Smart Prescription Purchasing Initiative Overview
The Department of Public Welfare can save Pennsylvania taxpayers $100 million a year by paying lower prices on prescription drugs for children and families who get their health care through the Medicaid program. Drug purchases currently are split between seven Medicaid managed care organizations (MCOs), putting them in a weak bargaining position with the big drug companies. MCOs also miss out on another chance to get good prices because they are not eligible for the rebates available to the Medicaid program. Under federal law, only DPW can get those rebates.
The state can negotiate rates that are 30 percent lower than the average price paid by the MCOs. This price chart demonstrates potential savings: Medication
MCO price DPW
Opponents are attempting to block this important change by making false assertions about the impact.
Opponents falsely claim that DPW will be involved in patient care if they take over paying for pharmacy. The facts are: • consumers will continue to go to the same doctor, • doctors will continue to prescribe medications, and • consumers will fill their prescriptions at the same pharmacies. The major change is that pharmacies will submit their claims to DPW instead of the MCOs. The bill payer doesn’t affect patient care.
DPW will deliver a statewide, unified program that simplifies rules for pro-viders and offers more choice to consumers: • One Preferred Drug List with more brand name drugs than MCOs currently offer• One set of operational procedures to submit claims• One set of procedures for prior authorization and • One set of guidelines to determine medical necessity of drugs that require prior authorization.
Currently, prescribing providers must keep track of multiple MCO for-mularies and requirements for prior authorization and pharmacies must follow multiple MCO claims submission procedures.
The major change for prior authorization is the phone number. Today when prior authorization is required, doctors call MCOs or their pharmacy subcontractor. Under the new plan, they will call DPW’s pharmacy staff instead. Drug copays will remain affordable. The maximum co-payment for a pre-scription drug is capped at $1 for generic prescriptions and $3 for brand name drugs, far below most private plans.
The MCOs assert that if DPW becomes the payer of claims, case man-agement will suffer. However, case management will not change. Under DPW’s plan, MCO case managers and clinical staff will have real time ac-cess to pharmacy claims information and patient claims histories at their desktop computers. Millions of people get their health care through Medicare, Preferred Pro-vider Organizations and other MCOs without ever thinking about the fact that a different group is responsible for pharmacy. State employees al-ready have the pharmacy benefit carved out from health insurance with no reported concerns. The fact that the seven Medicaid MCOs manage both health and pharmacy is the exception not the rule. Pennsylvania has the experience and expertise to process pharmacy claims. Between Medical Assistance and the PACE/PACENET programs for older Pennsylvanians, state government processed 22.7 million claims worth nearly $800 million in the last budget year. That amounts to over 62,000 claims per day – including weekends and holidays. DPW alone cur-rent manages pharmacy services for 800,000 consumers.
Twenty states have gone before Pennsylvania in fully or partially removing pharmacy from their Medicaid MCO contracts. Those states are: WashingtonOregonCaliforniaNevadaUtahTexasNebraskaIowaIllinoisMichiganTennesseeNew YorkNew JerseyHawaiiWisconsinDelawareMarylandWest VirginiaSouth CarolinaFlorida



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