With Big Changes to Medicaid Looming, Ohio Pharmacists Complain About Lack of Details

The Ohio Department of Medicaid plans to dramatically change the way it does business in July, but a group that helped spur the reform effort says some basic details weren’t provided.

Some members of that group, the state’s community pharmacists, say those details could determine whether they can stay in business — and whether some small towns become pharmaceutical wastelands.

Last summer, the Medicaid Department launched the largest public tender in state history, awarding $22 billion in five-year contracts to six managed care companies. One of the goals of the exercise, officials said, was to refocus the program around individual clients and their health.

The state issued another billion dollar contract with Aetna to create a continuum of care for 60,000 Ohio children with complex behavioral needs. Under the current, disjointed system, some parents have to turn their children over to the state to get them the care they need.

And the reforms aim to dramatically change how the Medicaid program pays for prescription drugs.

As early as 2016, independent pharmacists in Ohio and other states complained that underreimbursement of Medicaid drugs was driving them out of business. Medicaid managed care companies have hired middlemen known as pharmacy benefit managers to handle transactions, and pharmacists have accused the middleman of starving them while defrauding taxpayers.

Pharmacy benefit managers, or PBMs, say they use their size to negotiate steep discounts from drugmakers, which they say pass on to consumers.

But the transactions aren’t transparent, and a state audit found that in 2017, PBM CVS Caremark and OptumRx charged Ohio taxpayers nearly a quarter billion dollars more for Medicaid drugs than they reimbursed the pharmacists who dispensed them. An investigation by The Columbus Dispatch also found that CVS was sending letters to independent pharmacies acknowledging that reimbursements were down and offering to buy them back.

After several attempts at legislative corrections, the Medicaid department is now trying to increase transparency by having the drug middleman – the PBM – work directly for it. Instead of being able to hide behind a contract with a managed care organization, the new arrangement will give the state full visibility into discounts collected, fees charged and reimbursements made by the new single PBM.

Instead of being based on a non-transparent and ever-changing reimbursement schedule, the Medicaid department is now trying to offer a public list of the prices it will pay for drugs, plus a dispensing fee to cover pharmacists’ costs.

The problem is, according to some pharmacies, the state still hasn’t specified the price list it will use or the dispensing fee it will pay.

“We know that what we have received over the past five years is not viable, based on all the pharmacies that have had to close,” said Lynne Fruth, president of Fruth Pharmacy, a chain that operates pharmacies. small towns in Ohio, Kentucky and West Virginia.

Fruth closed his Nelsonville pharmacy operation in 2019, saying 50% of his clientele were Medicaid patients and the program’s paltry reimbursements made it impossible to stay in business.

Now Fruth is frustrated that she can’t get information from the Medicaid department that will help her keep the company’s 10 other Ohio pharmacies running.

“The biggest problem is not being able to get anyone to tell us what (the refunds) will be,” Fruth said.

The Medicaid department has said more transparency is the goal of pharmacy reforms, and director Maureen Corcoran spices up her public statements with that word. However, the department frequently ignores requests for comment from the press, including for this story.

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