Seeking to save an estimated $95 million a year, the state wants to change the way that more than 1 million low-income Pennsylvanians get their prescription drugs.

The proposal by the state Department of Public Welfare would apply to enrollees in the state's Medicaid managed care plans, companies that are paid per capita fees to provide Medicaid recipients with medical and drug coverage. The department wants to take over the drug portion of the coverage from the plans.

Department officials, who note that other states have taken similar steps, maintain the change would enhance services for consumers and simplify requirements for medical providers.

The companies disagree, contending that the measure, known as a pharmacy "carve out," could reduce consumer choice and undermine their efforts to manage care for enrollees with conditions like diabetes.

"To pull out a central plank of our medical management capability will help no one," said Michael Blackwood, president of Pittsburgh-based Gateway Health Plan.

Gov. Ed Rendell's administration has unsuccessfully pressed for a similar carve out in the past two years. Officials expect the issue to be settled, at least for this year, during budget negotiations this spring.

Behind the administration's proposal is the fact that, compared to managed care companies, state Medicaid agencies can get much larger rebates from drug manufacturers. The rebates would make up much of the estimated $95 million in annual savings once the program was fully implemented.

The state already administers pharmacy benefits for about 800,000 other Medicaid recipients, including about 300,000 who receive most of their drug coverage through the Medicare program known as Part D. State officials would add staff to accommodate the pharmacy needs of the Medicaid enrollees now served by the managed care plans.

To help them continue to manage patients' care, the plans would have "real-time" access to the state's pharmacy claims data and would receive other information on a weekly basis, said Mike Nardone, the welfare department's deputy secretary for medical assistance programs.

The plans could use the data, for example, to ensure that patients get medications most appropriate for their conditions, which could head off the need for more expensive treatment.

In recent legislative testimony, welfare Secretary Estelle Richman said the policy change would simplify pharmacy program requirements by establishing one statewide formulary, or list of preferred drugs, and one set of procedures to submit claims and request prior authorization of certain medications. Consumers would have access to additional drugs, she said, because the state's formulary is less restrictive than those used by the managed care plans.

But plan officials argue that the change would reduce consumer choice by limiting enrollees' access to a single drug formulary rather than separate plan formularies.

And the companies "will have to pay the price when one of their Medicaid enrollees is unable to get the medication they need and lands in the emergency room," Sherry Knowlton, senior vice president for AmeriHealth Mercy Health Plan, said in her testimony.

Michael Campbell, executive director of the Pennsylvania Health Law Project, said that compared to the plans, the state's process for developing its formulary has been more open.

He noted, however, that a state consumer advisory group has expressed concern that the state lacks the kind of expedited appeals process that the plans have for seeking approval for certain drugs.

Mr. Nardone said the state plans to present a proposal about the matter to the group today.

Some lawmakers already have raised concerns about the carve-out proposal. They include House Democratic leader Bill DeWeese of Waynesburg, who was among 20 southwestern Pennsylvania House members who signed a letter to the governor last Wednesday about the matter.

The proposal also got a cool reception from some senators when it was aired late last month before the Public Health and Welfare Committee.

The current system "isn't broken, so why fix it?" asked Sen. Jane Orie, R-McCandless.

A number of states already carve out pharmacy benefits from their Medicaid programs, according to a report published last year by the National Association of State Medicaid Directors.

It indicated that 11 states carved out all drugs from Medicaid managed care organizations, while nine carved out selected drug classes, and seven others reported considering a carve out of all drugs in the past year.