Medicaid Payment for Outpatient Prescription Drugs

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May 2018 | Prescription Drugs

Prescription drugs are expected to experience the fastest average annual spending growth among major health care goods and services over the next 10 years. In order to address this growth in spending, it is helpful to understand how Medicaid pays for prescription drugs and the Medicaid rebates that drug manufacturers pay to states.

This issue brief outlines how state Medicaid programs  and Medicaid managed care organizations pay pharmacies, and describes the role manufacturer rebates play in Medicaid. It updates our March 2017 brief to reflect legislative changes, as well as updates to state data.

Because Medicaid drug payment and rebate policy includes many technical terms and acronyms, a glossary is provided at the end of the brief.

For more information on Medicaid and 340B, see MACPAC’s issue brief on The 340B Drug Pricing Program and Medicaid Drug Rebate Program: How They Interact.

Publication Type: Issue Briefs

Tags: carve in/carve out, fee for service, managed care, payment, prescription drugs, spending