N.Y. Medicaid program could save big through new approach

WASHINGTON — New York’s state Medicaid program could save $2.2 billion over 10 years by managing Medicaid pharmacy benefits more like private-sector employer plans, state employee plans and Medicare, according to a new study by healthcare policy research firm The Lewin Group.

While most health plans use third parties to increase generic utilization and directly negotiate pharmacy payments with chain drug stores and wholesalers that represent independents, Medicaid uses fee-for-service programs in which public officials help determine dispensing fees and reimbursements.

“Medicaid is one of the few pharmacy benefit programs that still relies heavily upon a fee-for-service approach,” Pharmaceutical Care Management Association president and CEO Mark Merritt said. “By operating more like Medicare and commercial market plans, the New York Medicaid program could reduce pharmacy costs, increase the use of generics and save $2.2 billion over 10 years without cutting benefits.”