State pharmacy benefits manager; DMAS to select & contract with a third-party administrator to serve
SB875 makes major changes to Virginia Medicaid pharmacy administration by requiring the Department of Medical Assistance Services (DMAS) to select and contract with a single, statewide third-party pharmacy benefits manager (PBM) by July 1, 2026. That state PBM would administer pharmacy benefits for all Medicaid recipients, including those enrolled in managed care, and managed care organizations would be required to use that state PBM in their Medicaid contracts. The bill also directs DMAS to hire an independent consultant with experience in Medicaid fraud control and in states that use a single PBM to help implement the new structure.
In addition to the PBM overhaul, the bill amends the Medicaid state plan statute to restate and expand a long list of covered services and eligibility-related provisions. These include telemedicine reimbursement, remote patient monitoring, school-based Medicaid services, family planning, contraceptive coverage, cancer screenings, transplant coverage, durable medical equipment requirements, postpartum care, hearing screenings, and other benefits. It also adds explicit requirements that managed care PBM contracts prohibit spread pricing and that the state PBM use pass-through pricing, a common formulary, transparent rebate and fee reporting, and fiduciary duties to DMAS.
The bill directly affects Title 32.1 of the Code of Virginia by adding a new section, 32.1-325.5, and by amending 32.1-325 governing the Medicaid state plan. Its practical effect is to centralize Medicaid pharmacy benefit administration under a single state-contracted PBM and to impose pricing and transparency rules intended to eliminate spread pricing in Medicaid managed care. It also reinforces or codifies numerous Medicaid coverage and administration requirements affecting DMAS, managed care organizations, providers, pharmacies, schools, and Medicaid enrollees.
The bill appears to have broad bipartisan support overall, passing the Senate and House with large margins and advancing through conference without recorded opposition in the final conference votes. However, the later vote history shows some disagreement after the Governor’s recommendations, including Senate rejection of the recommendations and a narrow vote against passing the bill in enrolled form, suggesting some unresolved concern about the final language or executive changes. Even so, the dominant sentiment in the legislative process was strongly favorable to the bill’s Medicaid pharmacy reforms and related coverage provisions.
The main point of contention is the shift to a single statewide PBM and the associated prohibition on spread pricing, which changes how Medicaid prescription drug benefits are administered and paid for. That structure affects DMAS, managed care organizations, existing PBM contractors, pharmacies, and potentially drug pricing and rebate flows. The Governor’s recommendations also drew resistance late in the process, indicating disagreement over the final form of the bill rather than over the concept of PBM reform itself. More generally, the bill’s broad Medicaid coverage mandates and administrative requirements may raise fiscal and implementation concerns, but the voting record suggests those concerns did not prevent passage.