Page 26 - Management Theory 2023-2024 Edition

www.pharmacyexam.com Krisman

2. In either case, participating pharmacies have to accept the given reimbursement rates by MCOs or PBMs
even though the traditional Medicaid fee-for-service rates are higher than rates provided by MCOs or
PBMs under state contracts.

3. A few plans also offer a variable dispensing fee structure. Under this type of reimbursement, the
dispensing fees may vary by the number of prescriptions filled by a patient for a given month. For
example, MS receives three prescriptions per month; the dispensing fee under the variable fee structure
would be $3 for the first prescription, $2.75 for the second prescription, and $2.50 for the third
prescription.

4. States may also be entitled to receive manufacturer’s rebates from pharmaceutical companies under
the Department of Health and Human Services and Federal Law. The discounted rate under such
contracts may be set up to 15%. At the end of each quarter, states may submit invoices to each
manufacturer with the detailed information about the specific product claims and utilization, and will
receive 15% of the total cost of medications.

Current challenges facing State Medicaid Programs:

1. Freedom of choice laws
2. Overutilization and underutilization of medications
3. Medicaid fraud and abuse
4. Medicaid reimbursement policies
5. Medicaid eligibility criteria

1. Freedom of Choice Laws: This law allows Medicaid recipients to receive services from any physicians
that participate in Medicaid programs. But, it is often seen that patients do not stick to the same
physician for some reason, and may result in lack of coordination within the system and increased
healthcare utilization costs.

2. Overutilization of Medications: There are patients who overutilized or underutilized pharmacy services
provided by the state medicaid programs. The overutilization of prescriptions may increase the total
costs of healthcare expenditures, while the underutilization of pharmacy services may result in
unnecessary hospitalization, and subsequently raise the cost of healthcare.

3. Medicaid Fraud and Abuse: The State Medicaid programs are abused by providers and patients. Due to
very limited financial resources; it is not possible for states to monitor providers’ dispensing and
prescribing patterns and patients’ utilization trends by analysing claims. It has been found that many
pharmacies fill unnecessary prescriptions in order to get more financial incentives from the Medicaid
managed plan. In additions, physicians also prescribe unnecessary laboratory tests and other medical
services for the same reason.
4. Medicaid Eligibility: State Medicaid programs may also face many difficulties in order to determine
patient’s eligibility to receive services under Medicaid programs. Many sociologists and cost analysis
experts believe that Medicaid eligibility requirement guidelines set by the federal and state
governments may discourage patients from getting healthy or seeking employment since this may
disqualify them from receiving Medicaid benefits.

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