Glitches in Illinois's Medicaid system

The Illinois Department of Healthcare and Family Services said it corrected a computer problem that was inadvertently charging "thousands" of Medicaid patients a $3 co-payment for certain brand-name drugs that have a cheaper generic equivalent that did not require a co-pay.

Normally, when a brand-name drug becomes available in a cheaper copy, an insurance company pushes its health-plan member to the generic and offers a lower co-payment to encourage generic usage. But the department, which runs the state's Medicaid health insurance program for the poor, negotiated a rate for certain brand-name prescriptions that locked in prices that were below the price of several generic copies and kept the brands on the state's preferred drug list.

Although its computer system was not prepared to waive Medicaid patients' co-payments for the cheaper brands initially, the state estimates it was able to save taxpayers more than $11 million annually by negotiating lower brand prices. Before the system was fixed last week, the state's Medicaid director confirmed there were likely "thousands" of patients who were asked to pay the $3 co-pays on popular brands such as the cholesterol drug Zocor and the antidepressant Zoloft. Both became available in generic form this year, so the computer issue dates back to at least June when Zocor became available in generic form, pharmacists say.

"There was a problem when people were charged a co-pay when using a preferred drug and that is now fixed," said Anne Marie Murphy, Illinois Medicaid director. "We recognized this was an issue and we reorganized the computer system to eliminate that consumer issue of increased co-pay."

Murphy said it is unclear how many of the Medicaid patients actually paid the $3 co-payment because some pharmacies say they waived it and ate the cost, but state officials say patients will be able to get their money back if they paid the co-pay."If a Medicaid beneficiary was charged a co-pay for a brand-named drug on our preferred drug list, they can take their medication back to the pharmacy, have it re-billed, and get their money back at the pharmacy," said Amy Rosenband, spokeswoman for the Illinois Department of Healthcare and Family Services.

Pharmacists say they worry some patients may have done without their medications and their health may have been put at risk during the period when the computer did not recognize the brands as cheaper than generics.

"We have some [Medicaid patients] who have said, `here is the three dollars' and some who have never come back for their prescription," said Len Scalzitti, owner of Medicine Stop Pharmacy of Chicago, 5525 S. Pulaski Road.The state said the problem was unfortunate but occurred in its zeal to aggressively negotiate lower prices with brand-name drugmakers, particularly because Medicaid's budget for drugs has doubled to $2 billion from just under $1 billion five years ago.

It is common for insurers to negotiate lower rates for brand names that are only recently available in generic form. Often, generics are not much cheaper than brand names until a second generic is on the market, when prices can be about 50 percent cheaper, a Food and Drug Administration analysis shows.