Studies of Medicaid

FORUM REVEALS HIGH RISK OF LOSING MEDICAID COVERAGE The risk of losing health insurance coverage is higher for those on Medicaid than for those with private coverage, said panelists at a forum on the uninsured March 21 in Washington, D.C. The forum was sponsored by the Alliance for Health Reform, which includes the AAFP. The panelists said that because Medicaid eligibility depends on income level, families with rising income levels lose eligibility even if they cannot get employer-sponsored insurance. Administrative barriers in state Medicaid programs also cause many children and adults to lose Medicaid coverage even though they remain eligible, panelists said. Uninsured people are more likely to avoid or delay needed care because they cannot afford it, according to a 2001 Commonwealth Fund survey discussed at the forum. "A lot of people change their health care status over a relatively short period of time," Pamela Short, Ph.D., professor of health policy and administration at Pennsylvania State University, University Park, said at the forum. "We need to be careful not to craft policy that opens gaps even wider." Go to (http://www.allhealth.org/event_032103.asp  ) to read more about the forum.

Hospital Impact  Overall Health Cost Impact

Overall Health Cost Impact

Question. Is capping the number of prescriptions for Medicaid beneficiaries a useful cost-containment strategy? Answer. No Background. The New Hampshire legislature limited Medicaid reimbursement to three prescriptions per month for an 11-month period. AHRQ research evaluated the impact of this Medicaid cost-containment initiative. AHRQ's finding. Investigators estimated that statewide increases in utilization costs were 17 times greater than the savings in drug expenditures (e.g., hospitalizations increased by 35 percent; nursing home admissions also increased in association with the prescription cap). Result: New Hampshire abolished the prescription cap, and another nine States have also changed their policies based on this research.

Question: Can Medicaid program expenditures for pharmaceuticals be reduced without harming the quality of care for children? Answer. Yes Background. Otitis media (middle ear infection) is the most frequent reason for administering antibiotics to children. In Colorado, low-cost antibiotics accounted for 21 percent of the antibiotic expenditures while high-cost antibiotics accounted for 76 percent of the antibiotic expenditures. AHRQ Finding. AHRQ-supported researchers concluded that the use of less expensive antibiotics resulted in the same or lower rates of a second course of antibiotics to treat the infection. They concluded conservatively that substituting low-cost antibiotics for only half of the expensive antibiotic prescriptions would have saved Medicaid nearly $400,000 for the State of Colorado. Result: This research has led to the development of guidelines by the American Academy of Pediatrics that recommend using less-expensive antibiotics and to a HEDIS quality measure.

Question. Is a prior authorization program for selected classes of medications in a Medicaid program cost-effective? Answer. Yes Background. Prior authorization is a program that States use to control Medicaid prescription expenditures. The Tennessee Medicaid program implemented a prior authorization program for prescriptions of non-generic nonsteroidal anti-inflammatory drugs (NSAIDs) at a cost of $75,000. AHRQ Finding. There was a nationwide switch to generic drugs, and a reduction in overall NSAID use. Result: There was a decrease in the amount Medicaid paid for NSAID prescriptions from $22.41 to $10.63 (53 percent) for each person-year of enrollment, for an estimated savings of $12.8 million. Furthermore, these savings were not reduced by an increase in the use of other medications, such as other classes of analgesics or anti-inflammatory drugs, or of other services, such as outpatient visits or inpatient admissions. Payment caps: On the other hand, a New Hampshire study showed that caps on Medicaid pharmaceutical benefits can raise health care costs, at least for certain patients. In 198 1, New Hampshire briefly imposed a limit of three prescriptions a month. An AHCPR-supported evaluation study showed that, for adult schizophrenic patients, the resulting increases in acute care and other medical interventions ($1,530 per patient over 11 months) exceeded the savings in outpatient drug costs ($56.54) several-fold (Soumerai, McLaughlin, Ross-Degnan, et al., 1994; Grant No. HS05554).

Soumerai SB, McLaughlin TJ, Ross-Degnan D, et al. Effects of limiting drug-reimbursement benefits on the use of psychotropic agents and acute mental health services by patients with schizophrenia. N Engl J Med 1994; 331(10): 650-5.

Soumerai S, et al. Payment restrictions for prescription drugs under Medicaid: Effects on therapy, cost, and equity. N Engl J Med 1987; 317(9): 550-556.

The point of this is that prescription savings are risky and will not be enough to offset program costs. What we have to do is to decide where our social service dollars should go to make the most impact. We can also explore ways to reduce the number of people who become dependent.

You are now more of an expert in this area than most of the Medicaid administrators, legislators, and all but the legal departments of managed care groups.

Robert C. Bowman, M.D. rcbowman@atsu.edu