Ohio, Kentucky & Indiana | Winter | 2010 | Health Plan Analysis

Ohio has decided to carve out Medicaid pharmacy in anticipation of the passage of a new federal law, the Drug Rebate Equalization Act. The Act will give managed care companies the same rebates – around 38 percent – for brand-name prescription drugs as state Medicaid agencies get when purchasing the same drug for their fee-for-service Medicaid populations. Previously, Medicaid MCOs could only negotiate rebates on drugs in the single digits. But Ohio and Indiana decided their state budgets would be better served by capturing all the rebates at the state level.
The economy continues to drive a payor mix shift in the Indiana-Kentucky-Ohio region. Commercial employer-sponsored coverage has eroded, while Medicare and Medicaid plans have grown. The reduction in employment-based coverage is driven less by employers dropping coverage than by erosion from within existing groups – employers laying off workers, dropping dependent coverage, auditing dependents for the availability of other coverage or pricing such that employees choose to work without taking the health benefit. Medicaid statistics show that working people make up nearly all new beneficiaries, since aged, blind and disabled populations – which generally don't include working people – have remained stable or down.
In Ohio, a UnitedHealthcare subsidiary, All Savers Insurance Co., has launched a pilot of a new insurance product that gives workers some up-front spending credits to purchase health services in hopes of bringing some market forces to bear on health spending. The small-group All Savers plan also offers employers the option to allow workers to "design" portions of their benefit themselves – including the amount of the spending credits – for the possibility of up to 16 different benefit designs that are all actuarially equivalent, and charge the same premium to both employee and employer.