What’s the impact on patient care, particularly prescription drug utilization, as Medicaid beneficiaries move from fee-for-service to Medicaid health plans?  This year, state Medicaid programs will spend over $22.1 billion on pharmacy benefits. This will grow to about $50 billion by 2020, according the CMS actuaries.

Nearly half of Medicaid prescriptions are now covered through Medicaid health plans, rather than fee-for-service (FFS).  The proportion of Medicaid pharmacy benefits provided through health plans will increase dramatically as states extend managed care to high-cost populations, such as dual eligibles and disabled SSI beneficiaries.  Medicaid health plan enrollment will also increase significantly as more adults enroll in Medicaid as a result optional Medicaid eligibility expansion under the Affordable Care Act (ACA), the woodwork effect of streamlined eligibility and enrollment, ACA crowd out of private coverage, and automatic screening of every Health Insurance Exchange applicant for Medicaid eligibility.  The portion of Medicaid drug benefits provided through health plans will also increase as states carve pharmacy benefits back into plans.

With Medicaid pharmacy spending more than doubling under the ACA and Medicaid health plan enrollment growing rapidly, policymakers need to better understand and track the effect of managed care on prescription drug patterns.  In particular, states need to know how best to maximize cost savings while improving patient outcomes.

New Insights on Medicaid Pharmacy Benefits:

Fortunately, an excellent new report from the IMS Institute for Healthcare Informatics provides valuable insights.  The new report – Shift from Fee-for-Service to Managed Medicaid: What is the Impact on Patient Care? – examines prescription drug utilization in four states that have experienced a dramatic shift to Medicaid managed care since 2011.

The IMS Institute analysis focuses on Kentucky, New Jersey, New York and Ohio, comparing changes in the use of anti-psychotic, respiratory, and diabetes medications between patients who switched to Medicaid health plans with those who remain in Medicaid fee-for-service.  In keeping with the highly reader friendly format the IMS Institute is well known for, the report is loaded with fascinating charts and tables, along with crisp insights from their team of researchers.  Since the Institute can draw upon IMS Health’s unique wealth of data, they are able to pinpoint patterns faster and more precisely than other research shops or the federal government.

Managed Medicaid is seen by many states as a way to deliver better preventive care at a lower cost, and recent actions to reduce use of fee-for-service plans has been significant.  While it is still early days, our research reveals some important signs of impact.  As states take on more responsibility with expanded Medicaid enrollment and management of exchanges in 2014 under the Affordable Care Act, their direct and indirect impact on patient care will be subject to closer scrutiny.  Measuring and assessing the consequences of their actions on patient care will become more vital to this critical healthcare program.

The study is intended to identify early trends in prescription utilization changes among patient populations served through Medicaid managed care.  Among the report’s findings:

  • Prescription medicines for beneficiaries enrolled in Medicaid managed care programs have more than doubled since September 2011.  From September 2011 to June 2012, the share of Medicaid prescriptions handled by Medicaid health plans grew from 19% to 46%, with the number of monthly prescriptions dispensed through Managed Medicaid rising from 4.9 million to 12.5 million over the same period.
  • Greater use in all states analyzed of anti-psychotic generics, when available. Patients in Medicaid health plans are much more likely to use generic anti-psychotic drugs than those in Medicaid fee-for-service. Generic utilization rates in the four states studied are between 3 percent and 14 percent higher for patients in Medicaid health plans.
  • Increased use of diabetes medications in New York Medicaid. Patients who switched to Medicaid health plans in New York received 5 percent more prescriptions for diabetes conditions, including 13 percent greater use of Metformin, the most commonly used diabetes treatment.
  • Greater use of respiratory medications in Kentucky Medicaid. Patients who switched to Medicaid health plans in Kentucky increased their average number of prescriptions for respiratory conditions by 5 percent, compared with a 1 percent increase among Medicaid patients in Ohio and New Jersey.
  • Negligible impact on care for many patients.  Little or no change was experienced by many patients who switched to Medicaid plans, or they experienced changes consistent with those who remained in fee-for-service. In New Jersey, for example, average diabetes prescription use per patient declined by 2 percent over the period analyzed for both Medicaid fee-for-service and Medicaid health plans. Use of anti-psychotics in Ohio Medicaid trended similarly for patients in both types of plans, with each declining by 1 percent.
  • Significant variations remain in Medicaid patient care across states and disease areas. Variations in patient care reflecting longstanding differences in clinical practice, Medicaid program design and patient profiles persist. For example, in New Jersey, average use of anti-psychotics per fee-for-service Medicaid patient is 40 percent lower than in the other states studied, while use of respiratory medicines by Medicaid health plan members is 40 percent higher.

The study was presented today at the Academy of Managed Care Pharmacy 25th Annual Meeting in San Diego.  The IMS Institute’s executive director, Murray Aitken, says that further analysis is needed to look more deeply at Medicaid prescription utilization at the drug product and therapeutic class levels and to incorporate information on diagnoses and office visits to enable greater understanding of the impact of capitated health plans as the principle delivery model in Medicaid.

The study – which was produced independently as a public service, without industry or government funding – is available free online at www.theimsinstitute.org.

Disclosure: IMS Health and the IMS Institute for Healthcare Informatics are former consulting clients of mine.  I know them well and am a big fan of their excellent work, but I have no business relationship.