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Achieving Results in Medicaid Pharmacy
Management
Anna Fallieras
Director, State Purchasing
Programs
September 2003
Clinical Pharmacy Management Initiative
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Presentation Overview
• Current State Environment
• Development of Clinical Pharmacy Management Initiative (CPMI)
• Case Studies
• State Resources
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Budget Crises Forcing States to Target Medicaid Cutbacks
SOURCE: National Association of State Budget Officers; Reuters
$48.8
$14.5
$30.7
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Medicaid Spending
• Total annual State General Fund spending= $467 Billion
• Medicaid accounts for approximately 15% of annual State General Fund expenditures ($70 Billion)
• Prescription drugs account for nearly 10% of state Medicaid spending ($25 Billion)
• Medicaid and State Employee Health Plans account for 20% of total prescription spending in the U.S. ( $28 Billion)
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Average Annual Rate of Growth 1998-2000
SOURCE: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of HCFA-64 data.
Medicaid Prescription Drug Growth Rate is Significant
8.8%
5.2%
1.7%
5.5%
7.9%
11.7%
15.9%
19.7%
0.00% 5.00% 10.00% 15.00% 20.00%
All Medicaid Services
Inpatient Hospital
Physician, Lab, X-Ray
Outpatient Hospital, Clinic
Prescription Drugs
Nursing Facilities
Home Care
Managed Care
CHCSCenter forHealth Care Strategies, Inc.Pharmacy Accounts 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 prescription drug spending increase.
• Management: Until recently, insufficient use/execution of pharmacy and clinical management strategies.
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32
22
8 9
4
45
37
2725
17
FY2002 FY2003
SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, June 2002.
Reducing/ Freezing Provider Payment
Reducing/ Restricting Eligibility
Reducing Benefits
Increasing Co-Payments
Number of states reporting:
Controlling drug cost
Containing Prescription Drug Costs Is a Stated Priority
CHCSCenter forHealth Care Strategies, Inc.States Have Access To A Range Of
Mechanisms That Manage The Pharmacy Benefit
• 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 focus is on preferred drug lists with
supplemental rebates to bring down price and change
drug mix.
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Strategies Based Only On Price and Mix May Come Up Short
• Use of prior authorization/preferred drug list with supplemental
rebates will certainly result in immediate program savings.
o Price/Mix: Does result in immediate reduction in cost of drug and a
share shift to lower cost, therapeutically equivalent drugs.
o Utilization: May not result in appropriate care and may affect quality of
care.
o 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 Based Only On Price and Mix May Come Up Short (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:
o Improved information to providers and consumers
o Improved disease monitoring and timeliness of interventions
o Improved compliance with proven “best practices”
o Improved coordination and communication among
caregivers and patients
o Measurable improvements in outcomes and costs
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Goal of the Clinical Pharmacy Management Initiative
To assist states in developing clinical pharmacy management initiatives that have the potential to generate Medicaid program savings while improving beneficiary care
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Clinical Pharmacy Management Initiative (CPMI)
• Center for Health Care Strategies - Health Strategies collaboration to:o Build the case for integrating quality into pharmacy
cost management strategies
o Identify models that pursue both clinical improvement and cost reduction goals
o Provide a framework for states to develop new clinical pharmacy management initiatives
o Provide technical assistance to states
Note: CPMI was developed in response to a request from State Medicaid Directors and with expert input from the CHCS Managed Care Solutions Forum on Pharmacy.
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What is Clinical Pharmacy Management?
Current efforts largely focused on
Pharmacy Case Management
(e.g., AZ, MS, UT)
Physician Profiling
(e.g., FL, TX, WA)
Improved coordination and communication among caregivers and patients
Improved compliance with proven “best practices”, Rx therapies
Improved information to providers and consumers
Improved disease monitoring and timeliness of interventions
Measurable improvements in outcomes and costs
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Pharmacy Case Management
• Identify and manage patients that meet at least one of the following criteria:o Generate high Rx costso Take high number of Rxo Have a certain chronic disease(s)
• Program typically triggered when beneficiary:o Reaches certain drug limito Generates claims above set levelo Is diagnosed with a particular disease
• Interventions can vary significantly: o Patient managed by healthcare professionalo Direct mail/disease education campaigns
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Physician Profiling
• Technique used to identify providers who prescribe outside guidelines
• Typically triggered through drug utilization reviews
• Intervention might include
o Education of prescribing protocols
o Pharmacist consultation to review patient-specific
issues
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CPMI: Framework
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Case Studies
• In-depth profile of 4 models that optimize the CHCS framework
o Washington Therapeutic Consultation Service
o Texas Medication Algorithm Project
o Americhoice of PA Behavioral Pharmacy
Management System
o North Carolina Nursing Home Polypharmacy Initiative
CHCSCenter forHealth Care Strategies, Inc.Washington State
Therapeutic Consultation Service (TCS)
Patients with 5th brand in calendar month or non-preferred drug.
