Budget Article VII (S.2809-B / A.4009-B, Part H)


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Budget Article VII (S.2809-B / A.4009-B, Part H)


Medicaid Recommendations related to fee-for-pharmacy reform and bundled pharmacy reimbursement into Medicaid Managed Care



The Business Council of New York State opposes those elements of Part H of the Health Article VII bill related to fee-for-pharmacy reform and bundling pharmacy reimbursement into Medicaid Managed Care. The Business Council supports most of the proposals advanced by the Medicaid Redesign Team. These two elements related to pharmaceuticals are being advanced as Medicaid reforms but represent more conventional targeted cuts to providers and a one-size-fits-all approach to health delivery that runs contrary to evidence-based research on how to ensure quality care, quality outcomes, and cost effectiveness.

Data shows that Medicaid pharmaceutical cost controls already in place have had their desired effect.  When a generic drug is available, 95% of the time it is prescribed.  As a result, pharmaceutical spending within Medicaid – after the $1.5 billion in rebates biopharmaceutical manufacturers contribute to offset the cost of Medicaid – is less than 5% of the state’s $54 billion Medicaid budget.

Employers have learned that valued based insurance design is a powerful tool that shifts the focus from the cost of care to the total value of care.  Value based plan design focuses on improving health by increasing patient access to supplies and services to yield improved health outcomes.  It is an approach that identifies and manages risks to attain two important and related goals:  clinical outcomes and saving money.  Employers managing their health insurance products based on outcome data know that cost savings is not the same thing as cost effectiveness.  

The two MRT recommendations regarding pharma purport to save money but do not weigh cost effectiveness and clinical effectiveness.  While other recommendations within the MRT put a heavy emphasis on increasing access to care management and to expanding the use of patient centered medical homes to improve overall patient outcomes, these two pharmaceutical recommendations take a one-size-fits-all approach by pre-determining which types of drugs can and cannot be prescribed (particularly patent protected medicines); by requiring prior approval for certain drugs not on the preferred drug list; and by limiting a physician’s ability to prescribe the most effective drug for a particular patient’s diagnosis. Finally, by including within the recommendation additional “rebates”, the recommendation merely provides a means by which “savings” can be generated through the imposition of an industry-specific tax, thereby sidestepping any true “redesign”. 

These pharmaceutical recommendations run contrary to the goals of other recommendations within Part H designed to move toward a redesigned Medicaid program.  The pharmaceutical recommendations seek to generate short term savings without any true Medicaid redesign and are likely to come with long term costs to the system and the patient.  

For these reasons, The Business Council opposes those recommendations within Part H that seek to bundle the pharmacy reimbursement within Medicaid managed care and which seek to impose fee-for-service pharmacy reforms.