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Managed MedicaidFeatured Health Business Daily Story March 19, 2009 President Obama’s Budget Would Extend Drug Rebates to Medicaid Health Plans Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and analysis on the Medicare (and Medicaid) managed care programs. By Judy Packer-Tursman (tursman@comcast.net) A group of safety-net health plans applauds President Obama's 2010 budget proposal on two counts: for seeking to expand health insurance coverage to more Americans, and for proposing to fund this partly by extending Medicaid prescription drug rebates now restricted to Medicaid fee-for-service (FFS) programs to include Medicaid managed care plans as well. Meg Murray, CEO of the Association for Community Affiliated Plans (ACAP), tells MAN that the administration's endorsement of the drug rebate policy for Medicaid plans "gives the policy great momentum." The federal Office of Management and Budget (OMB) "recognized that this was good policy, a significant saver, and did no harm to Medicaid beneficiaries," she says. According to the fiscal year 2010 budget overview issued Feb. 26, the administration estimates that promoting the cost-effective purchase and delivery of Medicaid prescription drugs would put $19.55 billion into the Health Reform Reserve Fund from 2010 to 2019. The steps include increasing Medicaid drug rebate amounts, extending to and collecting rebates on behalf of managed care plans, and applying rebates to new formulations of existing drugs. While there is no breakdown on savings among the three components, Murray notes that last December the Congressional Budget Office (CBO) scored legislation pertaining to drug rebates to Medicaid plans as saving up to $11 billion over the next decade. The Drug Rebate Equalization (DRE) Act (H.R. 904), which was first introduced in 2005, has been reintroduced in the House by Rep. Bart Stupak (D-Mich.) According to Murray, Sen. Jeff Bingaman (D-N.M.) is expected to introduce a companion bill in the Senate as early as the week of March 2. Under the legislation, the states would get the rebates on behalf of the managed care enrollees. Under current law, CMS receives data from the manufacturers on "best price" and Average Manufacturer Price (AMP) each quarter, Murray explains. CMS then calculates the unit rebate amount for the smallest unit of each drug and provides this amount to the states. The state then determines its Medicaid utilization for each drug and reports this information to the manufacturer within 60 days of the end of the quarter. The manufacturer must then compute and pay the rebate amount to each state within 30 days of receiving the utilization data. Under the 2009 DRE bill, plans would submit their utilization data to the state, which would include those data in the amounts that they reported to the manufacturers. States would then receive rebate dollars for both beneficiaries in FFS and managed care. Why does this matter to Medicaid managed care plans? Murray
describes the current system in which rebates aren't given for Medicaid
managed care enrollees as an anomaly in federal law. She notes that
several states, including Ohio, Indiana and Pennsylvania, again are
looking at carving drugs out of the capitation rate to get the federal
rebate. She says the drug rebate equalization legislation would obviate
the need for this and protect plans' ability to perform the care management
that comes with having control over prescription drugs. |
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