Ohio Medicaid’s largest Medicaid managed-care provider has dramatially shrunk its pharmacy network by dropping Walgreens. But despite promises of new transparency, neither the agency has done much to explain the change.
A week after it approved a major reduction in CVS’ pharmacy network, the Ohio Department of Medicaid apparently hasn’t asked whether the state’s largest pharmacy retailer demanded that 252 of its Walgreens competitors be dropped.
The department last week approved the reduced network in the middle of the period during which Medicaid beneficiaries are choosing health plans for 2020. That raised concerns that some Walgreens customers might face reduced access to pharmacy care when they’re forced to again switch plans or pharmacies in the coming months.
Yet while top officials at Medicaid have accused Walgreens of trying to restrict the network, they seem incurious about whether CVS has made a similar demand.
The Ohio Department of Medicaid and one of its major contractors promised greater transparency last year after taxpayers learned of possible profiteering by middlemen from an opaque system used to pay for drugs. A state-sponsored analysis conducted amid a Dispatch investigation found that in 2017, a pharmacy middleman controlled by CVS billed taxpayers almost $200 million more for Medicaid drugs than it turned over to the pharmacies that had bought and dispensed them.
Despite their promises of transparency, however, the Medicaid department did little to announce — much less explain — the decision to drop Walgreens from the network of its largest managed care provider, CareSource, which serves 1.2 million Medicaid recipients.
In a Nov. 1 interview, Ohio Medicaid Director Maureen Corcoran said that at the beginning of October, CareSource notified her agency that it wanted to drop Walgreens from its network. That contradicted what Medicaid spokesman Kevin Walter told The Dispatch on Oct. 11 and 15, when he said the agency had not received such a notification.
In a letter last week to CareSource, Medicaid Deputy Director Roxanne Richardson approved CareSource’s request to eliminate Walgreens from its network, saying “CareSource informed us that Walgreens would be willing to continue a business relationship with them, if CareSource would eliminate other pharmacies from its network.”
Medicaid, however, hasn’t responded when asked to explain which other pharmacies Walgreens wanted to exclude. For its part, Walgreens said, “Our most recent proposal was for a network that included CVS and all the independents, as well as the others.”
Despite accusing Walgreens of trying to shrink the CareSource pharmacy network, the Medicaid department last week wouldn’t respond to questions about whether CVS had tried to do the same thing. Monday evening, Walter only reiterated what he has said in answer to earlier questions about the matter.
“Negotiations are between managed-care plans and providers. ODM’s focus is on ensuring access to quality care,” he said. “We have no knowledge of a conversation between CVS and CareSource.”
Among the questions Walter and the Medicaid department haven’t responded to: Did Medicaid even ask CareSource whether CVS had demanded a major reduction in the CareSource pharmacy network?
CareSource has been even less forthcoming. Spokesman Joe Kelley on Nov. 6 said his company wasn’t going to comment on whether CVS wanted its biggest retail competitor dropped from the managed-care network. On Tuesday, he said the same thing.
CVS said it “played no role” in structuring the CareSource pharmacy network.
Ohio’s independent and small-chain pharmacies have long complained that Medicaid reimbursements are so low that they’re putting many of them out of business.
Until now, 90% of those reimbursements have been controlled by CVS’ pharmacy middleman, CVS Caremark, which has maintained that it hasn’t used its reimbursement power as a middleman to benefit its retail operation. But many Ohio pharmacies reported that amid periods of particularly bad reimbursements from the company, CVS sent them letters offering to buy them.
In announcing new transparency, CareSource in April said it would jettison CVS Caremark as its middleman, or pharmacy benefit manager, and replace it with Express Scripts, another PBM giant. In May, ExpressScripts sent independent pharmacists contracts offering dispensing fees that were 1.5% of what the state’s own pricing survey said was necessary in order for pharmacists to break even.
Those contracts were quickly withdrawn. Independent pharmacists say they’ve yet to see another — even though the contract year starts in five weeks.