comm of ky 300KENTUCKY (6/13/19) — A state agency has responded to questions about independent pharmacies claims that pharmacy benefit managers are being unfair about Kentucky medicaid reimbursements to independents versus reimbursements to PBMs.

SurfKY News has published several stories from the point of view of local pharmacists and asked for comments and information from the state Attorney General's Office, which has yet to respond. A response to inquiries made to the Governor's Office and relayed to the Cabinet of Health and Family Services was received yesterday.

The primary inquiry involves what pharmacists claim are “unfair advantages” between what independents are reimbursed compared to PBMs. Certain independent pharmacists have said that some Medicaid prescriptions are reimbursed to them as low as 45 cents while a PBM gets $5.

Some independent pharmacists claim the PBMs reimburse their own chain and mail order pharmacies at a greater rate than the independents. Independent pharmacist Dr. Gregg Henry of Sacramento has been leading the fight against the PBM, Caremark, which owns CVS pharmacies and what he calls “profiteering”.

The response from the office of CHFS addressed the disparity.

“Kentucky’s Department for Medicaid Services (DMS) is aware of “spread” pricing contracts between managed care organizations (MCOs) and pharmacy benefit managers (PBMs). The difference in the rates between what the MCO pays the PBM and the amount the PBM pays the pharmacy is kept by the PBM and is referred to as the “spread.” In February, DMS and the Office of Health Data and Analytics released a report titled “Medicaid Pharmacy Pricing: Opening the Black Box,” said CHFS spokeswoman Christina Mora Dettman.

The CHFS response also included the Department for Medical Services recommendations on a fix.

“One of the eight recommendations provided by DMS included the removal of 'spread' pricing contracts and allowing only pass-through, or transparent, contracts. Additionally, DMS recommended prohibiting any retrospective recoupments from pharmacies by PBMs after listening to the concerns independent pharmacists brought to our attention. DMS is currently conducting an analysis to measure the fiscal impact of a pharmacy benefit carve-out from managed care and a move to the fee-for-service model,” Dettman wrote in her response.

Henry said during a town hall meeting in Sacramento that Caremark, which is the PBM for Wellcare that manages state Medicaid, cut his reimbursements by $3,000 during a five-week period. He alleges the cuts violate SB 5.

Dettmen addressed SB 5 and what she believes as affording DMS more leeway in oversight.

“Last year’s passage of Senate Bill 5 has provided DMS the ability to more closely monitor the actions of PBMs in the state. With it comes many challenges around the payment for prescription medications and reimbursement rates to pharmacies. DMS is working with our MCOs, PBMs, and the pharmacists in our state to ensure transparency and appropriate adherence to the legislation passed,” she said.

Rita Dukes Smith
SurfKY News Director



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