Skip to main content
Sister Publication Links
  • ESG: THE NEW IMPERATIVE
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • Current News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Digital Health
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Awards
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
    • Women in Healthcare
    • - Luminaries
    • - Top 25 Diversity Leaders
    • - Leaders to Watch
    • - Luminaries
    • - Top 25 Women Leaders
    • - Women to Watch
  • Events
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Custom Media Event: ESG Summit
    • Transformation Summit
    • Women Leaders in Healthcare Conference
    • Social Determinants of Health Symposium
    • Leadership Symposium
    • Health Care Hall of Fame Gala
    • Top 25 Women Leaders Gala
    • Best Places to Work Awards Gala
    • Top 25 Diversity Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain Revenue Cycle
    • - Hospital at Home
    • - Workplace of the Future
    • - Strategic Marketing
    • - Virtual Health
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Medicaid
April 09, 2021 04:47 PM

Ohio to save $240M in Medicaid drug costs by running its own PBM

Nona Tepper
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Modern Healthcare Illustration / Getty Images

    Ohio officials expect that consolidating the seven private pharmacy benefit managers that run its Medicaid managed-care system into a single, state-regulated PBM will save more than $240 million every year. The change will go in effect starting in early 2022.

    Officials will administer PBM services through Gainwell Technologies, a state-regulated PBM that will replace the seven PBMs currently operating in the managed-care system. A pharmacy pricing and audit consultant will help state officials make decisions with regard to in-network providers, pharmacy reimbursement and more.

    Ohio Department of Medicaid Director Maureen Corcoran declined to name the consultant working with Ohio.

    "There's too much about the PBM world that is not transparent," she said. "There's too many opportunities for conflicts of interest. There's too many opportunities for decisions to be made based on profit, and rebate amounts, and things like that, rather than the best interest of the consumer."

    The state is reforming its $20 billion Medicaid program after its Legislature told Medicaid officials to account for the $224 million "black box" paid to PBMs each year. Corcoran blamed PBMs' spread pricing policy for causing the department to lose track of funds. Spread pricing is when a PBM charges a payer more than it reimburses the pharmacy for a specific drug and retains the difference. The state has since switched to a pass-through drug pricing policy, which requires PBMs to charge payers the same amount that they reimburse pharmacies, along with a set administrative fee.

    "There was a variety of different kinds of financial decisions that were being made that were not apparent even to the managed care plan," Corcoran said. "They were causing the PBM to be able to take a great deal of profit."

    Now, the state has decided to ditch private PBMs altogether.

    The state-run PBM will technically serve as another managed care plan, which will allow officials to engage in value-based payment programs with providers. While many other states have carved PBM services out of their managed-care contracts, Corcoran said most end up paying PBMs under a fee-for-service model. Tennessee is the only other state that runs their PBM through a capitated payment model, she said.

    The consolidation to a single vendor is expected to save Ohio's Medicaid agency $128 million the first year and, after that, $184 million each year compared to the current system, Corcoran said. The state is also implementing a unified preferred drug list to help ease the administrative burden providers face when dealing with multiple patients under multiple insurance policies. By mandating which drugs are covered under Ohio's Medicaid program through a single program, Corcoran expects to cut $60 million from the nearly $4 billion the state spends on medication each year, since it will help Ohio officials optimize drug rebates.

    "All Medicaid departments are wrestling with how to get the best value and to have adequate transparency so that you know what's going on with the money that's being spent on the program," Corcoran said.

    In addition to switching to a single PBM, the Ohio Department of Medicaid also announced it had chosen six companies to run its $20 billion Medicaid program. UnitedHealthcare, Humana, Molina Healthcare, Anthem and Caresource affiliates all won contracts, along with AmeriHealth Caritas Ohio.

    The state is deciding on a bid from Centene over allegations that its Buckeye Health Plan affiliate used a "web of subcontractors" to obscure drug costs and fleece the state's Medicaid program out of millions in pharmacy benefits. Earlier this week, Centene wrote in a legal motion that Ohio Attorney General Dave Yost lacks a "basic understanding" of how the state's Medicaid program works. Centene did not respond to an interview request.

    An attorney for the Ohio Department of Medicaid said officials are engaging in additional consideration concerning Centene's application to run the managed-care program, which scored the second-highest among the bids received. He declined to comment on when the Medicaid department would have a decision on the award. Companies that receive the contract will be in charge of managing care for Ohio's more than 3 million lower-income adult and children Medicaid enrollees.

    The Mississippi Attorney General is also investigating a Centene subsidiary for allegedly obscuring and overcharging the Mississippi Department of Medicaid by millions of dollars in drug costs.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    mom_with_baby_getty_i.jpg
    States extend Medicaid for new mothers — even as they reject broader expansion
    Medicaid weighs attaching strings to nursing home payments to improve patient care
    Medicaid weighs attaching strings to nursing home payments to improve patient care
    Sponsored Content
    Daily Dose Newsletter: Sign up to receive a late afternoon weekday roundup of that day’s breaking news and developments in healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Digital Health
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Nominate/Eligibility
      • 100 Most Influential People
      • 50 Most Influential Clinical Executives
      • Best Places to Work in Healthcare
      • Excellence in Governance
      • Health Care Hall of Fame
      • Healthcare Marketing Impact Awards
      • Top 25 Emerging Leaders
      • Top 25 Innovators
      • Diversity in Healthcare
        • - Luminaries
        • - Top 25 Diversity Leaders
        • - Leaders to Watch
      • Women in Healthcare
        • - Luminaries
        • - Top 25 Women Leaders
        • - Women to Watch
    • Events
      • Conferences
        • Transformation Summit
        • Women Leaders in Healthcare Conference
        • Social Determinants of Health Symposium
        • Leadership Symposium
      • Galas
        • Health Care Hall of Fame Gala
        • Top 25 Women Leaders Gala
        • Best Places to Work Awards Gala
        • Top 25 Diversity Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain Revenue Cycle
        • - Hospital at Home
        • - Workplace of the Future
        • - Strategic Marketing
        • - Virtual Health
      • Webinars
      • Custom Media Event: ESG Summit
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing