Quality Outcomes Are Better When Medicaid MCOs Administer Pharmacy Benefits

Pharmacy-related quality outcomes were better in states where Medicaid managed care organizations administered health plans’ pharmacy benefits, according to a report from Elevance Health.

The Menges Group, a healthcare consulting organization, used the National Committee for Quality Assurance (NCQA) Quality Compass data set, including Healthcare Effectiveness Data and Information Set (HEDIS) data from 2014 to 2022, to compare Medicaid managed care organization pharmacy-related quality outcomes.

Researchers assessed 29 pharmacy-related HEDIS measures for health plans in states where managed care organizations manage the pharmacy benefit, referred to as a carve-in model, and health plans in states where managed care organizations are not responsible for managing the drug benefit, known as a carved-out model.

Carve-in managed care organizations had more favorable HEDIS scores in 65 percent of the quality performance comparisons made between managed care organizations operating in pharmacy carve-in and carve-out states. Similarly, after excluding age-related measures, HEDIS scores were better in the carve-in setting for 65 percent of comparisons.

Among the 29 HEDIS measures, 12 were behavioral health-focused and 17 were physical health-focused. The carve-in setting delivered better performance on 67 percent of comparisons for behavioral health measures and nearly 63 percent of comparisons for physical health measures. The results were similar after excluding age-related measures.

Researchers also compared HEDIS scores in each carve-out state with the collective scores across managed care organizations operating in a carve-in adjacent state to control for regional variations. Across the three regional analyses, the average HEDIS score was better in the carve-in setting for 68 percent of the comparisons.

The report included 34 sets of findings summarizing different types of comparative analyses. In 33 comparisons, managed care organizations operating under the pharmacy carve-in model had higher HEDIS scores than those operating in the carve-out setting.

“The findings appear to be conclusive that the pharmacy carve-in setting has yielded better performance than the carve-out setting across the pharmacy-related quality measures that differences in prescription drug management can reasonably be expected to influence,” researchers wrote. “Policymakers are encouraged to take this programmatic evidence into consideration as they weigh the pros and cons of each approach.”

Medicaid managed care organizations offer an alternative payment model to fee-for-service. Under a managed care model, states pay a fixed monthly fee to managed care plans for each person enrolled in the plan. Beneficiaries then have access to managed care organizations’ provider networks.

States assess managed care organizations based on quality measures and patient outcomes, furthering the shift to value-based care. Managed care organizations incentivize high-quality care, and the report’s findings reinforce how this care model can lead to better outcomes, specifically with pharmacy benefit integration.