California and New York Newest States Seeking to Create Their Own Contracts With Medicaid

March 4, 2021

A growing number of states have decided to form their own contracts with Medicaid. Most recently, California and New York announced their plans to negotiate their own rates. This trend is expected to continue—other states including Tennessee, West Virginia, Wisconsin, Missouri, and North Dakota have formed their own managed care contracts with independently negotiated drug benefits. Critics note this trend may impact how MCOs (managed care organizations) prescribe medication.

According to senior policy analyst Rachel Dolan, “I think the pharmacy benefit overall will be something that states are looking at in order to find savings in some way — whether through carveouts or through another policy — just because there are limited levers that the state is going to be able to pull to save money.” She adds, “It also allows the state more control over their formulary and their payment policy, and it can also help them potentially negotiate more supplemental rebates with manufacturers if basically all the drugs are in one big pool covered by the state.” Read more here.

(Source: Leslie Small, MMIT, 2/25/21)

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