|
Gov.
Mark R. Warner is right to try to reduce Medicaid
expenses. His proposal to cut the rising cost of
Medicaid would create a new “prior
authorization” system. His proposed Preferred Drug
List program is intended to reduce prescription drug
costs by creating a new gatekeeper for those who
need medication.
But evidence suggests it is a fallacy to treat
prescription drugs as a stand-alone cost.
A growing body of research suggests that
newer, and generally more expensive, drugs offer a
rapid “payback” by reducing costs elsewhere in
the health care system.
A
recent study for the National Bureau of Economic
Research by Columbia
University
economist Frank Lichtenberg shows that $7.20 in
medical expenses is saved for every dollar spent on
newer drugs.
This
savings is more dramatic for the Medicare/ Medicaid
population where average medical expenditures are 57
percent higher than for the general population. Here
there is a savings of $8.30 in medical expenses for
every dollar spent on newer drugs.
And research by the
Harvard
Medical
School
found that restricting New Hampshire
Medicaid recipients to three prescriptions a month
cut drug use by 35 percent, but substantially
increased the number of nursing home admissions.
The
Governor’s Medicaid proposals would restrict
the use of newer drugs. Drugs not included on the
proposed Preferred Drug List, which a drug gets on
by being one of two selected by a committee or by
offering a rebate to the state, will require prior
authorization from a Richmond
bureaucrat. All drugs on the list in any given
therapeutic class would be treated as equal.
But
not all such drugs are equal – notably those used
in mental health treatment, asthma, heart disease
and especially among the elderly. And it is these
ailments that are over-represented in the growing
Medicaid population.
Additionally,
the rebate – or “kickback” in less polite
terms – results in a hidden tax on private
patients. Required to supply services to Medicaid
populations at below cost, providers increase prices
to private patients and insurers. This leads to
higher insurance premiums, driving lower paid
workers to drop coverage, and increasing demand for
Medicaid services.
The
prior authorization requirement can also result in
added expense. In a report on Michigan’s
Medicaid prescription drug program, the Kaiser
Family Foundation noted that some beneficiaries were
actually harmed, as bureaucratic approval snafus
resulted in the need for expensive hospitalization
to correct untreated or improperly treated
conditions.
Rising Medicaid costs are real. The Governor and General
Assembly need to take effective action. Here are
some ideas that could protect patients and also help
ensure that cheaper, less effective drugs don’t
lead to higher costs in other areas:
·
Patients
already taking drugs covered by Medicaid should be
allowed to continue doing so, thus avoiding any
complications or expensive adverse health effects
from shifting therapies.
·
Any
Preferred Drug List or prior authorizations should
not apply to serious life threatening conditions
when increases in non-drug health care costs (i.e.,
hospitalization) might overwhelm any prescription
drug “savings.”
·
New,
more effective FDA-approved prescription drugs
should be immediately allowed until a drug
utilization review has been performed.
·
The
General Assembly must build in accountability to the
new system, requiring an evaluation of any drug
savings vs. increased non-drug expenses.
Governor Warner has already requested a federal waiver
allowing Virginia
to test market-based Medicaid reforms to improve quality
while bringing down cost. Similar to the successful
“Cash and Counseling” pilots in other states, it
allows for “patient directed” Medicaid accounts
for disabled patients, allowing them to purchase
cost-effective services meeting their specific
needs.
Virginia’s
previous pilot for disease management of chronic
conditions targeted doctors and patients with
education and case management of both medications
and treatments. The result was dramatic cost savings
through reduced emergency room and hospital visits.
This successful pilot could be expanded for further
savings.
Expanding this approach to include prescription drugs or
health insurance in the form of a Medicaid Health
Account or insurance voucher would allow Virginia to
offer a “patients first” program to its
non-permanent chronic care patients. Such a plan
would put patients into a more normal insurance
market, giving them the means to purchase basic
coverage, and permitting them to devote excess MHA
balances to a personal health-related benefits not
covered by traditional Medicaid programs.
The former businessman now serving as Governor understands
that costs reduced in one area can show up as
“budget busters” in other areas. Any Medicaid
“reform” must avoid this very real possibility.
--
February 3, 2003
|
