#feeforservice

To decrease costs in its Medicaid Health Plan (MHP), Michigan is carving out pharmacy benefit managers (PBMs) and moving to a fee-for-service (FFS) model for the delivery of prescriptions. In October, the state's Department of Health and Human Services (MDHHS) disclosed that outpatient prescription drug coverage will no longer be a MHP benefit. Starting December 1, 2019, prescription drugs will be provided through a FFS model and the state will contract with a single PBM to bill its health department.

Michigan hopes to save about $10 million in general funds each year under the FFS model. According to MDHHS, these savings will be attained "through a combination of increased pharmaceutical rebates and elimination of related MHP administrative capitation costs. The transition to a single formulary will also result in significantly streamlined administration for Michigan's health care providers and coverage consistency for program beneficiaries."

To allow for a smooth transition for beneficiaries, "MDHHS will partner with MHPs and its PBM contractor by utilizing recent MHP PAs and paid claims data to create system edits. The intent of these edits is to continue the beneficiary's medication coverage that was provided by their MHP and to minimize and/or eliminate PA obstacles during the first three-months of the coverage transition."

In addition, the transition will apply coverage limits and prior authorizations to all program recipients. Members over the age of 21 will incur co-pays starting the first of December. For Rx services, copays will be $1 for preferred and $3 for non-preferred medications.

Healthcare payers and PBMs oppose the decision. They claim that such a move does not align with MHP's goal to provide whole-person integrated care. The decision will increase out of pocket costs and members will not have the necessary overview of their prescriptions.

In January, California's newly elected Governor, Governor Gavin Newsom authorized an executive order to significantly reform health care in the state. Executive Order N-01-19 introduced a number of actions and budget proposals to lower the cost of prescription drugs and health care. One measure, specifically, transitions all pharmacy services for Medi-Cal managed care to a fee-for-service (FFS) model.

Pharmaceutical drugs are one of the primary drivers of growing health care costs. Last year the state's individual market experienced a 10% increase in health care costs and studies indicated the drug manufacturers planned to increase pricing in 2019.

FFS RX BENEFIT

Presently, Medi-Cal acquires prescription drugs with the help of public and private purchasers that negotiate with manufactures independently. Under the FFS model, California would become the largest single payer of prescription drugs and the state would have increased bargaining power to negotiate prices with drug manufacturers.

Governor Newsom stated, "We will use our market power and our moral power to demand fairer prices for prescription drugs. And we will continue to move closer to ensuring health care for every Californian."

RFP # 19-96125

In July, California's Department of Health Care Services released a request for proposals for managing the FFS pharmacy benefit. RFP # 19-96125 is requesting proposals for the takeover, operation, and ensuing turnover of administration of the FFS pharmacy services. Entities including commercial businesses, nonprofit organizations, state or public universities that meet the qualification criteria are eligible for submission.

Hybrid Concierge vs. Direct Pay: ONE Thought for Physicians

In the last year or two, there has been an increase in discussion about the direct pay approach to patient care. Surprisingly,  while there are a lot of stories in the media, physicians aren’t asking us about this model. Doctors seem to understand that this is a model that is hard to realize for existing practices.

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