Investor Presentaiton
Pros: Current model
Easier for CCOs to coordinate care
across pharmacy and medical benefits
Cons: Current model
Limited monitoring and knowledge of
PBM activities by OHA
Drug rebates, which can lead to lower
costs, are not maximized
•
Health equity concerns for members who
do not have consistent access
Does not leverage purchasing power and
economies of scale
In an FFS model, prescription drug benefits would be administered by OHA. Pharmacy claims would be
processed by the contracted pharmacy benefit administrator, who currently performs those duties for
FFS claims. In this model, a uniform preferred drug list would be more efficient to implement,
prescribers would benefit from uniformity, and pharmacies would have more consistent
reimbursements. West Virginia calculated $54.4 million in actual savings during the first year of their
transition to FFS. 26 While there is potential for cost savings, some states, like Florida, 27 have
determined a move to this model would be more costly.
Pros: FFS
Potential decrease in capitation costs
Potential increase in federal drug
rebates, which could lower costs
Reimbursement consistency
Increased transparency: State has
greater control of plan design and would
streamline monitoring efforts
Statewide consistency in pharmacy
benefits administration
Uniform formulary and coverage criteria
Leverages economies of scale
Cons: FFS
Requires development of IT solutions for
CCOs to access real-time pharmacy
claims and drug utilization for care
coordination
. Additional claims processing could strain
current IT infrastructure
Potential loss of provider tax revenue
Potential negative impacts to 340B
providers 28
A single PBM model has been used in other states to contract with one PBM for Medicaid coordinated
care or public employee health plans. For many health plans, Medicaid is not the only line of business,
and may include private insurance or Medicare. Health plans typically contract with one PBM for all lines
of business, and a move to a single PBM model may require plans to have contracts with multiple PBMs,
which could reduce some operational efficiency. There is also a possibility some plans could withdraw
from Medicaid. In this model, Oregon could have some flexibility to maintain certain pharmacy
revenues, depending on the program structure, whereas an FFS model would not offer this kind of
flexibility.
26 See West Virginia's 2019 Pharmacy Savings Report
27 See Florida's 2020 PBM Pricing Practices in Statewide Medicaid Managed Care Program Report
28 Medicaid's 340B program requires participating drug manufacturers to provide outpatient drugs to participating pharmacies
and entities at significantly reduced prices. State Medicaid programs are prohibited from billing manufacturers for rebates on
discounted medications under this program.
Oregon Secretary of State | Report 2023-25 | August 2023 | page 26View entire presentation