Friday, September 17, 2010

MDRP 2010 Conference - New Strategies and Opportunities in Medicaid and Medicare Programs

Mary Kay Owens – Southeastern Consultants

As we look further into the new healthcare reform changes the only thing that is clear at this time is that things are very unclear.

One issue being the Take-Back (a.k.a. clawback) provision which is already in place. Will the states use the increase in the prescription volume from the MCOs to negotiate supplemental rebate increases in an effort to recapture the 8% Take-Back amount? Or will they be looking at other options that will help to make up for that “lost” money? In addition, it is uncertain if there will be new methods for calculating pharmacy capitation rates for MCOs.

The managed care end of the business will have various impacts due to the new regulations. Included, but certainly not limited to, being unable to capture existing rebates for the Commercial and Medicaid populations due to the decrease in prescription volume as the rebates shift to the stats.

There is confusion on the increase of the direct and administrative costs. Will the costs go up specifically due to all of the possible system edit changes that could be taking place? And will we see an increase in the renegotiating for those “other” covered population rebate contracts/agreements? One thing is certain; there is an increase in reporting requirements for the states coming down the line. This additional reporting burden will be placed on the staffs that are already faced with increased volumes and complicated cross population issues.

As for the industry there are many additional questions that are still up in the air. Will the new regulations affect the placement of products on not only the MCO formularies, but also the FFS PDLs? And if so, what will be the impact on administrative costs in tracking and working for that placement? Along those lines; how will the access to products be affected? Will there be more restrictions in those changes to placement, including but not limited to, policies for PAs, step therapies, and quantity limits that will be imposed by the state. Again, one thing is for certain; the industry will be seeing increases in costs attributable to the rebates and also in their administrative costs.

These scenarios (and no doubt several others) will be playing out in the next few months as companies/entities gain more understanding of the impacts on them. Be prepared by expecting some shifts to your “responsibility” relationships with other companies/entities in healthcare. I doubt that Newton had the healthcare industry in mind when he came up with his Third Law; but it is certainly true that with these reform actions being placed upon companies/entities, there will be equal and opposite reactions from them.

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