CareSource to change how it pays prescription benefits

CareSource is switching how it decides how much to pay for prescriptions, gaining praise from pharmacists who for years have lobbied for an overhaul of how Medicaid pays them.

Starting February, the Dayton-based insurer will shift how it decides to spend billions of dollars in pharmacy benefits and start using a federal benchmark to base how much it pays pharmacists for prescriptions. Pharmacists said this move brings more transparency and fairness to the typically untransparent pharmaceutical world.

CareSource said the move allows pharmacists to focus more on care and is part of a series of pharmacy reforms the company is in the midst of.

The move also is an example of consensus between pharmacists and CareSource, when for years pharmacists had been criticizing contractors that process Ohio Medicaid benefits, saying they pay pharmacists too little and keep too much of the Medicaid dollars that they manage and aren’t transparent in where the money all goes. The fight over at times obscure insurance policy spilled over into legislative debate and a campaign talking point in past years, with then-candidates Mike DeWine and David Yost promising reforms.

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What CareSource is planning to do in February is start basing prescription drug reimbursement in Ohio on a federal benchmark, National Average Drug Acquisition Costs. It’s compiled by a survey by Centers for Medicare & Medicaid Services.

Ge Bai, a Johns Hopkins professor who has researched drug pricing, said this is the kind of reform she has wanted to see because it uses a better method that makes it less likely that the companies that manage pharmacy benefits will get overpaid by the Medicaid program. The new system means pharmacists are getting paid based on a formula more closely aligned with how much drugs actually cost.

“We advocate that the state Medicaid programs should use NADAC ... the price paid by the Medicaid programs are based on the average wholesale price, the AWP. The problem is the average wholesale price is a very poor measure of the acquisition costs,” Bai said.

The new pricing methodology is the latest in a series of pharmacy overhaul initiatives by CareSource. They recently started a pilot to pay pharmacists for not just filling prescriptions but also providing some clinical services, such as counseling about blood pressure. They also adopted a value-based program with incentives for pharmacies that target medication adherence and patient outcomes. In addition, CareSource has switched from using Caremark to manage its pharmacy benefits to working with Express Scripps on an overhauled approach.

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“This move magnifies the importance of our commitment to local, independent pharmacies by providing both transparency and stability to our critical access providers in order to help us achieve the highest quality of patient care for our members, particularly in rural and underserved patient populations,” said Steve Ringel, CareSource Ohio Market president.

CareSource, a Dayton-based insurance company, covers 1.3 million Ohioans with Medicaid as well as other business lines, and spends around a third of its money on prescriptions. For 2018, a company subcontractor reported managing $1.9 billion in pharmacy benefits.

Dr. Thad Franz, pharmacist at Cedar Care Village Pharmacy, said these business model changes help pharmacists stay in business and provide better care to patients, instead of feeling like they need to push for high volume to stay in business.

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“The reason that most people go into the profession of pharmacy is to care for people. If we’re strapped by the dollar, we can’t do that well. I think this is a huge shift to ward not only getting paid for the product and service we’re trying to provide, but to extend the service that pharmacists really can provide,” Franz said.

Ernest Boyd, executive director of the Ohio Pharmacists Association, said in a statement with CareSource that “it’s no secret that pharmacists in Ohio have been looking for someone to step forward and redesign the pharmacy benefits model for the better."

“Pharmacy is complicated, and it takes a lot of work and motivation to unwind it and fix it," Boyd said. "The Ohio Pharmacists Association applauds CareSource for rolling up their sleeves and building solutions for local providers who serve some of the most vulnerable populations.”

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