ACAP: Drug rebate equalization allows states to restore Rx benefits to managed care

WASHINGTON — The Patient Protection and Affordable Care Act is producing savings for state Medicaid programs that take advantage of a provision equalizing drug rebates between managed care and fee-for-service programs, according to a fact sheet released Tuesday by the Association for Community Affiliated Plans.

The Medicaid Drug Rebate Program was the result of the Omnibus Budget Reconciliation Act of 1990 and provides federal rebates to states for outpatient drugs dispensed to Medicaid patients, as long as the drugs’ manufacturers have rebate agreements with the Department of Health and Human Services. But Medicaid managed care programs were excluding, leading states to remove prescription drugs from health plan benefits, also known as carve-outs.

The Patient Protection and Affordable Care Act provision, however, removes that exclusion, allowing states to restore prescription drug benefits to managed care.

“It used to be that states faced a difficult choice,” ACAP CEO Margaret Murray said. “They could carve out prescription drugs from their Medicaid plans and enjoy the high federal rebate or opt for lower rebates and seek savings through the better care coordination offered by managed care. Drug rebate equalization allows states to enjoy both benefits.”