Ohio Medicaid Audit Only Proves that Transparency is Critical to Reforming a Broken System that Benefits Shareholders Before Patients
The release last week of the HealthPlan Data Solutions report allegedly “vindicating” CVS Caremark and other large pharmacy benefit managers accused of overbilling Ohio Medicaid and reimbursing Ohio pharmacies at or below the cost for Medicaid prescriptions only proves what everyone already knows: numbers can be arranged favorable to just about any outcome.
How else would an audit based on self-reported - but unverified - data supplied by the corporations under scrutiny turn out? The fact the data couldn’t be verified for “proprietary reasons” only casts further doubt on the veracity of the numbers.
So of course the report is going to find Medicaid saved $145 million under managed care, or that CVS reimbursed pharmacies at a rate higher than its own, though data from Arkansas, Kentucky and other states plainly show the opposite. Of course CVS is going to say its 8.7 profit margin on prescriptions is very reasonable and that any of the $223.7 million CVS made off taxpayers last year is covering “administrative costs.”
These “reasonable” markup claims by CVS are decidedly different than the 12 percent margin found by The Columbus Dispatch’s independent analysis using actual pharmacy reimbursement data. Also, in its self-congratulatory crowing, CVS failed to mention it would be increasing the per-prescription transmission fee it charges the pharmacies it reimburses, so those “administrative costs” should go down a little as its taxpayer-funded profit margin increases.
Ohioans have the opportunity to make history. Ohio could be the first state to force the issue of PBM transparency for state-funded plans and otherwise. Why does this matter? Because PBMs want everyone to believe no one can afford transparency, that health plan payers and enrollees are better off NOT knowing how their prescriptions are priced.
In fact, PBMs blame health plan payers for the lack of drug benefits transparency. In a statement released June 26 following the Senate Finance Committee’s hearing Prescription Drug Affordability and Innovation: Addressing Challenges in Today's Market the Pharmaceutical Care Management Association -- the trade/lobbying organization for PBMs -- stated “In any case, payers — not PBMs — already call the shots on transparency. Each payer and its benefits consultant determines exactly what kinds of transparency it wants long before choosing a PBM to help execute it.”
But think about it - when has keeping the consumer in the dark ever paid off? It didn’t go well for consumers and taxpayers when we learned about the “proprietary” actions of Big Tobacco, Enron or the investment firms behind the Financial Crisis of 2008. Transparency would have been extremely helpful in heading off the actions of a few greedy corporations whose first allegiance was and is to deliver maximized returns to shareholders.
Ohio consumers and taxpayer should be VERY wary at this point. No one who works with or around PBMs was surprised to read that CVS Caremark and OptumRx pocketed almost $224 million in taxpayer dollars last year. No eyebrows were raised at the discovery that the audited data was supplied by CVS Caremark and Optum. And that sound you hear? That’s the slow, unimpressed clap of your local pharmacists who already know how this shell game works and are doing everything in their power to educate you, so you can stop losing at that game too.