Click on State for Medicaid Pharmacy Savings

States, Federal Government Could Save $33 Billion by Managing Medicaid Pharmacy More Like Medicare and Commercial Sector Programs

Medicaid pharmacy could save $33 billion over the next decade by transitioning from the current approach used by state Medicaid fee-for-service (FFS) programs to the more efficient approaches used by Medicare Part D and commercial sector plans, according to a recent study.

Many state Medicaid programs pay too much for prescription drugs because they use an archaic, fee-for-service approach in which state officials set payment rates and are therefore constantly lobbied to inflate them by special interests. To avoid this trap, most non-Medicaid drug benefits programs – like those offered by Medicare, employers and unions – rely upon independent, third party pharmacy benefit experts to negotiate competitive rates with pharmacies. These programs also reduce costs by employing cutting-edge, market-proven strategies to increase the use of generic medications.

Recent polling finds voters would rather modernize Medicaid pharmacy than cut benefits for patients or payments to doctors and hospitals. Transitioning to a more efficient and affordable pharmacy benefit model could save states billions without limiting access, the National Center for Policy Analysis (NCPA) announced in a new white paper, "Increasing the Cost-Effectiveness of Medicaid Drug Programs."