30 Sep NYRx PHARMACY BENEFIT CARVE OUT
Changes in how pharmacy benefits are provided under New York’s Medicaid program are coming. Earlier this year, the state reported that to decrease prescription drug costs, it would carve out its Medicaid pharmacy benefits and transition to a fee for service delivery model. On April 1, 2023, Medicaid members will start receiving their pharmacy benefits under the state’s new delivery model, NYRx.
New York’s carve out approach is designed to lower drug costs by consolidating the state’s purchasing power. Aside from lowering costs, the carve out is also geared to improve access to care and reduce restrictions by introducing a single drug formulary.
The move to carve out, however, has not gone unnoticed. Within the past year, there has been a growing amount of criticism directed at the state’s decision. The advocacy organization, Save NY’s Safety Net, wrote the state’s governor earlier this month and requested that she reverse the decision. They are concerned over its impact on the delivery of healthcare to the state’s most vulnerable populations. They also warned the governor that the carve out would negatively affect the Medicaid program’s provider network. According to the coalition, “many existing facilities will be forced to close completely, and hundreds of frontline community healthcare workers will lose their jobs.”
Advocates of the carve out, like New York state Assemblyman John McDonald, disagree with the advocacy organizations. He believes that the move will help more program recipients than it hurts.
According to the New York State Department of Health, “moving all Medicaid consumers under the FFS Pharmacy Program allows for a single, uniform list of covered drugs and standardized, consistent rules and regulations. Thus, New York State is able to offer an improved, simplified process for Medicaid consumers to get the medicines and supplies they need.”
Each year prescription drug spend represents a larger percentage of state budgets. To reduce these costs, some states like New York have opted to transition to fee for service models and carve out pharmacy benefits. While this is one approach to try and reduce costs, states should also identify opportunities to improve efficiency and cost avoid in their Medicaid plans.