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Kentucky highlights single PBM model and oversight; some rebate mechanics flagged for follow-up
Summary
DMS officials described the single pharmacy benefit manager model (MedImpact) created under Senate Bill 50 and said the contract centralizes reporting and rebates to the department; officials will verify whether any rebates are not captured in DMS reporting.
Department for Medicaid Services officials told the Health Budget Review Subcommittee that Kentucky now uses a single pharmacy benefit manager (PBM) model to manage pharmacy benefits for managed-care and fee-for-service Medicaid members.
Jennifer Dudinsky and Commissioner Lisa Lee described the current arrangement: "We do have one single PBM. It's MedImpact," Lee said, referencing the post-Senate Bill 50 procurement that consolidated pharmacy management. Under the model, DMS said MedImpact administers pharmacy claims reporting and rebate collection for the department; the agency also retains responsibility for oversight and reporting to the legislature.
Why this matters: Pharmacy costs are a significant portion of Medicaid spending; consolidation of PBM functions affects how rebates, utilization metrics and top drug spend are tracked and reported to state officials.
What DMS said: The department described two separate contracts held by MedImpact: one to serve the managed-care organizations and another for fee-for-service pharmacy administration. DMS staff said MedImpact reports prescription volume, provider types and top medications by spend and by volume. DMS also said a pharmacy and therapeutics technical advisory committee helps review medications for coverage decisions.
Concerns and follow-up: Committee members asked whether any rebates might bypass DMS reporting. Lee said most rebates are collected by the department but noted physician-administered drugs billed through a different claims channel "may be carved out" and could have separate rebate mechanics; she agreed to double-check and confirm whether any rebates are not reported to DMS. The committee also sought metrics on the PBM's performance and any corrective actions taken; DMS said it will provide the requested documentation.
Ending: DMS characterized the single-PBM model as improving efficiency relative to previous arrangements with multiple MCO-specific PBMs, and agreed to provide additional PBM reporting and rebate reconciliation details to committee staff.
