Medicare Compliance & Reimbursement

Beneficiaries may pay the price through co-pays on non-preferred drugs.

States might start basing their pharmaceutical prices on the average manufacturer price rather than the average wholesale price--if Congress accepts the Medicaid Commission's recommendations.

The Medicaid Commission released its first report to the Department of Health and Human Services and Congress on Sept. 1 that recommended major structural changes to the Medicaid program to achieve $11 billion in savings during the next five years.

Following the Commission's public meeting in August, the members voted on a package of options to make the staggering budget cuts to the program.

The Medicaid Commission's recommendations include:

• allowing Medicaid managed care plans access to the pharmaceutical manufacturer rebate program, which is available to other Medicaid health plans, and giving states the option to collect the rebates directly or allowing plans to exchange them for lower capitation payments;

• changing the penalty period's start date from the date of the beneficiary's transfer of assets for Medicaid eligibility to the beneficiary's Medicaid application date or the nursing home admission date;

• expanding Medicaid financial eligibility screeners' "look-back" period from 36 months to five years;

• permitting states to increase beneficiaries' co-payments on non-preferred drugs to encourage beneficiaries to choose the least costly drug for treatment and develop tiered co-payment structures to encourage cost-effective drug utilization; and

• encouraging states to tax all managed care organizations--not just those with Medicaid contracts.

The Medicaid Commission will make longer-term recommendations to HHS and Congress by Dec. 31, 2006.

Find it online: To read the report, go to http://www.cms.hhs.gov/faca/mc/090105rpt.pdf.