Gov. vetoes pharmacy carve-out for NY Medicaid managed care
NY Medicaid Managed Care
November 30, 1996
In a victory for New York’s managed care industry, Governor George E. Pataki (R-NY) vetoed a bill that would have carved out prescription drugs from the capitation rate under Medicaid managed care.
"The loss of pharmacy savings projected under managed care, coupled with the additional costs that the state and the counties will bear, may negatively affect the state’s negotiations to obtain the federal waiver," asserted the governor in his veto message. Such a result would be "unacceptable," he said.
New York and the Health Care Financing Administration (HCFA) are entering their twentieth month of negotiations on the state’s 1115 waiver application to mandate managed care enrollment for the Medicaid population. The pharmacy carve-out, with its potentially high price tag, was seen as one more issue that could jeopardize waiver approval.
The cost of carving out the pharmacy benefit instead of capping it by placing it within a managed care benefit, was estimated at $44 million annually.
The carve-out bill had been heavily promoted by New York’s retail pharmacy
lobby, which claimed that allowing managed care to control the pharmacy benefit for the Medicaid population would sound a death knell for community pharmacies. "More than 800 pharmacies will close," predicted Craig M. Burridge, executive director of the pharmacists Society of New York State. "We have already seen how managed care routinely excludes independent pharmacies from their networks. This has been one of the most devastating blows the community pharmacy could suffer." According to Mr. Burridge, Delaware, Maine, Virginia, Nebraska and Texas are states that currently carve out prescription drugs.
Mr. Burridge noted that a prospective drug utilization system and a generic drug substitution program have shown that pharmacists can achieve cost efficiencies.
Siding with the pharmacists, both the state assembly and state senate overwhelmingly backed the bill. "We were very concerned about the impact of managed care on basically mom and pop’ pharmacies," said Alexander Grannis (D-NY), chair of the insurance committee in the state assembly. He noted that among the pressures facing community pharmacies is that "many people are increasingly getting their managed care prescriptions by mail order."
But Gov. Pataki criticized using the Medicaid pharmacy carve-out bill to resolve the plight of community pharmacies. "While the goal of the bill — to assist neighborhood pharmacies—is laudable," he said, "it is irresponsible for the Legislature to have passed a bill imposing additional costs on the Medicaid program." Instead, he promised to address neighborhood pharmacies’ "legitimate" concerns in the context of the 1997-1998 budget.
State officials defended the veto on the grounds that giving managed care plans control of the pharmacy benefit would enhance coordination of care and accountability. Bob Hinckley, director of public affairs for New York’s Department of Health, said, "We obviously agreed with the governor’s veto. Pharmacy is a basic component of a managed care medical system and we believe it should remain in the basic package of services."
Leslie S. Moran, spokesperson for the HMO Conference of New York State, said the carve-out would hinder disease management activities that require close coordination between the HMO, physicians and pharmacies. Access to a pharmacy database helps managed care organizations identify members likely to benefit from case management and also helps monitor compliance with the treatment program based on how prescriptions are filled.
Maura Bluestone, president and CEO, the Bronx Health Plan, said, "pharmacy data offers the best source of data on asthma. "You can go and look at pharmacy data and see how many patients are getting nebulizers, whether parents filled prescriptions, and get them enrolled in case management. . . . If you separate pharmacy out of the benefit package, you compromise what we can do in health care. It’s an unnecessary exclusion."
But consumer advocates question whether Medicaid patients will have ready access to necessary medications under managed care. Elizabeth Benjamin, member of the New York City Task Force on Medicaid Managed Care and staff attorney, Legal Aid Society, NY, sees "massive restrictions" and fears chronic care patients will suffer.
Assemblyman Grannis said the controversy surrounding the legislation partially reflects " a lot of reservation, and in some cases, anger, about the speed and insensitivity with which this managed care revolution is overtaking us."—Laura Newman
Contact Assemblyman Grannis at 518-455-5676; Mr. Burridge at 518-462-0618; Ms. Moran at 518-462-2293.
Gov. vetoes pharmacy carve-out for NY Medicaid managed care
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