Single Source Procurement: Medicaid Fee-For-Service Pharmacy Benefits Management
The Office of Health Insurance Programs (OHIP) requests approval to extend the current Pharmacy Benefit Management (PBM) contract (C020463) with Magellan Medicaid Administration, Inc. (MMA) for twenty four months through March 31, 2017, or sooner if all applicable functions are implemented under the new MAS contractor and/or the pending competitive procurement for rebate administration. This current contract expired on March 31, 2015.
This contract provides PBM services to the Medicaid fee-for-service (FFS) pharmacy program. Under this contract MMA provides support for the Preferred Drug Program, prior authorization services for all pharmacy programs and significant supplemental drug and supply rebates, the history of which is outlined below in the Background section.
Considering the expiration of the current PBM contract, it is neither feasible nor cost-effective to craft and process is a competitive procurement for interim services. Maintaining current PBM services for an additional twenty four months is necessary to allow DOH time to implement services within the new MAS contractor and/or the pending procurement for OHIP's rebate pharmacy programs, without jeopardizing collection of supplemental drug rebates or patient care.
The extension of the Magellan contract is aligned with the Department's strategic business decision to incorporate the functions of all programs managed and administered by this contract into other contracts or procurements, as described in the Justification section below.
There are two significant factors driving this waiver request:
- the implementation of the MAS contractor, which will includes major components of pharmacy program administration, such as claims processing, customer service and prior authorization; and
- the impending Drug Rebate Administration procurement, through which the Department will seek to acquire services for administration of all drug rebate programs currently managed by OHIP.
The MAS: The MAS has been awarded with an official contract start date of May 1, 2015. This will replace the existing Medicaid Management Information System (MMIS), known as eMedNY. These services are currently provided through a contract with Computer Sciences Corporation (CSC). The MAS contract will include all fee-for-service Medicaid services provided by eMedNY (claims processing, benefit administration, fiscal agent services, program integrity, provider management, etc.). All non-rebate related functions currently administered for Medicaid pharmacy under the current PBM contract with Magellan are included in the MAS contract. Functions to be assumed by the MAS contract are not scheduled until February 1, 2016.
The Drug Rebate Administration Procurement: OHIP is seeking to competitively procure services for the administration of all currently operated drug rebate programs.
Drug rebates are a significant component of all the programs included in this waiver request, through which the State realizes approximately $1.2 billion in total annual revenue as a result of rebates earned from Medicaid and EPIC program drug expenditures. It is imperative that current processes continue without interruption until such time that a new vendor is in place.
A procurement is being developed to issue a Request for Proposal to procure services to administer rebate related functions. Because of the potential risk of lost revenue, the Drug Rebate Administration Procurement will be aligned with the MAS implementation so that the collection of rebates is not jeopardized. Rebate functions are scheduled for April 1, 2017, under this RFP.
As such, an extension to the PBM contract is needed through March 31, 2017 for the rebate component of the contract. The PBM component of the current contract would be extended through January 31, 2016 to bridge the gap through the start of the MAS contract. Should implementation not begin by February 1, 2016, the DOH also requests approval to extend this component of the contract at existing rates.
| Procurement / Program Name | Medicaid Fee-For-Service Pharmacy Benefits Management |
|---|---|
| Contractor Name(s) | Magellan Medicaid Administration, Inc. |
| Contract Period | 4/01/2015 – 3/31/17 |
| Contract Number(s) | C020463 |
