Evidence record

Poor Accountability and Transparency Harm Medicaid Patients and Independent Pharmacies

Jurisdiction
Oregon
Publication date
August 2023
Source record
Original document linked
Open original reportOriginal source available

Findings

4

Recommendations

9

Overall 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.

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.

Findings (4)

Each finding has a stable link.

  1. F-840

    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.

  2. F-841

    Oregon's regulation of PBMs is limited and fragmented; other states have meaningful legislation targeted at patient protections, pharmacy protections, and transparency.

  3. F-842

    Pharmacy reimbursements vary significantly depending on the drugs, pharmacy type, and PBM; national chains reimbursed twice the amount independent pharmacies were for selected drugs.

  4. F-843

    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)

  1. R-736

    Move toward a single PBM or a more centralized PBM structure for Medicaid to enhance oversight and contract administration.

    Related finding F-840
  2. R-737

    Implement a pass-through pricing model by default, ensuring all rebates and cost savings are passed through to CCOs and Medicaid.

    Related finding F-842
  3. R-738

    Strengthen CCO contract provisions to require full disclosure and annual market checks, and provide attestation of financial and organizational accountability.

    Related finding F-843
  4. R-739

    Provide independent annual audits of high-risk PBM areas, with clearly defined escalation steps and enforcement mechanisms for noncompliance.

    Related finding F-843
  5. R-740

    Ensure OHA monitoring is conducted by staff without conflicts of interest and assign resources to monitor PBMs more effectively.

    Related finding F-843
  6. R-741

    Require CCOs to submit PBM contracts and amendments for OHA review and require annual market checks with transparent data sharing.

    Related finding F-843
  7. R-733

    Adopt a universal uniform Medicaid preferred drug list across all CCOs and the FFS program to simplify coverage and reduce burden.

    Related finding F-840
  8. R-734

    Require PBMs to act as fiduciaries for Medicaid beneficiaries to align PBM incentives with client interests.

    Related finding F-841
  9. R-735

    Mandate disclosure of PBM cost information, including rebates, administration fees, and spread pricing, to improve transparency and oversight.

    Related finding F-843