Ohio Medicaid Orders Managed Care Plans To Break Contracts With PBMs Using "Spread Pricing"

Aug 14, 2018

Ohio Medicaid is telling its five managed care plans to sever their contracts with two pharmacy benefits managers, and to work up new deals by the beginning of the year.

In a letter to the managed care plans, Ohio Medicaid director Barbara Sears says they must stop working with CVS Caremark and Optum, which are using a “spread pricing” model. Sears says the managed care plans have until January 1 to work out deals with PBMs that will agree to a pass through model, where the plans pay the PBMs’ fees. Sears says that model will be more transparent and won’t cost taxpayers extra money. A report commissioned by Ohio Medicaid showed the spread between what the state paid the PBMs and what they paid pharmacies added up to $224 million last year, which the state initially declined to say was a good or bad deal. A court battle continues over the release of that report, which the PBMs say contains trade secrets.