Furthermore, the average reimbursement rate for a 50-unit test strip package that Medicaid managed care organizations in New Jersey paid was $3.1 million greater than retail prices and $4.5 million greater than reimbursement rates Medicare achieved through competitive bidding, according to the report.
The four state Medicaid MCOs could cut what they spend on test strips by 49 percent to 70 percent if they reduced their rates to match retail prices or created a competitive bidding mail order program similar to what Medicare uses, the OIG found.
The report advises the state Medicaid agency to consider reducing fee-for-service reimbursements for test strips to retail levels or creating a competitive bidding program. The report also recommended the state agency work with the Medicaid MCOs to adjust pay rates to average retail prices or to Medicare competitive pay rates.
After reviewing the OIG draft report, the state Medicaid agency disagreed with the recommendations, saying the fee-for-service savings wouldn’t have been realized in 2011 because more than 90 percent of state Medicaid beneficiaries are currently enrolled in an MCO. The agency also told the OIG that the decision to alter MCO test strip pricing rests with the MCOs. In response to the state agency’s comments, the OIG still maintains its findings and recommendations are valid, according to the report.
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