Promote appropriate pharmaceutical care and promote cost-effective drug therapies.
Pharmacists review entire drug regimen and perform any necessary prior authorization. Average 8,545 edits/month needing intervention.
Savings for FY 2002 estimated at $8.75 Million (5 months of TCS). Net savings for first 12 months was $31 Million.
Identification/ StratificationClinical GoalsOutreach/ InterventionMonitoring/ Evaluation
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Texas Medication Algorithm Project (TMAP)
Identification/ StratificationClinical GoalsOutreach/ InterventionMonitoring/ Evaluation
Providers of patients diagnosed with schizophrenia, major depression, and bipolar disorder identified through claims data.Improve clinical outcomes, reduce use of inappropriate medications, standardize care throughout the state.Algorithms given to providers; patient and family education describes prescribing guidelines; documentation of prescribing practices and clinical outcomes.Two-year longitudinal study showing “superior clinical outcomes”, such as improved cognitive functioning for schizophrenics. Economic analysis will be released later this year.
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AmeriChoice of PA Behavioral Pharmacy Management System
Identification/ StratificationClinical GoalsOutreach/ InterventionMonitoring/ Evaluation
Physicians with “outlier” prescribing patterns are identified using an evidence-based algorithm of physician prescribing patterns.Reducing duplications and inappropriate dose patterns.
Physicians are sent letter and guideline materials, followed by “peer-to-peer” education call re: evidence-based guidelines and best practices.Five quality edits are monitored for improvement. During 2001-2002, an 11% increase in behavioral health pharmacy costs among all prescribing MDs; MDs receiving the intervention had no related cost increases.
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North Carolina Nursing Home Polypharmacy Initiative
Patients in select nursing homes 18+ medications in 90 day period.
Reduce inappropriate drugs, duration of therapy, dosing, duplications, adverse reaction, and non-preferred drugs.State-hired physician/pharmacist teams review patient drug regimens, determine if a drug therapy problem exists, recommend a change and perform follow-up to verify change. 8559 out of 9208 patients required recommendations.
74% of recommendations acted upon. Cumulative savings from intervention expected to total $15 million this year.
Identification/ StratificationClinical Goals
Outreach/ Intervention
Monitoring/ Evaluation
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Design and Implementation Issues
• How will those targeted for the intervention be identified, e.g., claims data, physician referral?
• What will be the basis for stratifying the intervention population, e.g., risk assessment, costs, other metrics?
• Who will participate in the development of the program objectives and quantifiable clinical goals?
• Will the program be rooted in evidence-based practices and are they currently available?
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Design and Implementation Issues (cont)
• How will provider and member participation be
encouraged?
• How will any additional services be reimbursed, e.g.,
performance-based, risk-based, service-based?
• How will the enrollment process be designed, e.g., opt-in
versus opt-out?
• Will the program be designed and administered in-house or
through a vendor?
• What measures will be established to identify process
achievements, cost savings, and clinical outcomes based
on identified program objectives?
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CPMI Technical Assistance Products
• Report comparing fiscal impact of state pharmacy programs to health plan pharmacy management efforts (January 2003)
• Introductory report outlining the Clinical Pharmacy Management Initiative and Best Practices (April 2003)
• Issue brief on nursing home pharmacy (Draft Available)
• Issue brief on behavioral health pharmacy (November 2003)
• Purchasing Institute Sessions for Medicaid Directors and Executive Staff (November 2003)
• CHCS State Technical Assistance Series (Winter 2003)
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Additional Information
For additional pharmacy resources and inquiries on CPMI, please contact:
Anna Fallieras or Sylvia Couvertier
(609) 895-8101
www.chcs.org
