medicare-medicaid costs and savings

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Transcript medicare-medicaid costs and savings

I DON’T CARE IF IT WORKS, HOW
MUCH DOES IT COST?! ESTIMATING
THE COSTS & SAVINGS OF A
MEDICAID AND MEDICARE
CESSATION BENEFIT
(Based on S. 854 and H.R. 3676)
Matt Barry, Senior Policy Analyst
Campaign for Tobacco Free Kids
November 19, 2002
WHY IS CESSATION IMPORTANT?
• 400,000+ annual deaths in the United States due to
tobacco use.
• 70% of tobacco users say they want to quit.
• Half will make at least one quit attempt this year.
• Only 2.5% of all tobacco users will achieve long-term
abstinence this year.
IT’S ALL ABOUT THE $$$$$
•
The clinical merits of tobacco cessation are well
established - the costs and savings of a cessation benefit
are not.
•
We’d like to think policy makers will “do the right thing” HAAAAAAA!!!
•
In a stark budget environment, the lack of budget
estimates is an impediment in moving the debate forward
on consideration and passage of a cessation benefit.
•
These estimates are an attempt to fill the information
vacuum and keep the debate going.
GIVING POLICYMAKERS SOMETHING TO REACT TO
• While the dollar estimates are important, having a
model for others to react to is even more
important.
• This model can serve as a detailed roadmap for the
development of “official” government budget
projections by the Congressional Budget Office, the
Office of Management and Budget, or the Center for
Medicare and Medicaid Services' Office of the
Actuary.
GENERAL FINDINGS
• In the context of total spending for either Medicare or
Medicaid, the costs of offering a tobacco cessation
benefit are minimal.
• In Medicare, the benefit could constitute as little as
one half of one percent of current program spending.
• In Medicaid, the benefit could constitute as little as
one-tenth of one percent of current spending.
• In both cases, if non-program savings are factored in,
the cessation savings significantly exceed the costs.
GENERAL FINDINGS
Medicare and
Medicaid
Medicare,
Medicare and Beneficiaries Medicaid, NonMedicaid
Who Won't Die Government
Beneficiaries From SmokingSavings
Who Stop
Caused
Beyond 10
Smoking
Disease
Years
615,000
560,000
$881 million
KEY ASSUMPTIONS
 Number of smokers covered by the benefit.
 Number of smokers who will utilize services.
 Number of smokers who will actually quit (of those
who utilize services).
 Growth in the numbers of beneficiaries over time.
 Types of NRTs and non-NRTs covered and any
restrictions on prescription length.
 Cost of NRTs and non-NRTs to Medicaid (retail cost
vs. drug rebate agreements).
 Cost of counseling services.
MEDICARE COST ASSUMPTIONS
Beneficiaries (millions)
Estimated Number of Medicare Beneficiaries
Who Smoke
5.2
5
4.8
4.6
5
4.4
4.2
4.4
4
2002
2012
Year
Reflects a prevalence rate of 10.6% held constant over 10 years.
MEDICARE COST ASSUMPTIONS
•
2-10% of Medicare beneficiaries who smoke will
utilize the cessation benefit each year.
•
20% of those Medicare beneficiaries who utilize the
benefit will achieve long-term abstinence.
•
Telephone and individual, in-person counseling
would cost $100 and $140 per beneficiary who
utilizes the service, respectively (half telephone, half
in-person).
•
No drug treatment available (the costs of drugs could
be calculated using this model).
MEDICARE COST ESTIMATES
Annual and Ten Year Cost Estimates for Medicare
Annual
Ten Year
2%
5%
10%
Utilization Utilization Utilization
$11.2m
$28.1m
$56.2m
$112m
$281m
$562m
MEDICARE SAVINGS ESTIMATES
2%
10%
Utilization Utilization
Long Term
Abstinence
Avoid Premature
Death
Additional Years
of Life
187,000
937,000
30,000
150,000
374,000
1.87m
MEDICARE SAVINGS ESTIMATES
Savings Equation
Utilization
Rate
2%
10%
Add'l 5Year
Percent
Medicare
Smoker
of Add'l
Coverage
Health
Costs for
of Elderly
Est. # of
Est.
