Medicaid in need of transparency and oversight

Ohio’s tale of drug-price excess just got about $20 million uglier.

We already knew pharmacy benefit managers — middleman companies handling the prescription-drug benefit for Ohio’s Medicaid program — overcharged taxpayers by anywhere from $149 million to $186 million.

Now we learn that one of the state’s Medicaid plans hired a second middleman, which soaked up another $20 million in taxpayer dollars for “services” that sound awfully redundant. That this second middleman, Envolve, has the same corporate parent as Buckeye Community Health Plan — the private Medicaid managed-care company that hired it — stinks to high heaven.

To review: Ohio’s Medicaid program contracts with five private managed-care organizations to act as insurance companies to Ohio’s 3 million Medicaid recipients. Those companies then hire PBMs for drug claims.

CVS Caremark, a PBM owned by the pharmacy giant, has been hired by four of the five plans; the other uses OptumRx.

Thanks largely to complaints from independent pharmacists and reporting by Columbus Dispatch journalists, it has been revealed that PBMs were charging taxpayers far more per prescription than is typical in the private sector.

They could do this unnoticed because terms of the contracts between the PBMs and the managed-care plans were secret; no one knew that the PBM was in many cases charging taxpayers high prices for certain drugs but reimbursing pharmacists a much lower amount and pocketing the difference.

State officials initially discredited the suggestion of a problem. Under public pressure, they commissioned a study which found that the PBMs were charging a premium of $5.60 to $6.50 for each prescription they processed, far above the 90 cents to $1.90 industry average.

The same contract secrecy apparently allowed Buckeye Community Health Plan to hire its corporate relative, Envolve, to perform “utilization management, specialty management, data analytics, drug utilization review and formulary management” — the same things it hires CVS Caremark to do.

The companies say that they aren’t doing the same things — that each focuses on different tasks. Still, Buckeye’s average fee per prescription filled, at $11.60, was almost twice that of the plans that didn’t use a second PBM.

We’re glad that HealthPlan Data Solutions, the Columbus consulting firm hired to audit the Medicaid drug program, has uncovered these glaring problems. The $50,000 cost appears well spent.

It is troubling, however, that state officials opted not to disclose the Envolve payment when parts of the report were released.

When reporters spotted the apparent redundancy in the report and asked about it, officials at first downplayed the issue.

Since then, a Medicaid spokesman has allowed that the arrangement might have some “inefficiencies” and that Centene, the parent company of Buckeye and Envolve, might be in line for more scrutiny when new contracts for Medicaid managed-care plans are reached in 2019.

The state has pledged to make next year’s Medicaid contracts, including subcontracts reached with PBMs, transparent. That is, indeed, the best way to enable public oversight and prevent the appalling self-dealing that has gone on out of public view.

But public confidence in the competence of Ohio Medicaid will be higher if state officials acknowledge the problems more forthrightly.

— The Columbus Dispatch

CREDIT: THE COLUMBUS DISPATCH