Reform Medicaid Vendor Drug Program

Testimony by Ryan Van Ramshorst, MD

Senate Health and Human Services Committee

Wednesday, March 29, 2017

Submitted on behalf of:  

  • Texas Medical Association,
  • Texas Pediatric Society,
  • Texas Academy of Family Physicians,
  • Texas Association of Obstetricians and Gynecologists,
  • American Congress of Obstetricians and Gynecologists-Texas Chapter, and
  • Federation of Texas Psychiatry

Chairman Schwertner and committee members, thank you for the opportunity to testify. I am Dr. Ryan Van Ramshorst, a practicing pediatrician from San Antonio, speaking on behalf of the Texas Medical Association, Texas Pediatric Society, and the medical societies listed at the top of my written testimony, on Senate Bill 1922, which relates to prescription drug benefits in the Medicaid managed care program. Reforming the Vendor Drug Program, or VDP, is complicated, and I want to thank you heartily for initiating a much-overdue discussion about how to simplify it.

Increasing physician participation in Medicaid is a high priority for our organizations. Medicaid is critically important to 4 million low-income Texans, who rely on it to obtain preventive, primary, specialty and behavioral health care. As a pediatrician, I see every day how Medicaid improves the health and well-being of my patients, allowing me to provide everything from immunizations and developmental screenings to treatment for asthma and diabetes. But the ability for my colleagues and me to provide care to Medicaid patients has become increasingly difficult over the past several years. Inadequate payments are the biggest concern, but a close second is the level of red tape. Given the budget environment, we understand Medicaid payment rates will not increase. So that is why Medicaid administrative simplification must be a high priority. 

Of particular concern is reforming the Medicaid Vendor Drug Program, which vexes physicians, patients and pharmacists with its bureaucracy and complexity. I hear these adjectives frequently to describe the program: “byzantine, rigid, exasperating, and mind-boggling.” Physicians do not understand it. Patients do not understand it. The complexity creates red tape and administrative costs for physicians, but more importantly, frequently delays patients from getting the prescription drugs they need.

Top line: Medicaid VDP, as currently administered, is defective. Whether the state continues to administer it or the health plans do, it needs a complete overhaul to:  

  • Eliminate barriers that impede patients from timely obtaining prescriptions; 
  • Ensure transparency and accountability;
  • Eliminate bureaucratic, unwieldy and complicated requirements;
  • Conform to physician prescribing practices; and
  • Conform to best available clinical literature and practice standards. 

Under current law, the program has two masters — the Health and Human Services Commission (HHSC), which develops and oversees a single, statewide Medicaid formulary and Preferred Drug List (PDL) — and the Medicaid HMOs, which administer the drug benefit according to HHSC policy and rules. In 2011, the legislature tasked HHSC with developing a single formulary and PDL with the goal of eliminating the need for each plan to develop its own. That would reduce confusion for patients and prescribers, while also allowing the plans to manage the entirety of a patient’s health needs more holistically by having the drug benefit under their management. Instead, regrettably, the process works for no one.   

Let me give you one example of what I deal with on a daily basis: Texas Medicaid organizes most prescription drugs into the Preferred Drug List. Drugs categorized as “preferred” do not require prior approval before being prescribed; drugs classified as “nonpreferred” do. But in addition to this categorization, some drugs or drug classes also are subject to what are known as “clinical edits.” A committee of physicians and pharmacists developed these edits for valid clinical reasons, such as avoiding potentially dangerous drug interactions. But nowhere on the actual PDL is a physician given information about these additional edits. So physicians often prescribe a preferred drug thinking no additional approval is needed, only to get a call from the pharmacist saying the drug is denied due to a clinical edit. At the behest of our organizations, HHSC indicates it will launch a new website later this year that might address these concerns. For this, we are grateful, but until it implemented we cannot say with certainty our concerns will be adequately addressed.

Furthermore, we are concerned about the high number of clinical edits. We also are concerned because HHSC implements no systematic process to review each one to ensure it is consistent with clinical practice and science. Currently some 80 clinical edits are posted on the HHSC website. If printed, it would be 440 pages. HHSC requires the Medicaid managed care organizations to follow five of the edits, but adoption of the remaining edits is at each plan’s discretion. This raises the question — if a plan is not required to accept a clinical edit, is it really clinically necessary? Moreover, when a clinical edit is established but subsequently found to be detrimental to patient care, there does not appear to be a standard process to request suspension and adjustment of the edit to address physician and patient concerns. 

