Audit of Medicaid pharmacy payments proposed

Summary#

Senate Resolution 412 would direct the Legislative Budget and Finance Committee to audit pharmacy benefit arrangements in Pennsylvania’s Medical Assistance managed care program. It does not amend an existing law or create a new benefit or program. Its stated goal is to examine public spending, payments, oversight and beneficiaries’ access to pharmacies.

  • The audit would examine pharmacy payments, fees, rebates and other adjustments, and compare payments to independent and chain pharmacies, including by pharmacy benefit manager affiliation and dispensing channel.
  • It would assess Department of Human Services oversight and selected practices involving pharmacy steering, network limits, payment differences and possible “spread pricing” (when a health plan’s payment to a pharmacy benefit manager differs from what the manager pays a pharmacy).
  • It would compare selected Medicaid measures with a prior commercial insurance study and review other states’ oversight and purchasing approaches, including at least one single-PBM approach.
  • It would estimate reimbursement under a scenario using historical national average drug acquisition cost prices plus a $10.49 dispensing fee per prescription. This would be an audit estimate, not a new payment rule.
  • The committee would set and document the audit’s main 12-month period within 30 days of adoption, based on when reliable, reconciled data are available. It must give the Senate a progress and feasibility report within 90 days; the resolution sets no deadline for the final audit report.

What it means for you#

  • Medical Assistance beneficiaries: The resolution does not change eligibility, covered services, pharmacy choice or payment rules. The audit would examine pharmacy access, but would not itself guarantee changes or better access.
  • Pharmacies, managed care organizations and pharmacy benefit managers: The resolution asks the Department of Human Services to coordinate requests for records, including payment, claims, contract, network and complaint information. It does not create a new legal reporting duty or penalty for these organizations.
  • State agencies: The Department of Human Services and Insurance Department are asked to cooperate and provide records within specified timelines. The resolution relies on authority under existing law and contracts; it does not give the committee a new enforcement power.
  • The audit committee: It would have to examine the listed topics and report findings and recommendations. The resolution calls for secure handling of sensitive data and aggregate or redacted public results where required by law.
  • Taxpayers: The resolution does not change taxes or directly change Medical Assistance payments.

Money#

No cost estimate is provided; no publicly available information gives the expected cost of the audit.

  • The resolution identifies staffing and specialist needs as matters for the committee’s progress report, but provides no funding or staffing amount.
  • The reimbursement scenario is for analysis only. It does not set what pharmacies or other parties must be paid.
  • The resolution does not estimate savings, added spending or effects on public expenditures.

What is unclear#

  • The resolution does not set a deadline for the final audit report.
  • Agencies and companies are asked to provide records on a schedule, but the resolution does not create a new penalty or enforcement process if requested information is late or incomplete.
  • The committee must assess whether the data are reliable and whether the scope remains achievable. The resolution does not guarantee that every requested comparison or estimate can be completed.
  • The resolution does not define “steering,” “payment differentials” or “spread pricing.”
  • It does not specify what policy changes, if any, should follow the audit.

Case for#

  • The audit appears intended to fill a gap: the commercial insurance study cited in the resolution excluded Medicaid, so it does not establish payment or access conditions in Medical Assistance managed care.
  • A review of contracts, payments, fees, rebates and adjustments could give lawmakers a clearer picture of how public funds move through managed care organizations and pharmacy benefit managers.
  • Comparing payment patterns and pharmacy access could help identify differences that may warrant further attention, while the resolution says the audit should not claim that one factor caused another without adequate evidence.
  • Reviewing other states’ approaches could inform decisions about whether any are suitable for Pennsylvania, while also documenting limits in the evidence.

Case against#

  • The audit depends on extensive records from several agencies and private organizations. The resolution requests cooperation but does not establish a new way to compel records or address non-cooperation.
  • The scope is broad, and the resolution does not set a final report deadline. Data gaps or staffing needs could limit what the committee can reliably conclude.
  • The $10.49 dispensing-fee scenario may be useful for comparison, but its results will depend on assumptions and data coverage; the resolution requires those limits to be disclosed.
  • The resolution commissions an examination, not a remedy. Even if it finds payment or access problems, it does not require a change to reimbursement, networks or oversight.