Prescription Drug Expenditures and Prescription Drug Expenditures and Healthcare Burdens in the Medicaid PopulationHealthcare Burdens in the Medicaid Population

G. Edward Miller, Jessica S. Banthin G. Edward Miller, Jessica S. Banthin and Thomas M Seldenand Thomas M Selden

AHRQ ConferenceAHRQ Conference

September 9, 2008September 9, 2008

Health Care Financial Burdens Health Care Financial Burdens in the Medicaid Populationin the Medicaid Population

All state Medicaid programs provide RX benefits All state Medicaid programs provide RX benefits with no premiums or deductibles and nominal with no premiums or deductibles and nominal copayments.copayments.

20 percent of non-elderly adult Medicaid enrollees 20 percent of non-elderly adult Medicaid enrollees report difficulty affording RX (Cunningham, 2005). report difficulty affording RX (Cunningham, 2005).

Medicaid enrollees are 3X more likely than Medicaid enrollees are 3X more likely than persons covered by ESI to live in families with high persons covered by ESI to live in families with high health care financial burdens (Banthin and health care financial burdens (Banthin and Bernard, 2006).Bernard, 2006).

Medicaid Pharmacy Medicaid Pharmacy Cost Containment PoliciesCost Containment Policies

By 2004, most states had implemented at least By 2004, most states had implemented at least some cost-containment policies:some cost-containment policies:

– CopaymentsCopayments

– Quantity limits (number of prescriptions)Quantity limits (number of prescriptions)

– Prior authorizationPrior authorization

– Generic substitutionGeneric substitution Goal is to reduce costsGoal is to reduce costs May affect access (Cunningham, 2005; Soumerai, May affect access (Cunningham, 2005; Soumerai,

1994).1994).

Data: Medical Expenditure Panel Data: Medical Expenditure Panel Survey, 2004-05Survey, 2004-05

The MEPS is an annual survey sponsored by The MEPS is an annual survey sponsored by Agency for Healthcare Research & QualityAgency for Healthcare Research & Quality

Nationally representative household survey Nationally representative household survey consisting of 12,000 households and 33,000 consisting of 12,000 households and 33,000 individualsindividuals

Includes data on insurance coverage, health Includes data on insurance coverage, health care utilization and expenditures, health status, care utilization and expenditures, health status, medical conditions, & moremedical conditions, & more

Most accurate source of data on out of pocket Most accurate source of data on out of pocket spending for medical carespending for medical care

Released on public use files, tables, statistical Released on public use files, tables, statistical briefs: briefs: www.meps.ahrq.govwww.meps.ahrq.gov

Sample of ‘Medicaid Families’Sample of ‘Medicaid Families’

Goal:Goal: study the extent to which families study the extent to which families covered by Medicaid are at risk of having high covered by Medicaid are at risk of having high health care burdenshealth care burdens

Medicaid families:Medicaid families: individuals are included individuals are included only if their entire family was covered by only if their entire family was covered by Medicaid/SCHIP for the entire year. Medicaid/SCHIP for the entire year.

Sample includes:Sample includes:– low income parents and their childrenlow income parents and their children– non-elderly adults with disabilities non-elderly adults with disabilities

Sample excludes low income elderly:Sample excludes low income elderly:– Medicare coverage affects burdenMedicare coverage affects burden– Since 2006, drug coverage through MMA Since 2006, drug coverage through MMA

Research QuestionsResearch Questions

What percentage of non-elderly Medicaid What percentage of non-elderly Medicaid enrollees live in families with health care enrollees live in families with health care spending burdens in excess of 5% (10%) of spending burdens in excess of 5% (10%) of disposable family income?disposable family income?

What is the contribution of out-of-pocket (OOP) What is the contribution of out-of-pocket (OOP) spending for prescription drugs to overall health spending for prescription drugs to overall health care burdens?care burdens?

Are cost containment policies associated with: Are cost containment policies associated with: – higher OOP spending for drugs? higher OOP spending for drugs?

– greater level of financial burdens?greater level of financial burdens?

Method of Calculating Health Care Method of Calculating Health Care Financial BurdensFinancial Burdens

Numerator: total out of pocket spending across Numerator: total out of pocket spending across all individuals in the family. all individuals in the family.

