CHICAGO (AP) — The search for Medicaid savings might drive some lawmakers to drugs examining drug spending, that is.
Medications for 2.7 million poor and disabled Illinoisans now cost the Medicaid program more than $1 billion annually. Medicaid covers drugs for a wide variety of illnesses, from asthma to schizophrenia, and the cost per prescription ranges from $1 for aspirin to $1,600 for an HIV drug.
So, for lawmakers trying to figure out how to meet Gov. Pat Quinn’s goal of cutting the $14 billion program by $2.7 billion, it makes sense to scrutinize the big-ticket cost of the pharmaceuticals.
Take a look at these figures:
The annual cost of drugs for Medicaid has reached $1.6 billion, or about $612 per Medicaid client.
The average Illinois adult on Medicaid (ages 21 to 64) fills 23 prescriptions a year. For children, it’s five prescriptions a year. An elderly Medicaid client fills many more: 115 prescriptions a year.
Before a policy change last year, Medicaid paid for over-the-counter medicine. In one recent year, the tab to taxpayers was $6.2 million for ibuprofen and $459,000 for aspirin. The program will continue to pay for aspirin to prevent heart attacks and strokes.
Generics and brand names play lopsided roles in Medicaid: Only 16 percent of Medicaid prescriptions are for brand-name drugs, but the brand names represent 63 percent of the total cost.
States aren’t obligated to cover drugs in the federally subsidized Medicaid program, so Illinois, in theory, could drop the whole benefit. When the Illinois Department of Healthcare and Family Services this year put together a menu of options for lawmakers to cut, the list included “adult pharmaceuticals.”
It’s a tempting target. But cutting back on drug spending could end up creating higher costs in other areas of health care. Lawmakers want to avoid those unintended consequences and the resulting outcry from health advocates.
“The fact that they put it on the list of possible cuts is almost laughable to me,” said Stephanie Altman of Health and Disability Advocates, a Chicago-based advocacy group. Can you imagine, Altman asked rhetorically, how many emergency room visits and hospitalizations you’d see if patients couldn’t get their antipsychotic drugs, their blood thinners and their insulin?
Research shows that simply increasing co-pays for drugs the amount patients pay out of pocket for a prescription can lead to higher hospital costs when patients then skimp on their drugs. The federal government, which pays for half of Illinois Medicaid costs, considers drug coverage an optional service. But hospital care is mandatory and costly.
“They just end up in the hospital,” if you cut people off of medications entirely, said Jim Parker, Illinois’ deputy administrator for Medicaid. “Most of that drug spending is for chronic conditions. You’re treating blood pressure, you’re treating cholesterol, you’re treating diabetes, you’re treating asthma.”
So spending on drugs can be smart spending, resulting in fewer hospital stays and emergency room visits. But drugs also can be misused and over-prescribed, leading to serious side effects, trips to the hospital and wasted money for the state, Parker said.
Illinois doesn’t have enough staff to thoroughly sift through Medicaid clients’ prescriptions looking for cases of over-prescribing or drug interactions, Parker said. That will happen, however, when Medicaid shifts to managed care. A Medicaid overhaul law enacted last year requires half of all Illinois Medicaid patients to be on managed care by 2015.
Managed-care companies and provider networks will find drug savings when they start coordinating the care of Medicaid clients, Parker said.
To be sure, Illinois has started some cost-saving measures in recent years: negotiating rebates from drug companies in exchange for putting their drugs on a preferred list, providing incentives for pharmacists who dispense generics instead of brand-name drugs and barring 3,000 Medicaid clients who abuse narcotics from further narcotics without prior approval. Cutting payment for most over-the-counter drugs is projected to save $10 million.
Other ideas are now on the table, Parker said.
Co-pays are one place to save money. When patients have to pay higher co-pays they take fewer drugs. Medicaid patients now pay $3 out of pocket for brand-name drugs. Federal rules require Medicaid programs to limit co-pays to minimal amounts, but Illinois could raise co-pays somewhat.
Pharmacists, however, are obligated to fill Medicaid prescriptions when patients can’t afford the co-pays, said David Vite of the Illinois Retail Merchants Association. Increasing copays, he said, “is certainly a reasonable approach as long as there’s a federal waiver to allow pharmacies to not fill a prescription” if the client can’t pay the copay, Vite said.
Limiting the number of prescriptions has been proposed.
Tennessee limits adults to five prescriptions per month. Illinois officials estimate that a similar limit would save the state $136 million a year and affect 200,000 Medicaid clients who now fill more than five prescriptions per month.
But advocates are concerned about how the limit would affect certain patients. For example, about 13,000 Illinois Medicaid clients have HIV, a small portion of the 2.7 million total Medicaid population. One HIV drug, Atripla, is among the top 10 drug expenses in Medicaid, costing $18.4 million in 2011.
“We want to absolutely make sure that HIV drugs are not included in the five-drug limit,” said John Peller, vice president of policy for the AIDS Foundation of Chicago.
“The whole health care system needs to be improved. There is tremendous room for improvement. But it’s got to be done right so it doesn’t backfire and end up raising costs,” Peller said.
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