Prescription Drugs: Another Potential Legislative Change Facing Medicaid Insurers

A House bill would force Georgia’s Medicaid managed care insurers to face tougher requirements on how they spend their government’s money.

There’s a second bill that’s also captured their attention — an attempt to wrest control of patient prescription drugs from those health plans.


House Bill 1351 would remove the function of the three managed care companies — Peach State, Amerigroup and CareSource — to oversee drug distribution, placing it instead under state oversight. The bill’s goal is to improve patient care and save the state money, said its main sponsor, Rep. David Knight, a Republican Griffin.

The bill was unanimously approved this week by the House Select Committee on Access to Quality Health Care. The legislation now goes to the House Rules Committee.

The three managed care companies, which oversee the care of more than one million Medicaid members in Georgia, use what are called pharmacy benefit managers, or PBMs. These entities essentially serve as intermediaries between health insurers or large employers and drug manufacturers in the management of pharmaceutical benefits.

These benefits management groups decide which drugs will be placed on an insurer’s list of covered drugs and how much the insurer will pay for them.

Knight has been a staunch critic of PBMs. He told lawmakers on the health care panel on Wednesday that people with cancer or HIV and patients with chronic conditions were referred to remote PBM pharmacies rather than local pharmacies, many of which are in areas underserved.

Stephanie Wells, a stage 4 cancer patient, said she was battling with PBM for better access to her chemotherapy drugs. She told lawmakers via Zoom that she had problems getting her cancer drug delivered. Wells said she would much rather get the drug locally.

“I’m a very stubborn person, so I’m going to keep fighting them,” she said.

Despite state laws against certain PBM practices, Knight said, “the games persist.”

Wells speaking to the House Committee on Wednesday via Zoom

Each year, Georgia pays CareSource, Peach State and Amerigroup a total of more than $4 billion to administer the federal state health insurance program for low-income residents and people with disabilities.

The Georgia Pharmacy Association supports the “carve-out” proposal, saying the current setup puts independent pharmacies at risk.

Phillip Howell, owner of a pharmacy in Calhoun, told the House panel on Wednesday that his pharmacy has lost more than $100,000 in each of the past five years, primarily due to low payments on Medicaid prescriptions that he fills.

Howell Pharmacy in Calhoun

Howell cited a recent case in which he filled an EpiPen prescription for a child. It cost him $300. The managed care company paid him $207 but then charged him a retroactive fee of $150, he said. So he ended up receiving a full refund of around $57, suffering a big loss.

“I’m about to go bankrupt,” he told lawmakers.

According to a consulting firm’s study, Knight said, the most likely scenario under a drug exclusion would save the Georgia Medicaid program $3.9 million.

Jesse Weathington, executive director of the Georgia Quality Healthcare Association, which represents Medicaid insurers, said he doubts a change in the drug program will save the state money.

Pharmacy dispensing fees will rise dramatically if prescription drug coverage is excluded from health plans, said Weathington, whose group opposes the legislation.

Such an exclusion has already occurred in California’s Medicaid program, called Medi-Cal.

Leanne Gassaway, vice president of state government affairs at CVS Health, which has a PBM that serves Peach State, said in a statement that House Bill 1351 “would require Medicaid recipients to Georgia to receive a lower drug benefit and would leave taxpayers on the hook for hundreds of millions of dollars in avoidable health care costs.”

“California’s shift to fee-for-service has disrupted care for millions of recipients and compromised timely access to needed medications,” Gassaway said.

From the Commonwealth Fund

Georgia, she added, “should reject a program that will only harm patients and drive up prescription drug costs.”

In his presentation to the committee, Knight noted that Centene, the parent company of Peach State, had reached multimillion-dollar settlements in Ohio, Mississippi and other states following lawsuits alleging the company had overcharged state Medicaid programs for pharmacy services.

Meanwhile, the three managed care insurers are also grappling with medical spending requirements in provisions contained in a mental health parity bill. The highly publicized House Bill 1013 would set a minimum medical spending level of at least 85% of the dollars Medicaid insurers receive from the program.

GHN and Kaiser Health News reported in September that Georgia is one of the few states that does not impose a minimum level of medical spending and quality improvements on Medicaid insurers.

Weathington recently told GHN that insurers would not object to the 85% threshold.

Another House proposal would require greater public disclosure of Georgia health plans that serve Medicaid patients, state employees and teachers.

House Bill 1276, if it becomes law, would require the state’s main health agency to publish reports showing how many primary care providers an insurance plan offers in a specific county, as well as data on hospital costs and prescription drug expenses from the insurer.

The proposal’s main sponsor, Rep. Lee Hawkins (R-Gainesville), said Weathington had agreed to the bill’s provisions.

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