Achieving Results in Medicaid Pharmacy Management

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• Achieving Results in Medicaid Pharmacy Management

NCSL Fall Meeting November 18, 2002 Anna
Fallieras
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CHCS Mission
To promote the delivery of high quality health
care services for low-income populations and
people with chronic illnesses and disabilities
Purchasing Institute
BCAP
Consumer Action
Strategic Grant-Making
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We All Know That Pharmacy Is Accounting For A
Growing Percentage Of State Medicaid Expenditures

• Pharmacy Costs Double digit increases in
  pharmacy expenditures, due to price inflation,
  utilization, and types of prescriptions used.
• Enrollment Growth Rising Medicaid enrollment
  due to past program expansions and increase in
  numbers of uninsured, and changing mix of
  Medicaid population have contributed to spend.
• Management Until recently, insufficient
  use/execution of pharmacy and clinical management
  strategies.

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The Managed Care Solutions Forum

• Purpose To develop operational strategies to
  improve States pharmacy management programs by
  controlling pharmacy expenditures and assuring
  quality through effective medical management
  strategies.
• Structure Discussion among multiple
  stakeholders (states, plans, providers, consumer
  reps, PBMs, pharmacies, manufacturers,
  policymakers, policy experts).
• Outcome Build consensus across stakeholder
  groups on viable state-based pharmacy management
  approaches.

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Characteristics Of Effective Solutions As Defined
By Forum

• Balanced Strategies are more politically
  palatable if focus straddles both savings and
  quality.
• Multi-faceted Comprehensive, multi-faceted
  approaches can leverage influence and expertise
  across stakeholders to maximize impact.
• Information-Based Trust can be established by
  using evidence and transparency in the
  decision-making process.
• Clinically-Focused Inclusion of provider-driven
  strategies to facilitate improvements in patient
  care while resulting in total health care savings
  were supported by all.

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States Have Access To A Range Of Mechanisms That
Manage The Pharmacy Benefit

• As discussed, pharmacy management strategies fall
  into several categories
• Price (e.g., PDLs, Rebates, etc.)
• Drug Mix (e.g., generic substitution, step
  therapy, etc.)
• Utilization (e.g., quantity limitations, DUR,
  etc.)
• Clinical Management (e.g., profiling, pharmacy
  case management, disease management, etc.)
• Currently, there is significant focus on reducing
  expenditures by using preferred drug lists with
  supplemental rebates to bring down price and
  change drug mix.

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Strategies Representing Only Price and Mix May
Not Yield Full Potential Of Available Options

• Use of prior authorization/preferred drug list
  with supplemental rebates will certainly result
  in immediate program savings.
• Price/Mix Does result in immediate reduction in
  cost of drug and a share shift to lower cost,
  therapeutically equivalent drugs.
• Utilization Does not address drug utilization,
  which continues to grow each year.
• Clinical Management Quality Does not address
  quality health issues related to complex,
  chronically ill populations resulting in
  potential expenditures in other service areas,
  e.g., inpatient, ER, physician visits, issues
  related to beneficiary confusion, etc.

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Strategies Representing Only Price and Mix May
Not Yield Full Potential Of Available Options
(cont.)

• Incorporating additional utilization and
  clinical management strategies as part of a
  comprehensive approach can result in additional
  savings while protecting and improving patient
  care. Examples include
• Pharmacy Case Management Florida, Washington,
  Arkansas
• Profiling Texas, Washington
• Disease Management 13 States

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Pharmacy Case Management Model
Trigger
High number of brand name drugs
Review of drug regimen by pharmacist
Intervention
Avoid duplications and polypharmacy, promote cost
and clinically effective treatment
Clinical Goals
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Physician Profiling Model
Physician prescribing patterns
Trigger
Provider education
Intervention
Increase prescribing of clinically appropriate
drugs
Clinical Goals
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There Are Benefits To Including Clinical
Management Efforts In The Overall Approach

• Some cost-only approaches harmful to patients
  (e.g., drug limits without safety net).
• Programs with focus on Rx only may result in
  increases in other expenses.
• Beneficiary and provider advocates more likely
  to support initiative with quality component.
• Potentially more politically palatable.

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Challenges To Implementing Clinical Management
Programs

• Difficult to score potential savings.
• Up front investment sometimes high.
• Administrative challenges.
• Establishing infrastructure
• Allocating resources
• Overcoming negative perceptions.
• Difficult to evaluate success of program (e.g.,
  constructing study, tracking patients).

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Upcoming CHCS Technical Assistance Products

• Issue brief comparing fiscal impact of state
  pharmacy programs to health plan pharmacy
  management efforts (December 2002)
• Policy paper outlining recommendations of the
  Forum and the Clinical Management Initiative
  (February 2003)
• CHCS Technical Assistance Series (Summer 2003)
• Purchasing Institute Sessions for New Medicaid
  Directors (Summer 2003)