03/07/2025
Update: Thank you to those that contacted your Senator. We were three votes short of passing this evening. We are already working on options for next year.
Reach out to your Senator regarding HB409. Find your Senator at le.utah.gov
HB409 Medicaid Pharmacy Amendments would transition Utah’s Medicaid pharmacy program from ACO control to a Fee-for-service model. This full carve-out removes pharmacy benefit managers and Accountable Care Organizations from pharmacy processing, allowing Medicaid to directly manage reimbursement.
Inefficiency: It’s highly inefficient for Utah Medicaid Fee for Service (FFS) and the ACOs to run parallel pharmacy processing systems and help desks. This system creates unnecessary administrative costs and wastes resources without benefiting patient care. The Medicaid Fee For Service system will already be fully equipped to adjudicate claims for all medications included in the preferred drug list (PDL) so there is no justifiable reason to waste tax dollars on systems that don’t contribute anything meaningful.
Lack of Care Coordination: ACOs argue a hybrid model promotes care coordination, but the reality is that they have access to claims data whether the state or ACO processes the claims. There’s little evidence that this "coordination" actually improves patient care, as it often just means restricting pharmacy networks for cost reasons.
Wasted Time: Requiring a hybrid system that requires pharmacies to bill two separate primary insurance plans wastes time and resources. Pharmacy staff must switch claims from FFS to ACO plans and this results in claim rejections when the wrong plan is billed. It is estimated that 25,000 hours of labor are wasted on this process each year amongst Utah’s 500 pharmacies.
Financial Savings: The Milliman Study and its supplement, released a few weeks ago. estimates cost savings of $21M ($19-23M) from implementing the unified PDL, and an additional ~$20M from carving the pharmacy program out of the ACO model, for a total savings of $38-$47M (⅓ of those dollars come directly from Utah). Part of that savings could be reinvested to support pharmacy staffing. With 500 pharmacies in Utah, investing just a small amount into pharmacy would allow each to afford 20+ more technician hours per week, a game-changer for overworked pharmacy teams. 2024 saw over 2000 pharmacies across the country close because they can no longer survive on the current PBM reimbursement model.
Pharmacy Market Control: The current ACO model essentially forces pharmacies to contract with CVS/Caremark, which is actively pushing out competitors. The ACOs benefit while smaller, independent pharmacies struggle to survive, limiting the choices available to patients.
Restricted Pharmacy Networks: The current model restricts Medicaid beneficiaries' access to pharmacies based on ACO affiliation. But the state will reimburse all pharmacies the same rate (UMAC + $11.57 per prescription), so there’s no justification for limiting patient choice. If a pharmacy is willing to accept Medicaid reimbursements, meet the provider requirements, and have a valid license, they should be able to serve Medicaid patients. A broad pharmacy network encourages competition based on service quality, which benefits patients and allows Medicaid patients access to any pharmacy they choose.
Duplication of Effort: ACOs employ pharmacists and technicians to duplicate the work already done by the state Medicaid program. These skilled professionals could be better utilized providing direct clinical care to patients instead of performing unnecessary tasks that are already covered by the state.
Hidden Subsidies: The ACO model allows covered entities to benefit from 340b drug pricing, where they can purchase drugs at Medicaid’s discounted rates and resell them at higher prices. This creates hidden subsidies for certain entities, with no clear oversight. A full carve-out would allow the state to better track these subsidies and ensure they go where they are genuinely needed.
