Poor Accountability and Transparency Harm Medicaid Patients and Independent Pharmacies
Learn how the AI-generated research projects were createdOverall Conclusion
The audit identifies Oregon’s Medicaid PBM framework as overly complex and insufficiently transparent, with limited direct oversight of PBMs by OHA. The report recommends a shift toward stronger patient and pharmacy protections, uniform formularies, fiduciary duties for PBMs, and centralized procurement approaches to improve value and protect independent pharmacies.
Source Document
Audit Scope
Scope includes Oregon Medicaid prescription drug benefits administered by the Oregon Health Authority and contracted with 16 Coordinated Care Organizations (CCOs) and six PBMs, including related entities and data through 2021-2023; covers spending and utilization patterns, contract oversight, and the interplay among OHA, CCOs, PBMs, pharmacies, wholesalers, and manufacturers.
Key Findings Summary
The current structure of Medicaid PBMs is too complex for the State to efficiently measure value; involves 16 Coordinated Care Organizations (CCOs), six PBMs, hundreds of pharmacies, multiple drug manufacturers, wholesalers, pharmacy administrative organizations, OHA, and the Department of Consumer and Business Services, among others.
Oregon's regulation of PBMs is limited and fragmented; other states have meaningful legislation targeted at patient protections, pharmacy protections, and transparency.
Pharmacy reimbursements vary significantly depending on the drugs, pharmacy type, and PBM; national chains reimbursed twice the amount independent pharmacies were for selected drugs.
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AI-Assisted
AI Scope Summary
Building on this audit's findings, future audits should focus on validating the implementation of recommended reforms, such as establishing a uniform Medicaid formulary, fiduciary duties for PBMs, and pass-through pricing; assess the effectiveness of OHA and DCBS in monitoring PBMs; quantify changes in independent pharmacy access and patient protections; and evaluate the potential cost savings and operational impacts of moving to a single PBM or FFS model, as well as exploring centralized purchasing programs.
AI-Generated Insight
This report highlights a fragmented and opaque Medicaid PBM landscape in Oregon, where complex contracts and proprietary pricing hinder transparent oversight. It argues for reform through uniform formularies, fiduciary PBMs, and centralized purchasing to enhance patient protections, pharmacy access, and taxpayer value. The recommended moves align with leading-state practices to increase transparency and accountability in the prescription drug supply chain.
Audit Objectives
Assess the transparency and accountability of Oregon's Medicaid prescription drug program, including PBMs, CCOs, and related entities.
Evaluate the regulatory framework and oversight of PBMs by state agencies (OHA and DCBS) and how they monitor compliance and protect patients and pharmacies.
Determine the impact of the current PBM contracting models on pharmacy reimbursements, access to medications, and overall program value, including effects on independent pharmacies.
Compare Oregon's PBM framework with leading practices in other states to identify reform opportunities, including uniform formularies, fiduciary duties, and pricing transparency.
Assess potential cost savings and feasibility of alternative models (single PBM, FFS, centralized purchasing).
Audit Findings (4)
The current structure of Medicaid PBMs is too complex for the State to efficiently measure value; involves 16 Coordinated Care Organizations (CCOs), six PBMs, hundreds of pharmacies, multiple drug manufacturers, wholesalers, pharmacy administrative organizations, OHA, and the Department of Consumer and Business Services, among others.
Oregon's regulation of PBMs is limited and fragmented; other states have meaningful legislation targeted at patient protections, pharmacy protections, and transparency.
Pharmacy reimbursements vary significantly depending on the drugs, pharmacy type, and PBM; national chains reimbursed twice the amount independent pharmacies were for selected drugs.
OHA does not ensure sufficient transparency and compliance from PBMs; monitoring of high-risk areas is insufficient and contract provisions are not comprehensive, though there have been improvements to contract language (2020-2023).
Recommendations (9)
Move toward a single PBM or a more centralized PBM structure for Medicaid to enhance oversight and contract administration.
Implement a pass-through pricing model by default, ensuring all rebates and cost savings are passed through to CCOs and Medicaid.
Strengthen CCO contract provisions to require full disclosure and annual market checks, and provide attestation of financial and organizational accountability.
Provide independent annual audits of high-risk PBM areas, with clearly defined escalation steps and enforcement mechanisms for noncompliance.
Ensure OHA monitoring is conducted by staff without conflicts of interest and assign resources to monitor PBMs more effectively.
Require CCOs to submit PBM contracts and amendments for OHA review and require annual market checks with transparent data sharing.
Adopt a universal uniform Medicaid preferred drug list across all CCOs and the FFS program to simplify coverage and reduce burden.
Require PBMs to act as fiduciaries for Medicaid beneficiaries to align PBM incentives with client interests.
Mandate disclosure of PBM cost information, including rebates, administration fees, and spread pricing, to improve transparency and oversight.