It’s a Managed World, After All.

With much fanfare, anticipation, anxiety and expectancy, March 1^st hales the beginning of Medicaid Managed Care in Texas.  We’re certainly not the first state experiencing this transition; many have come before us and lit the path.  But because it’s happening to US, this change is much BIGGER and MORE IMPORTANT than any state has experienced prior to NOW.

Texas’ expanded Medicaid Managed Care Organizations will provide incentive payments for health care improvements, monthly stipends to physicians for coordinating patients’ care (including preventative care, acute care, and hospitalization), and direct more funding to hospitals that serve large numbers of uninsured patients.  Communities and hospitals will form regional health partnerships that support more localized health care solutions, and the partnerships will qualify for incentives by identifying ways to improve health services in their region.

Under MCOs, Texas pays a set fee each month to a health plan to provide care for the Medicaid client, who selects a primary doctor from the plan’s network to coordinate his or her care.  MCOs boast more coordinated and efficient patient treatment and by their calculation Texas is expected to save about $100 million over the next two years.  Patients are being assured “benefits will not be cut to those in need” and MCO’s are looking for even more populations to enroll in an effort to save everyone more money.  Wink, wink.

Prescription drug benefits for Texas’ 3,313,960 Medicaid patients will be delivered through Pharmacy Benefits Managers with a state-approved formulary.  A recent study showed that Texas’ dispensing fee under the Medicaid/Vendor Drug Program-administered prescription plan was among the highest in the country, although pharmacies were paid less of the product cost.  According to a coalition of Texas pharmacists, the dispensing fee per prescription is predicted to fall from about $6.50 with VDP system to as little as $1.35 with the new PBM system.

Many things are confusing but this nugget jumps to front of mind: adding multiple for-profit MCO and PBM middlemen will probably increase total healthcare costs.  Why would Texas want to surrender day-to-day management of prescription drug plans to the most highly litigated and highest profit-margin vendors in health care - PBMs?

A quick Google search showed PBM Express Scripts 2010 net income of $1.2 billion, an increase of 82%; 2011 net income reached $1.3 billion, an increase of 8%.  PBM SXC Health Solutions 2011 revenue was $5 billion, a 42% increase from 2010.  PBM Medco’s 2011 net revenue was $19 billion, an increase of 12.2% from 2010.

A final thought:  Americans have been fighting the good fight, but many are still feeling the residual effects of the recession that began in late 2008.  It’s impossible to calculate the number of people who left prescriptions go unfilled because money was needed for other things.  Millions are trying to make their way in this new economy, and we see proof of that every day in our stores.  Meanwhile PBMs are posting record profits and MCOs are promising to save everyone more money.  But at what cost to the patient?