Association of Community Affiliated Health Plans

A coalition of Medicaid Focused Health Plans contracted with The Lewin Group to analyze the impacts of allowing Medicaid managed care organizations (MCOs) to have access to the Medicaid drug rebate on a voluntary basis. Since its inception in 1991, the federal rebate program has applied only to Medicaid fee-for-service programs. Currently, Medicaid MCOs must enter into separate negotiations with drug manufacturers, either directly or through their contracting pharmacy benefits managers (PBMs), in order to obtain rebates. The proposal being explored would allow participating health plans to continue to pay for the ingredient costs of drugs as they do currently, but rebates would no longer be a negotiable item with the manufacturers or with the health plans’ pharmacy benefits managers (PBMs). Instead, Medicaid health plans would receive the same level of rebate available to state Medicaid fee-for-service programs. The report describes the potential trade-offs of the proposal and looks at its potential financial impact.

"Throughout the engagement, Lewin consultants listened to us and delivered superb analyses and thoughtful guidance–not canned solutions."  NONPROFIT HEALTH SYSTEM