Transcript SystemWideStrategiesForControllingCosts_BrendanKrause

System Wide Strategies:
Controlling Costs in
Medicaid
Brendan Krause
National Governors Association
Illinois Health Forum
Wednesday, December 7, 2005
What’s causing Medicaid
growth
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Increase in caseloads
Slowdown in economy (after effects of
recovery)
Nursing homes and LTC
Increase in Rx and medical technology
utilization
Expensive caseloads/Chronic Illness
Cost Containment Approaches
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Control Long-Term Care Costs
Improve Administration/Management (purchasing
strategies, brokerage models, purchasing pools).
Enhance Fraud and Abuse Efforts
Increase cost-sharing
Decrease reimbursements
Change Benefits, Eligibility
Disease/Care Management/Prevention
Rx Benefit-PDLs, Supplemental Rebates
Prescription Drug Trends—What’s
Happening in the States and Why?
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Rx spending is about 11 percent of
healthcare spending overall—a little more
than 10 cents of the health care dollar
Rx spending grew 9.1 percent in 2003 –
(substantially lower than the 2002 increase of
13.2 percent and less than half the 1999
peak increase of 18.4 percent)—Health
Affairs
Role of Rx in Medicine increasing
Medicaid Rx Management
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Medicaid Rx Purchased through a Rebate
Agreement between Medicaid and Rx
Manufacturers)
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Medicaid gets the “best price”
Limits to purchasing arrangements that Medicaid
can form
Limits to utilization management
Limits to cost sharing for beneficiaries—amount
and enforceability
No closed formularies
What are the Tools?
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Prior Authorization
Preferred Drug Lists and Supplemental
Rebates (about half)
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Generally exemptions for mental health, cancer,
HIV/AIDS drugs
Evidence based
PAL—Prescription Advantage List (ie. NC—
list of prescriptions preferred by Medicaid—
no PA)
What are the Tools?
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Generic Substitution (rebate caveat, mandatory vs.
encouraged)
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Cost Sharing (nominal rates $0-3 apply)
Prescription limits and Drug Exclusions
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When available, the average price of a generic is 70
percent less than that of a brand name drug.
At least 40 states limit the amount of a medication
dispensed to a patient at one time, 24 limit refills, 12 limit
the number of monthly or annual prescriptions, and one
uses a spending cap.
Mail Order Pharmacy for Maintenance Medicines
Purchasing Strategies
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Multi- or Inter-State
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Intra-State
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Across state Medicaid Programs
MI, VT, AK, NH, NV, MN, HI, MT
 LA, MD, WV
Across State Employee/Retiree Benefit Programs
 DE, MO, NM, WV
Across State Agencies and Programs
Negotiated Discounts for Low-Income and/or
Uninsured Residents
Other
Disease/Care Management of
the Chronically Ill
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Chronic disease as a cost driver
Patients who have chronic illness Chronic
disease changing face of primary care
practice
Lack of adherence to evidence based
standards
State role in convening, facilitating standard
setting, measurement
State Options
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Make
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Buy
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Build infrastructure, generally through PCCM
model
Contract with a vendor for case management
services, software
Assemble
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A make/buy combination
State Models
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Indiana
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Chronic Disease Management Initiative with
Diabetes, Asthma, and CHF.
Future initiatives—hypertension,HIV/AIDS
North Carolina
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Community Care of North Carolina (CCNC)
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Provider networks that manage asthma, diabetes, ER
use, and Rx utilization for Medicaid patients statewide
What’s Next?
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The Medicare Modernization Act and the States
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Medicaid
SPAPs
Clawback/Phased Down State Contribution
Retiree Benefit Subsidy
More interest in multi-state purchasing and benefits
management
More focus on quality and outcomes—and
purchasing accordingly