Denominator: total family income and adjusted Denominator: total family income and adjusted for taxes.for taxes.

We identify individuals living in families that We identify individuals living in families that spend more than 5% or more than 10% of spend more than 5% or more than 10% of disposable family income on out of pocket disposable family income on out of pocket expenses.expenses.

Results are presented in terms of numbers or Results are presented in terms of numbers or percent of individuals living in families with high percent of individuals living in families with high financial burdens.financial burdens.

Results: Health Care Financial Burdens Results: Health Care Financial Burdens Among Medicaid Enrollees: 2004-05Among Medicaid Enrollees: 2004-05

14.6 million non-elderly persons in ‘Medicaid families’14.6 million non-elderly persons in ‘Medicaid families’– subset of Medicaid populationsubset of Medicaid population– ‘‘Medicaid family’ = all persons in the family were Medicaid family’ = all persons in the family were

continuously enrolled in Medicaid or SCHIP continuously enrolled in Medicaid or SCHIP

16.5% have high burdens16.5% have high burdens– Spend 5% or more of income for health careSpend 5% or more of income for health care

10.2% have very high burdens10.2% have very high burdens– Spend 10% or more of income for health careSpend 10% or more of income for health care

Comparison of Families Above/Below Comparison of Families Above/Below 5% Spending Threshold5% Spending Threshold

Average Disposable Income

6,273

15,468

02,0004,0006,0008,000

10,00012,00014,00016,00018,000

20

05

Do

lla

rs

Above Threshold Below Threshold

Average OOP Spending

1,081

118

0

200

400

600

800

1,000

1,200

2005

Dol

lars

Above Threshold Below Threshold

*

*

*P < .05 for difference between groups.

Components of OOP Spending In Components of OOP Spending In Families with High (5%) BurdensFamilies with High (5%) Burdens

Percent1 of OOP Spending by Type of Service

2.0 3.5 4.89.8 11.6

16.6

51.6

0

10

20

30

40

50

60

Emerg.Room

Other HomeHealth

Hospital Dental Office-based

Drug

Pe

rce

nt

1. Percent = (OOP spending for service / Total OOP spending) X 100

Contribution of Specific Services to Contribution of Specific Services to the Risk of High (5%) Burdenthe Risk of High (5%) Burden

Sample = persons with a high (5%) burden Sample = persons with a high (5%) burden How many would continue to have a high burden if OOP spending for How many would continue to have a high burden if OOP spending for

each service was set to zero?each service was set to zero?

98.1 95.5 99.6 95.1 92.0 89.0

39.4

0

20

40

60

80

100

Emerg.Room

Other HomeHealth

Hospital Dental Office-based

Drug

Per

cent

Evaluating the Effects of Evaluating the Effects of State Cost Containment PoliciesState Cost Containment Policies

We consider: prior authorization, generic We consider: prior authorization, generic substitution, copayments, quantity limitssubstitution, copayments, quantity limits

Many states have multiple policiesMany states have multiple policies Compare mean OOP RX spending in Compare mean OOP RX spending in

– states with <3 polices states with <3 polices – states with 3+ policiesstates with 3+ policies

Use “raking post-stratification” weight Use “raking post-stratification” weight adjustments to control for differences across adjustments to control for differences across policy groupspolicy groups

Association of Cost Containment Association of Cost Containment Policies with OOP Drug SpendingPolicies with OOP Drug Spending

Full 'Medicaid Family' Population

102

163

0

50

100

150

200

Average OOP RX Spending

2005

Do

llars

< 3 Policies 3+ Policies

Persons with High (5%) Burdens

357

628

0

100

200

300

400

500

600

700

Average OOP RX Spending20

05 D

olla

rs

<3 Policies 3+ Policies

* *

*P < .05 for difference between groups.

ConclusionConclusion

Many states have responded to financial Many states have responded to financial pressures by implementing Medicaid pharmacy pressures by implementing Medicaid pharmacy cost containment policies.cost containment policies.

In implementing these polices, state programs In implementing these polices, state programs may face a trade-off betweenmay face a trade-off between – reducing pharmacy costs reducing pharmacy costs – maintaining appropriate access to maintaining appropriate access to

prescription drugs and shielding Medicaid prescription drugs and shielding Medicaid enrollees from high spending burdensenrollees from high spending burdens