing a Common Core Formulary within its Medicaid managed care program in 2017  for CCC Plus members and in 2018 for Medallion 4.0 members. The Virginia Association of Health Plans (VAHP) engaged The Menges Group to analyze the fiscal and programmatic impacts of this policy change. Our tabulations indicate that the change to the Common Core Formulary led to increased net (post-rebate) Medicaid costs of $13.2 million during calendar year 2019, including $5.5 million in additional state funds.

Full Report


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