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MACPAC Issues June Report to Congress

The Medicaid and CHIP Payment and Access Commission (MACPAC) released its June report to Congress, which includes several chapters on issues of importance to essential hospitals, as well as recommendations for policymakers.

Prescription Drug Coverage

The report offers two recommendations to support states’ development of prescription drug coverage criteria and increase rebates for outpatient prescription drugs to reduce Medicaid spending. Specifically, MACPAC recommends:

  • allowing states to exclude or otherwise restrict coverage of a covered outpatient drug for 180 days after a new drug or new formulation of a drug has been approved by the Food and Drug Administration and has entered the market; and
  • removing the cap on Medicaid drug rebates, which currently is limited to 100 percent of the average manufacturer price, to allow higher rebates on drugs with large price increases.

Third-Party Payments in the Definition of Medicaid Shortfall

The report also suggests on how third-party payments should be treated in the calculation of Medicaid shortfall when used to determine hospital disproportionate share hospital payments.

Several lawsuits have challenged the Centers for Medicare & Medicaid Services’ (CMS’) policies on this issue, with a March 2018 district court ruling that vacated the policy nationwide. In response to concerns about the ruling, MACPAC analyzed the potential impact and recommends that the definition of Medicaid shortfall exclude costs and payments for all Medicaid-eligible patients when Medicaid is not the primary payer.

Medicaid Program Integrity

The report includes findings from the commission’s study on how states measure program integrity performance and return on investment (ROI).

MACPAC found many states did not, or could not, calculate ROI because many program integrity activities are required, embedded in broader program functions, or generate benefits that are not easily quantifiable. Specifically, the commission recommends:

  • the Health and Human Services Secretary conduct a rigorous examination of current program integrity activities and pilot tests of novel strategies; and
  • participation in the recovery audit contractor program be optional for states.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Gontscharow is a senior policy analyst for America's Essential Hospitals.

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