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States to Get Drug Rebates Even Under Managed Care

Cheryl Clark, for HealthLeaders Media, July 28, 2011

A provision in the Affordable Care Act changes states' incentives on drug plans and represents billions in potential savings for the states, and better coordination of prescription drug usage for Medicaid patients.

Since 1990, state Medicaid programs have not been able to receive federally allowed prescription drug rebates if they turned over their enrollees' drug benefit plans to Medicaid managed care organizations.

So 14 states carved out those drug benefit plans from their managed care plans, and administered the drug benefits themselves. They got the rebate money, but in many cases coordination of patient care involving prescriptions and, frankly, misuse or inappropriate use of some medications, flourished.

Now, a provision in the Patient Protection and Affordable Care Act that took effect last year is changing the states' incentives. It allows those states to still get those rebates even if they turn over Medicaid drug plan operations to those managed care plans, which some say take a tighter look at prescription appropriateness.

At least three states – New York, Texas, and Ohio – have converted or are in the process of converting, according to the Association for Community Affiliated Plans, which represents 58 nonprofit Safety Net Health Plans in 28 states that cover more than 8 million lives. The result, ACAP officials said in a statement, is billions in potential savings for the states, and better coordination of prescription drug usage for Medicaid patients.

"One of the greatest benefits of managed care is its ability to access and analyze pharmaceutical data to enhance care and control costs," ACAP said in a statement. One way that happens is to curb the inappropriate use of drugs, for example, the inappropriate prescribing of antibiotics for patients with viral colds.

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