Costs
Elderly
Benefits
Quitters
Savings
$2,800 x
33% x
55% x 187,000 =
$83m*
$2,800 x
33% x
55% x 937,000 = $414m*
* Estimated Savings reflect fact that not all savings appear in 10 year budget window.
MEDICAID COST ASSUMPTIONS
Beneficiaries (millions)
Estimated Number of Medicaid Beneficiaries
Who Smoke
10.5
10.1
10
9.5
9
8.7
8.5
8
2002
2012
Year
Notes: (1) Reflects a blended prevalence rate of 31.6% (held constant over 10 years) - 36% for adults and 28% for 14-18 years
old, excludes disabled; (2) 2002 figure includes 340,000 pregnant women, 360,000 in 2012.
MEDICAID COST ASSUMPTIONS
•
2-10% of the Medicaid beneficiaries who smoke will utilize
the benefit each year.
•
For pregnant women, 50% less likely to use drug
treatment and 50% more likely to use counseling.
•
20% who utilize the benefit will achieve long-term
abstinence.
•
For pregnant women, individual counseling would cost
$140 per beneficiary.
•
The cost estimates for drugs reflect a 25% discount off
retail drug prices and unit costs and duration of use were
taken from the PHS Guidelines.
MEDICAID COST ASSUMPTIONS
• The design of the drug formulary has a significant
impact on costs.
• We have illustrated two possible drug plans, one that
is the least restrictive (consistent with PHS
Guidelines) and a second with a realistic set of
formulary limitations.
• Despite differences in formulary design, overall
clinical effectiveness of either approach is the same
thereby generating identical savings projections for
both drug plans.
MEDICAID COST ESTIMATES
Annual and Ten Year Cost Estimates for Medicaid
10%
5%
2%
Utilization Utilization Utilization
Annual
Full PHS Drug Benefit
Limited Drug Benefit
$58m
$22m
$145m
$54m
$291m
$109m
$580m
$220m
$1.5b
$540m
$2.9b
$1.1b
Ten Year
Full PHS Drug Benefit
Limited Drug Benefit
Reflects Federal share only (57% of total cost).
MEDICAID SAVINGS ESTIMATES
2%
10%
Utilization Utilization
Long Term
Abstinence
Avoid
Premature
Death
372,000
1.9m
79,000
394,000
MEDICAID SAVINGS ESTIMATES
Savings Equation (excluding smoking pregnant women)
Add'l 5Percent
Year
of Add'l
Smoker
Costs
Utiliz.
Health
for
Rate
Costs
Medicaid
2%
$2,800 x
67% x
10%
$2,800 x
67% x
Medicaid
Coverage
Federal
of Total
Share of
Est. # of
Est.
Benefits
Medicaid
Quitters
Savings
55% x
57%
x 372,000 = $167m*
55% x
57%
x 1,900,000 = $834m*
* Estimated Savings reflect fact that not all savings appear in 10 year budget window.
MEDICAID SAVINGS ESTIMATES
Savings Equation (smoking pregnant women only)
Utiliz.
Rate
2%
10%
Add'l 5Year
Smoker
Health
Costs
$1,300 x
$1,300 x
Percent
of Add'l
Costs for
Medicaid
100% x
100% x
Medicaid
Coverage
Federal
Est. #
of Total
Share of
of
Est.
Benefits
Medicaid
Quitters
Savings
100% x
57%
x 14,000 =
$10m
100% x
57%
x 70,000 =
$52m
WHAT DID WE LEARN?
• There is a need for basic data on tobacco use
prevalence, particularly in Medicaid.
• The assumptions drive the outcome - DUH!!!
• When factoring in program and non-program savings,
the benefit appears to pay for itself.
• Using program savings only, depending on assumptions
used, benefit pays for majority of costs.
• The cost and savings estimates need to be used
TOGETHER with clinical and quality of care data to
achieve coverage under Medicare and Medicaid.
WHAT’S NEXT?
• Identify strengths and weaknesses of model.
• Educate policy makers about the model and engage
them in a dialogue about cessation benefits.
• Encourage budget officials (in Congress, in HHS) to use
this model to develop their own estimates.
• Develop state-specific cost/savings data based on this
model for Medicaid and Medicare.
• Investigate applicability of this model to other publicly
funded programs (FEHBP, State Employee Health
Programs) and to private employers and insurers.