Additionally, the PDL is completely counterintuitive to how physicians practice. Unlike commercial or Medicare preferred drug lists, the Texas Medicaid PDL often designates brand-name drugs as preferred instead of generics (when a generic is available). This means physicians must configure their electronic prescribing systems to comply with just Medicaid, creating an extra cost. It also interferes with patient care. When patients are hospitalized, any drugs prescribed for them are generics. If the patient leaves the facility with a prescription refill, the prescription also will be for the generic. But because the Medicaid PDL often prefers brands over generics, when the patient submits the refill request, it may be denied because the physician did not obtain prior approval for the generic. A current example of this is the drug Abilify, which is used to treat bipolar and other mental health disorders, including those teenagers experience. If a patient is prescribed Abilify within a facility, the patient will receive the generic. But Texas Medicaid prefers the brand version of the drug. The misalignment of the inpatient and outpatient drug lists frequently results in patients not getting timely refills, which is particularly dangerous for behavioral health drugs like Abilify, since patients should not skip doses. Child psychiatrists have complained about their teenaged patients being rehospitalized as a result of the PDL mismatch.

There are numerous other problems with the Vendor Drug Program. Among them: 

  • Recent direction from HHSC to the managed care organizations (MCOs) that physicians include diagnosis codes on certain behavioral health prescriptions, even though this is not a standard practice and may result in prescription drug denial until the plan receives the code;  
  • Tardy transmittal of new or updated National Drug Codes to MCOs, which means a drug may appear incorrectly as covered on the Medicaid formulary when it is not;
  • HHSC placing expensive name-brand drugs on the formulary instead of cheaper but clinically equivalent over-the-counter drugs, such as medications for head lice treatment; and
  • Clinical edits that not only may interfere with patient care without a process to timely suspend and amend them but also that may be inconsistent with clinical practice.  

Allowing the Medicaid managed care organizations to manage the prescription drug benefit would address many of our members’ top frustrations with the Medicaid VDP. If doing so saves money in a tight budget session, we also accept it is a prudent cost-containment strategy so long as the reform includes patient and physician and provider protections as I will enumerate. 

First, however, I note that at the same time, MCO management of the VDP certainly will raise other potential hassles, including the potential for HMOs to decrease prescription drug utilization by requiring greater use of step therapy or adopting utilization management criteria inconsistent with best practices or clinical evidence. To address these concerns, over the past several months, TMA has met with leaders from the Medicaid HMOs and consumer advocates to discuss statutory safeguards needed to make the change worthwhile. Among the reforms medicine advocates if the Medicaid MCOs fully manage the drug benefit are:  

  • Ensuring at least 90 days’ continuity of care for prescription drugs when patients enroll in a Medicaid HMO or switch plans;
  • Grandfathering patients taking selected brand-name drug classes from being required to switch to a generics, including most behavioral health drugs; anticonvulsants; and other drug classes for life-threatening, chronic conditions;
  • Limiting the number of step therapy attempts to no more than two and establishing an easy, expeditious process for physicians to override a step therapy requirement if clinically indicated or the patient has previously tried and failed a step therapy protocol;
  • Establishing in statute current patient protections such as requiring Medicaid MCOs to pay for a 72-hour emergency supply of a drug if failure to obtain prior approval would delay the patient obtaining his or her medication; 
  • Requiring HMOs to publish rationale for step therapy and clinical criteria used to develop it; 
  • Fixing technical coding issues that create undue administrative burden on physicians; and
  • Maintaining a single, statewide Drug Utilization Review Board to review proposed clinical edits and step therapy protocols and to ensure physician and patient input into those requirements. 

The current VDP process is untenable. Despite years of trying to repair it, little progress has been made. This is not to criticize HHSC staff, who have been collaborative and responsive to our concerns. But HHSC is tasked with acting as a $6 billion pharmacy benefit manager on a shoestring budget. Without more staff and resources, physicians’ frustration with the HHSC-VDP will be difficult to resolve. 

Whether the legislature grants MCOs authority to manage the Vendor Drug Program or the VDP stays at HHSC, we need your help to make it an effective, efficient, transparent and accountable program to help us better care for our patients.  

We look forward to working with you to achieve commonsense VDP reforms.

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Last Updated On

March 30, 2017