One way, in theory at least, to pay for certain facets of healthcare reform is coming not only from cost shifting within Medicare, but also from Medicaid. It involves pharma rebates states receive from drugmakers for many branded preparations. Typically at least 15% of costs associated using those drugs is given back to states after negotiations with pharma companies.

However, with increases in rebate rates, a certain amount usually reserved for payments to states will now be kept by the federal government in an effort to raise monies to offset the cost of healthcare reform.

Cindy Mann, the agency’s director for the Center for Medicaid and State Operations ,confirmed in an interview that meant states that already received drugmaker rebates between 15.1 and 23.1 percent would no longer be able to keep that portion of their savings. States and the federal government would continue to share in savings for the portion of the rebates both below and above that range. Many states already have average rebates well above 23 percent.

Naturally, some states are concerned with the potential losses to care access with such a move, as more pressure is placed on individual states to negotiate with managed care plans to recoup possible individual deficits. Time will tell if this plan (which creates incentives in purchasing drugs via Medicaid arrangements) will bring more states into the fold as only 25 states use this method to provide a drug benefit. | LINK

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