The $26.4 million in pharmacy expenses that the Health Plan reported in its fiscal year 2018 FSR did not reflect the final amount paid
to the pharmacy providers. While the $26.4 million represents what was initially paid to pharmacy providers, it did not reflect the
final amount retained by pharmacies because it did not include the impact of funds a pharmacy was required to return to the Pharmacy Benefit Manager.
That return effectively reduced what the Pharmacy Benefit Manager paid for ingredient and dispensing costs. In addition, the encounter data reported
by the Health Plan did not include any returned funds.
According to the Commission, the Pharmacy Benefit Manager’s process to require a pharmacy to return funds is an unallowable practice.
For one contract tested, the Pharmacy Benefit Manager calculated the amount of funds to return using an analysis that aggregated Medicaid claims with
claims from non-Medicaid programs. In addition, it is the Pharmacy Benefit Manager’s practice to require a pharmacy provider to return funds post payment.
Both of those practices are unallowable, according to the Commission.
The return of funds resulted from an “effective rate” contract. The payment methodology established in that contract between the Pharmacy Benefit Manager
and the pharmacy provider does not comply with the requirements in the Commission’s contract with the Health Plan.
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