Setting record straight on W.Va. Medicaid 'carve out' program


I am Vicki Cunningham, a registered pharmacist in West Virginia and the retired Director of Pharmacy Services for West Virginia Medicaid. 

I worked for the Medicaid Program for 18 years, serving as the Pharmacy Director for the last six years of my employment. I promoted and helped lead West Virginia Medicaid’s pharmacy program “carve out,” returning the program to a Fee for Service Model managed directly by West Virginia Medicaid as opposed to managed care organizations (MCOs). 

Due to recently inaccurate information published by the Pegasus Institute and, more recently, a letter-to-the-editor from an advocate of the Kentucky Rural Health Association, I feel compelled to respond. It’s a matter of both professional and state pride that the facts be presented correctly to our Kentucky neighbors.

  1. The savings achieved during first year of the “carve out” were $54.5 million. The $38 million quoted by the Pegasus Institute and Kentucky Rural Health Association were the estimated savings projected while considering the “carve out.”

  1. The published Pegasus Institute article and the Kentucky Rural Health Association letter seem to imply that any achieved savings were negated by increased dispensing fees. Actually, the $54.5 million dollars in savings were achieved over and above the professional dispensing fees paid to pharmacies.

  1. During the first year of the “carve out,” the  total for professional dispensing fees paid on each prescription filled, was $122 million.  This was $116 million more than paid out the previous year by the MCOs.  These fees were not hidden, but proudly acknowledged. The dispensing fee is a professional fee paid directly to pharmacies.

It should be noted that MCOs pay a variable (and lower) dispensing fee per prescription. In the “carve out”, the majority of these fees stayed in West Virginia and were used by pharmacies to support and grow their businesses, hire local employees, support their community and contribute to their local and state economy.

Counter to the assertions made, West Virginia Medicaid is not seeking drug rebates on its own.  West Virginia Medicaid belongs to a group of 13 states known as the Sovereign States Drug Consortium (SSDC).

With approximately 7.5 million Medicaid members, the SSDC seeks supplemental rebates on drugs utilized in their Medicaid programs.  In fact, West Virginia Medicaid receives, at a minimum, 65% of the cost of their program back in the form of both Federal and supplemental pharmaceutical manufacturer rebates. These rebates go back into the Medicaid general fund and reduce the amount of taxpayer funding required to support the Medicaid program. 

Additionally, since West Virginia is a Medicaid expansion state, many more people are covered, significantly reducing the number of West Virginia residents without healthcare coverage.  These additional insured citizens are a boon to rural health clinics and hospitals, since formerly uninsured patients, previously unable to provide payment, are now covered by Medicaid.


  1. The West Virginia Medicaid Pharmacy “carve out” did not cut out 340B pharmacies from participating in the Medicaid Program. Instead, it required 340B entities (which purchase drugs at a deeply discounted rate) to pass those savings on to the Medicaid program, reducing the cost of the pharmaceutical care for Medicaid members and saving money for the West Virginia Medicaid Program and taxpayers.  340B pharmacies are paid a professional dispensing fee, just as all other pharmacies dispensing prescriptions to WV Medicaid members.

The West Virginia Medicaid Pharmacy “carve out” has provided real savings to West Virginia’s Medicaid Program and fair reimbursement to West Virginia pharmacies.  The “carve out” has been a win for West Virginia Medicaid, local businesses and pharmacists, Medicaid members, and the state of West Virginia.


Vicki M. Cunningham, R.Ph.

Former WV Medicaid Pharmacy Director


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