Ohio Medicaid to try transparent PBM pricing

Ohio’s Medicaid department is directing its managed-care organizations to quit their contracts with pharmacy benefit managers because of opaque pricing practices that officials said cost the state millions of dollars.

The state’s five managed-care plans must strike up new contracts with companies able to manage pharmacy services using a more transparent pricing model by Jan. 1.

The decision comes after an analysis commissioned by the Medicaid department found that the two largest PBMs operating in the state—CVS Caremark and OptumRx—billed managed-care plans $223.7 million more for prescrip- tion drugs than they paid pharmacy providers in one year under a practice known as “spread pricing.”

Ohio Medicaid wants to move to a pass-through pricing model, in which the managed-care plan pays the actual discounted pharmacy price that the PBM negotiated with the retail pharmacy network. Under that model, PBMs wouldn’t be able to keep the difference as revenue. Managed-care plans would be required to pay higher administrative fees to the PBM, however.

Centene-owned Buckeye Health Plan, CareSource Ohio Market, Paramount Advantage, UnitedHealthcare Community Plan of Ohio, and Molina Healthcare of Ohio contract with the state to serve its nearly 3 million Medicaid beneficiaries.