Drug Utilization Under Managed Medicaid

Cash-strapped states are shifting patients from traditional fee-for-service Medicaid coverage to managed Medicaid plans. The IMS Institute of Healthcare Informatics took an early look at how this trend effects prescription drug utilization.

In April 2010, the Affordable Care Act expanded the Drug Rebate Equalization Act to managed Medicaid enrollees, meaning CMS would get the same drug rebates under managed Medicaid as it did in the fee-for-service model.

At the end of 2011, stimulus dollars dried up while individual states continued to grapple with larger economic pressures and smaller budgets. As a result, states with large (soon to become larger) Medicaid populations have begun to transition patients into managed Medicaid plans, hoping that managed care equals better, coordinated care, and lower costs.

Source: IMS Health

As a result of the shift toward managed Medicaid, the number of prescription drugs paid for under managed Medicaid plans has more than doubled since September 2011, according to new research from the IMS Institute of Healthcare Informatics.

It’s too early to draw definitive conclusions about what this shift will mean for patients and drug-makers nationally; IMS only looked at four states, and three therapeutic categories. The findings point to a slight uptick in prescriptions for patients in managed Medicaid plans versus those remaining in fee-for-service plans, and a push toward increased generic substitution. The data also highlights a dramatic discrepancy in prescribing practices by region, due to demographics, environmental factors, physician preferences, other variables, or all of these combined.

In terms of prescription utilization under managed Medicaid, “the biggest increase was in New York, in diabetes, where we saw a 5% increase lift in the average number of diabetes prescriptions per patient,” says Murray Aitken, executive director, IMS Institute of Healthcare Informatics. By comparison, total diabetes prescriptions in New York for those patients remaining in fee-for-service Medicaid dropped by 1%.  “But that’s in one state in one therapeutic class,” says Aitken. “We’re not seeing a consistent uplift.”

On generic swaps, patients taking antipsychotic meds and covered under managed Medicaid have “between a three and 14% higher utilization of generics” than those patients covered under traditional Medicaid, says Aitken. But again, that’s just one therapeutic class, and only four states.

On the subject of geographic discrepancy in utilization of prescription drugs, “we see 40% differences…in some categories, between different states,” says Aitken. “Some of that is demographic, some of that may be patient profile, and different physicians practice medicine differently…these are significant variations in the care that patients are receiving.”

Geographic variation in the practice of medicine and drug utilization has long been noted and examined by the Dartmouth Institute for Health Policy and Clinical Practice, and in 2009, Congress asked HHS to sponsor two Institute of Medicine studies to examine geographic payment discrepancies under Medicare Parts A,B,C and D. The second study is due for publication this summer, and an interim data read was published in March.

To read the interim data report from the IoM, for free, click here.