Avalere's white paper synthesizes published evidence on PBM roles across the healthcare system, including their administration of prescription benefits for managed Medicaid plans alongside commercial, employer, and Medicare Part D populations. The review examines PBM impact on costs, access, and clinical outcomes, finding evidence of adherence improvements and cost savings through rebate negotiations, while acknowledging heightened regulatory scrutiny from federal and state policymakers. For Medicaid MCO pharmacy directors and compliance teams, the paper provides context on PBM value propositions and evolving oversight landscape relevant to their vendor relationships and state contract requirements.

Avalere's national and state-level modeling quantifies the economic burden of opioid use disorder at nearly $1 trillion annually, with state and local government costs ranging from $137 to $524 per capita depending on geography. The analysis demonstrates that medication-assisted treatments—including methadone, buprenorphine formulations, and behavioral therapy—generate significant per-case cost savings, a finding directly relevant to Medicaid MCO benefit design, utilization management policies, and state pharmacy carve-in/carve-out decisions. With Medicaid covering a disproportionate share of individuals with substance use disorders, these cost-offset calculations inform managed care contracting, quality incentives, and state budget planning.

Avalere analyzed pharmacy claims across payer types including Managed Medicaid to assess on-label and off-label use of GLP-1 and GIP/GLP-1 receptor agonists for diabetes and weight management. The piece examines product differentiation strategies for manufacturers and notes that USP Drug Classification limitations affect coverage decisions in non-Part D plans. While focused primarily on manufacturer strategy and market dynamics, the analysis incorporates Medicaid managed care data and touches on formulary implications relevant to MCO pharmacy benefit management.

Avalere modeling of three Congressional funding reform scenarios—per capita caps, expansion FMAP reductions, and removal of the 50% FMAP floor—projects total federal Medicaid cuts of $436-779 billion over ten years, with children's services losing between $57-114 billion. The analysis breaks down state-by-state impacts across different reform approaches, showing per capita caps would affect all states uniformly while FMAP changes would create highly variable impacts depending on expansion status. These projections provide MCOs and state Medicaid directors critical baseline data for understanding how federal funding restructuring could affect managed care capitation rates and children's service adequacy.

With Congress seeking Medicaid savings through budget reconciliation, mandatory work requirements across states are gaining momentum as a cost-cutting measure. The analysis reviews how past state implementations in Arkansas and Georgia led to coverage loss and administrative complexity, with key design variables including which populations face requirements, exemption processes, and reporting burdens. For MCOs, renewed work requirements would require significant changes to eligibility verification systems, member outreach, and retention strategies while potentially shrinking enrollment.

Federal proposals to prohibit PBMs from earning compensation tied to drug prices or manufacturer rebates—requiring instead flat service fees—could fundamentally change how Medicaid managed care plans contract for pharmacy benefit management. While delinking bills have focused primarily on Medicare Part D and commercial markets, the policy shift would affect PBM operations across all lines of business including Medicaid, potentially altering incentive structures that currently encourage deeper manufacturer discounts. MCOs would need to evaluate how mandatory flat-fee arrangements impact their ability to maximize drug rebates and manage pharmacy costs under capitated payment models.

A new executive order from President Trump instructs federal agencies to develop recommendations within 180 days for improving Medicaid drug rebate accuracy, advancing value-based payment arrangements for pharmaceuticals, and supporting state-level strategies to manage drug spending. While much of the order focuses on Medicare reforms—including changes to IRA negotiation guidance and new CMMI pricing models—the Medicaid provisions signal potential federal action that could reshape how MCOs and states approach pharmacy benefit design and financial management. The directive suggests increased federal attention to pharmacy cost containment as a priority area for Medicaid managed care plans.

