Georgia’s managed-care organizations to abandon “spread” pricing
After working with GPhA, Georgia’s four Medicaid managed care organizations (MCOs) have announced they will be switching to a pass-through pricing model in their future PBM contracts.
The agreement between GPhA and the Georgia Quality Healthcare Association (which represents the four Georgia MCOs) was announced Wednesday, and will take effect as each organization renews its PBM contracts.
“This is another step to ensure fairer treatment of Georgia’s pharmacists under the current PBM system,” said Bob Coleman, GPhA CEO. “We’re looking forward to continuing our discussion with GQHA and again express our thanks for their willingness to seek further solutions.”
Here is the full press release from GPhA and GQHA:
GQHA/GPhA reach agreement on PBM contracting
(ATLANTA) January 30, 2019 – The leadership of the Georgia Quality Healthcare Association, representing the four companies that serve Georgia’s Medicaid Managed Care members, and the Georgia Pharmacy Association, representing Georgia’s pharmacists across all practice settings, are pleased to jointly announce that they have after much discussion, reached an accord to improve access to pharmacists’ care by adopting no-spread reimbursement methodologies in future agreements between GQHA members and Pharmacy Benefit Managers to administer pharmacy benefits to Georgia Families beneficiaries.
Jesse Weathington, GQHA’s executive director, said “We appreciate the opportunity to have an open dialogue with all our health care partners to make sure we are serving our Medicaid members well. We would like to thank the Georgia Pharmacy Association for working with us to address this issue and are committed to improving our partnership. This is an important first step.”
“On behalf of our membership, the Georgia Pharmacy Association thanks GQHA for listening to the concerns expressed by pharmacists statewide and committing to making this landmark change,” said Bob Coleman, GPhA CEO. “GPhA believes this is an important step for the state of Georgia, pharmacists, and most importantly the patients for whom pharmacists provide vital care in the communities they serve.”
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Spread vs. pass-through pricing models
Spread pricing: The PBM bills the MCO one amount for a patient’s medication, and pays the pharmacy a different (smaller) amount to dispense it. It keeps the difference as profit — along with any rebate it receives from the drugmaker. That means PBMs have an incentive to bill the MCO (i.e., the taxpayers) as much as possible while paying the pharmacy as little as possible. Until recently, the amount of a PBM’s spread, and how much it received in rebates, has been a closely guarded secret.
Pass-through pricing: The PBM receives a flat fee for each prescription it processes, on top of the actual cost of the medication. Pharmacies are (in theory) also paid a set amount per prescription, again, above the cost of the medication.
