Most people in Illinois probably do not know what managed care Medicaid is or what a pharmacy benefit manager does. Managed care organizations (MCOs) get paid by the state (the taxpayer) to administer the Medicaid benefit to Illinois residents. Pharmacy benefit managers (PBMs) administer the prescription benefits on behalf of health plans and MCOs.
Sometimes the MCO and PBM are the same company. By paying these MCOs, the state is supposed to save money. In the case of prescriptions, we taxpayers are getting taken advantage of. These MCOs pay pharmacies at a terrible rate, often below the pharmacy's cost of a medication. They then turn around and charge the state a higher amount for that medication than was paid to the pharmacy. This is called "the spread." The spread is one way these MCOs bilk the state out of millions of dollars each year.
Other states have figured this out and have, or are in the process of, firing these MCOs. Ohio found an average spread of 8.9% per prescription, or $224 million per year. Yes, the state paid $224 million more to the MCOs than what was paid to the pharmacies that year.
Illinois already had financial problems before the pandemic, and things will be worse going forward. We need to act now and fire the MCOs. This will save the state (taxpayers) money and help prevent pharmacies from going out of business due to below cost payment from these plans.