Committee hears extended debate on pharmacy reimbursement, PBMs and impact on provider-led Medicaid models; decision delayed

Senate Bill 520 prompted the committee's longest discussion of the day, with sponsors, Department of Human Services (DHS) officials, pharmacists and hospital representatives trading questions about reimbursement floors, PBM practices and the bill's potential impact on Arkansas's provider-led Medicaid models.

Sponsor Senator Hammer and his co-sponsors described an amendment adopted to delete an earlier contentious 5 percent provision and said the amendment addressed several stakeholder concerns. John Vincent of the Arkansas Pharmacists Association warned of volatile contract terms, clawbacks and unpredictable reimbursement changes, and said pharmacists have seen "dynamic" and sometimes drastic overnight payment changes.

Dennis Smith, senior adviser for Medicaid and health care reform at DHS, told senators the department's primary concern is the bill's effect on the PASS (provider-led) program, which recently moved to full risk. "This bill is about the state stepping in," Smith said, "telling an insurance company that they will cannot, continue to do business in the state unless you, provide a bottom line reimbursement to a particular group of providers." Smith cautioned that embedding mandated reimbursement levels into statute could reverse provider-led initiatives, reduce incentives to innovate and have budget effects; he also said DHS did not have a fiscal analysis available.

Representative Gray, a house cosponsor, said a $10.50 dispensing component remained in the bill to ensure pharmacies recover operating costs, and suggested eliminating spread pricing would free funds to cover that amount due to reduced excess. Pharmacist and hospital witnesses described the spread and clawback practices they say reduce transparency and threaten smaller pharmacies.

Committee members asked DHS for numbers and fiscal impact but Smith said DHS had no fiscal analysis and could not provide specific cost estimates. The committee heard multiple public comments from pharmacists and passed no final motion; the chair said the committee would reconvene later in the day to hear final closing remarks and potentially vote after members had time to absorb the amendment language and confirm votes.

Next steps: The committee agreed to reconvene about 30 minutes after adjournment to hear closing remarks and to consider action; sponsors said an engrossed amendment may be placed on the floor.