Pharmacists in Pennsylvania say they get paid less for drugs dispensed to Medicaid patients • Pennsylvania Capital-Star

As of October 1, pharmacists across Pennsylvania will receive less money to reimburse certain medications they dispense to Medicaid patients. In some cases, they would even lose money compared to the cost of stocking the drugs.

The amounts varied in individual pharmacies and were often small but significant.

“Two percent for a $5,000 HIV drug is a lot of money,” said Rob Frankil, executive director of the Philadelphia Association of Retail Druggists. “All of a sudden you went from a $20 profit to an $80 loss.” Frankil noted that not all pharmacies were affected.

The change was the result of a complicated maneuver involving some of the largest providers of health care services to Pennsylvanians on Medicaid, the managed care organizations — companies or plans hired by the state to build networks of health care providers and reduce health care costs possible – Amerihealth Caritas and Keystone First as well as the pharmacy benefit manager PerformRX.

Pharmacists and the state Department of Human Services say the change should never have been allowed under the terms of their state contracts.

A spokesperson for the Department of Human Services said its agreement with Amerihealth Caritas and Keystone First requires the agency’s approval of any changes to pharmacy reimbursement rates. The agency “has not agreed to a change in Amerihealth Caritas/Keystone First rates.”

The DHS spokesperson added: “We have issued a corrective action plan” which would require insurance companies to revert to their old reimbursement rates and reimburse pharmacies for anything lost since October 1st.

A spokesman for Amerihealth Caritas said the company notified DHS before the rate change, which it said was consistent with its contractual requirements.

“We are working with DHS, our partner in serving millions of Pennsylvanians over the past 40 years, to provide additional clarity and determine the best path forward,” the spokesperson added.

Frankil said pharmacists have not seen any reimbursement or change in reimbursement rates.

More than 140 pharmacies closed in Pennsylvania last year, according to pharmacy trade groups. They largely blame unsustainable drug reimbursement rates.

A contract for a contract

To put it in simple terms, when a Medicaid patient picks up a medication at a pharmacy, they may pay a copay or nothing at all. The rest of the cost of the medication is covered by the insurance company, which hires a middleman called a “pharmacy benefit manager” to reimburse the pharmacy.

Pharmacies have dozens of different contracts with pharmacy benefit managers. For any insurance plan they accept, they likely have a contract with a pharmacy benefit manager hired by that insurance company.

Pharmacists say they are often at the whim of these pharmaceutical middlemen when it comes to the terms of the contract. “Take it or leave it” is a term commonly used by pharmacists to describe them. But there should be certain guardrails when dealing with Medicaid. For example, insurance companies that offer Medicaid plans must seek approval from the state if it changes the way pharmacies reimburse their patients’ medications.

None of the changes will affect drug costs for Medicaid patients.

Recipe for trouble: Pennsylvania pharmacists say PBMs are driving pharmacy closures

The Department of Human Services told the Capital-Star that while the agency was notified, it did not approve Keystone First and Amerihealth Caritas’ Oct. 1 rate change. These two companies insure together approx. 35% according to the state’s most recent Medicaid enrollee enrollment report. They also use the same pharmacy benefit manager, PerformRX. All three companies are connected through the same parent company, BMH LLC.

According to an AmeriHealth spokesperson, PerformRX has not changed the terms of its contracts with pharmacies. Instead, it paid another pharmacy benefit manager, OptumRX, to “rent the OptumRx retail pharmacy network.”

What does that mean? Remember that pharmacies have many contracts with many pharmacy benefit managers. And basically, PerformRX believed that OptumRX had a better contract and, in many cases, paid pharmacists less for the same medications. So PerformRX struck a deal to effectively take over OptumRX’s contracts and pay pharmacists who lowered reimbursement rates.

The Amerihealth Caritas statement offers more jargon than clarity. “This transition allows us to leverage OptumRx’s pharmacy contract terms and offer competitive pricing and cost savings while ensuring convenient, accessible and high-quality care for members,” AmeriHealth Caritas said in a statement to the Pennsylvania Capital-Star.

Frankil, a former State Board of Pharmacy board member and leader of a pharmacist trade group, said he had never heard of the practice of network leasing.

“That’s not how it’s supposed to work,” he said. “That’s just not how it works and it’s very, very wrong in my opinion.”

In August: Auditor General Tim DeFoor published a damning report arguing that the Department of Human Services failed to supervise pharmacy benefit managers and monitor its contracts with Medicaid managed care organizations.

Pharmacy benefit managers have also been a target of Gov. Josh Shapiro, who endorsed a bipartisan bill aimed at curbing them.

The auditor general’s report alleged that the Department of Human Services told DeFoor that it had little authority when it came to reining in the middlemen, something his office disagreed with. However, in this case, the Department of Human Services says the problem lies with the managed care organizations, which have agreed not to take any action that would result in changes to pharmacy reimbursement rates.

Federal regulators have also investigated pharmacy benefit managers, and some lawmakers are doing the same calls on them to expand their investigation.