Clinical Edge

Summaries of Must-Read Clinical Literature, Guidelines, and FDA Actions

CMS Targets ‘Spread Pricing’ to Lower Drug Costs

Key clinical point: The Centers for Medicare & Medicaid Services targets the practice of so-called “spread pricing” in Medicaid.

Major finding: The agency clarified its calculation of the medical loss ratio so that spread pricing cannot be used to inflate health plan profits. Spread pricing occurs when pharmacy benefit managers keep a portion of money paid by the managed care plan instead of passing the payment to the pharmacy for filling the prescription.

Study details: CMS clarified that drug price rebates include any price concession or discount received by the managed care plan or its pharmacy benefit manager. These are to be excluded from the medical loss ratio calculation.

Disclosures: The agency makes no disclosures when issuing its guidance.


CMS guidance document.