Pennsylvania Medicaid pharmacy reimbursement
An audit of generic-drug reimbursement in Pennsylvania Medicaid, using the program's own federal reporting (Medical Assistance fee-for-service vs HealthChoices managed care (MCOs and their PBMs)). Findings only — every number traces to a public dataset and a published script, and the reader is welcome to check both.
The short version
Over the latest four quarters (through 2026 Q1), Pennsylvania's managed-care filings show $7.08 per generic prescription above national-average acquisition cost — consistent with the dispensing fee being included in the reported totals — versus $2.72 under fee-for-service. The drug-level sections below show where reimbursement lands relative to acquisition cost regardless.
Background
Pennsylvania runs the largest Medicaid pharmacy program in this series: nearly all members get drugs through HealthChoices managed-care plans whose PBMs set pharmacy reimbursement, beside a fee-for-service program paying NADAC plus a $10 professional dispensing fee. A 2024 Auditor General audit found the state failed to effectively monitor HealthChoices' $4.6 billion in pharmacy spending — undisclosed spread pricing and unreported transmission fees cost taxpayers an estimated $7 million in 2022 alone — and the legislature has kept tightening PBM rules (Act 120 of 2020, Act 77 of 2024). Pennsylvania's managed-care filings carry a fee-like margin; unusually, it is the fee-for-service filings that sit well below the published fee — the reverse of the pattern this series began with.
Every state reports its Medicaid drug utilization to CMS, which publishes it as the State Drug Utilization Data (SDUD) — per drug, per quarter, fee-for-service and managed care separated. This report compares those reported payments against NADAC (CMS's national survey of pharmacy invoice prices) for every generic drug that can be matched.
Reported payment above ingredient cost, per generic prescription
ⓘ How this was built
- CMS State Drug Utilization Data (Pennsylvania rows, FFSU vs MCOU)
- CMS NADAC quarterly per-NDC averages
- FDA NDC Directory (ANDA = generic)
For each quarter and payment system: (total amount reimbursed − units × quarterly NADAC) ÷ prescriptions, summed over every generic NDC with a NADAC price that quarter. Neither side of SDUD itemizes the dispensing fee — this residual is all that is measurable. Suppressed cells (fewer than 11 claims) are absent from the source data; brands are excluded because rebates make their gross prices uncomparable.
Pipeline and calculations built by Claude (Fable 5) from the public datasets above. Educational only — verify against primary sources before acting.
One limit stated plainly: no public dataset itemizes the fee on either side. The chart shows the reported residual above national-average ingredient cost — all that is measurable. A residual near the published fee is consistent with fee-included reporting; a residual near zero is consistent with ingredient-only reporting.
Reimbursed below the national-average cost
NADAC is an average — roughly half of pharmacies pay more than it for any given drug, and the fee absorbs the difference before becoming income. Among managed-care generic fills with $500+ of ingredient cost since 2025, 30% were reimbursed below even the national-average cost — a $5597K shortfall before counting any labor.
| Drug | NADAC / unit | Paid / unit | Rx | Qtr shortfall |
|---|---|---|---|---|
| Polyethylene Glycol 3350 | $1.15 | $0.0760 | 698 | −$336,396.62 |
| Polyethylene glycol 3350 | $1.15 | $0.0755 | 198 | −$109,294.92 |
| XULANE | $36.82 | $32.71 | 4,740 | −$89,034.13 |
| Polyethylene glycol 3350 | $1.15 | $0.0729 | 142 | −$88,129.77 |
| Cetirizine Hydrochloride | $0.1385 | $0.0860 | 7,761 | −$76,209.24 |
| Polyethylene glycol 3350 | $1.15 | $0.0776 | 139 | −$65,126.81 |
| Cholestyramine | $0.7956 | $0.2704 | 279 | −$40,336.09 |
| Betamethasone Sodium Phosphate and Betamethasone Acetate | $9.39 | $6.86 | 1,131 | −$6,475.32 |
ⓘ How this was built
- CMS State Drug Utilization Data (Pennsylvania managed-care rows, latest quarter)
- CMS NADAC quarterly per-NDC averages
Managed-care generic NDCs with 100+ prescriptions in the quarter whose reported payment per unit is below the quarter's NADAC, ranked by total dollars below. 'Shortfall' compares against the national-average cost — an individual pharmacy's actual invoice may be higher or lower.
Pipeline and calculations built by Claude (Fable 5) from the public datasets above. Educational only — verify against primary sources before acting.
Methodology
Sources. CMS State Drug Utilization Data, Pennsylvania rows at full grain (NDC × quarter × utilization type), from data.medicaid.gov; CMS NADAC weekly files and monthly archives, same portal; FDA NDC Directory application numbers (ANDA = generic) via openFDA; the state's professional dispensing fee of $10.00 from Pennsylvania MA professional dispensing fee ($10; 48 Pa.B. 1902).
Computation. Quarterly NADAC per NDC = the latest monthly average observation at or before the quarter's end (look-back capped at 6 months). Ingredient margin = total amount reimbursed − units × quarterly NADAC; per-prescription figures divide by prescription count. All sums are over generic NDCs (ANDA approvals) with a NADAC price in the quarter.
Exclusions. Brand drugs (statutory rebates make their gross prices incomparable); SDUD cells suppressed by CMS (fewer than 11 claims); NDCs without a NADAC price that quarter.
Reproduce it. Every number on this page is emitted by one script, public in our repository: drugdashboards/reports/state_report.py. Generated 2026-08-31.
A DrugDashboards report · the 50-state fee survey · site-wide methodology · informational only — not legal, clinical, or purchasing advice.