Abandoning List Prices In Medicaid Drug Reimbursement Did Not Affect Spending

Research output: Contribution to journalArticle

Abstract

State fee-for-service Medicaid programs have traditionally based payments to pharmacies for drugs on a percentage of the drugs' list price. Because list prices have increased more quickly than the prices actually paid by pharmacies, estimating appropriate reimbursements has become challenging. In recent years most states have switched to models where payments were based instead on results from a survey of pharmacy invoices. We examined how this changed fee-for-service Medicaid drug spending. We found that the policy change had minimal, if any, effects on overall Medicaid drug spending. This was at least partially explained by concomitant sharp increases in dispensing fees paid to pharmacies, designed to help cover operating expenses and profit margins. We discuss ways to improve invoice-based pricing approaches and lower costs if desired.

Original languageEnglish (US)
Pages (from-to)1202-1209
Number of pages8
JournalHealth affairs (Project Hope)
Volume39
Issue number7
DOIs
StatePublished - Jul 1 2020

Keywords

  • Acquisition cost
  • Costs and spending
  • Dispensing fees
  • Drug reimbursement
  • Drug spending
  • Fee-for-service
  • Health policy
  • List price
  • Medicaid
  • Payment
  • Pharmaceuticals
  • Prescription drug costs
  • Prescription drugs
  • State Medicaid

ASJC Scopus subject areas

  • Health Policy

Fingerprint Dive into the research topics of 'Abandoning List Prices In Medicaid Drug Reimbursement Did Not Affect Spending'. Together they form a unique fingerprint.

  • Cite this