Avalere projects that 18 million Americans receiving enhanced ACA marketplace premium tax credits will lose subsidies if they expire in 2025, including nearly 5 million adults ages 50–64. The analysis notes that marketplace enrollment surged partly due to Medicaid redeterminations following the end of the COVID-19 continuous coverage requirement, with approximately 4 million people ages 50–64 disenrolled from Medicaid between 2023 and 2024. The expiration could affect coverage pathways for populations that transitioned from Medicaid to marketplace plans during unwinding.

Avalere surveyed health plan executives on Prescription Drug Affordability Boards (PDABs) and upper payment limits (UPLs) now authorized in four states. Plans anticipate UPLs will force changes to formularies, cost-sharing, and pharmacy reimbursement, with 80% identifying patients as most impacted and most expecting increased out-of-pocket costs despite state affordability goals. While focused on commercial and state policy broadly, the findings have direct implications for Medicaid managed care plans operating in states with PDAB authority, particularly around pharmacy benefits and network adequacy.

The Trump administration's early termination of the ESRD Treatment Choices model and ongoing transplant system reforms under the Increasing Organ Transplant Access model will affect how kidney care is delivered and paid for in 2025. These federal policy changes carry implications for Medicaid managed care organizations covering members with chronic kidney disease and end-stage renal disease, though the piece focuses primarily on Medicare policy with only indirect Medicaid relevance.

The piece examines how 2024's strengthened mental health parity enforcement and emerging psychedelic treatments are creating new compliance pressures and potential coverage expansion obligations for health plans. While it addresses behavioral health policy changes affecting payer compliance and benefit design, the analysis does not specifically focus on Medicaid managed care or distinguish Medicaid implications from commercial and employer-sponsored coverage. The relevance to Medicaid MCOs is real but indirect, as parity rules and treatment innovations affect all behavioral health payers.

This white paper examines how the Medicaid Drug Rebate Program's inflation penalty can trigger rebate obligations for generic manufacturers even when they haven't increased prices beyond inflation, due to purchasing pattern shifts, seasonal fluctuations, or commodity market dynamics. The analysis details five scenarios where AMP increases occur mechanically rather than through deliberate price hikes, creating financial pressure on generics manufacturers operating on thin margins. For MCO pharmacy programs and state Medicaid finance teams, this explains important dynamics affecting generic drug availability and rebate calculations.

When 340B covered entities shift hospital outpatient drug claims from Medicaid into the 340B program, state Medicaid programs lose access to manufacturer rebates—totaling an estimated $2 billion in 2023 alone. The analysis highlights how rapid 340B growth, particularly among rural referral centers and disproportionate share hospitals, creates budget pressure for state Medicaid programs while patients may not receive direct cost-sharing relief. This matters for MCO compliance and finance teams navigating drug pricing arrangements and state directors managing pharmacy budgets under constrained fiscal conditions.

The Trump administration's temporary communications pause has postponed key vaccine advisory committee meetings that typically inform coverage policies across federal and state health programs. The piece examines how delays in vaccine recommendations from CDC and HHS committees could create downstream challenges for public health implementation, though it does not specifically address Medicaid managed care operations or state program implications. The analysis focuses primarily on federal vaccine policy infrastructure and advisory processes rather than payer-specific concerns.

Avalere and Tenasol argue that health plans currently operate fragmented data systems that create technical debt and compliance risks while missing opportunities for quality improvement. The analysis projects that plans will need enterprise-level data strategies integrating expanded sources—including social determinants of health data and electronic medical records—with emerging technologies to drive operational efficiency. While the piece addresses all health plans generically, Medicaid managed care organizations face particular pressure to integrate SDOH data and demonstrate quality outcomes under state contracts.

CMS has selected 15 additional Part D drugs for Medicare price negotiation under the Inflation Reduction Act, representing $41 billion in Part D spending and affecting 5.3 million beneficiaries. The list includes high-cost medications for diabetes, behavioral health conditions, and cancer that are also commonly covered in Medicaid managed care formularies. While the negotiation applies to Medicare, the pricing pressure and manufacturer strategies could influence Medicaid rebate structures and drug access in managed care plans that cover dual-eligible populations.