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Prescription Drug Expenditures and Healthcare Burdens in the Medicaid Population

Slide Presentation from the AHRQ 2008 Annual Conference

On September 9, 2008, G. Edward Miller, Jessica S. Banthin, and Thomas M. Selden, made this presentation at the 2008 Annual Conference. Select to access the PowerPoint® presentation (720 KB).

Slide 1

Prescription Drug Expenditures and Healthcare Burdens in the Medicaid Population

G. Edward Miller, Jessica S. Banthin and Thomas M. Selden
AHRQ Conference
September 9, 2008

Slide 2

Health Care Financial Burdens in the Medicaid Population

All state Medicaid programs provide RX benefits with no premiums or deductibles and nominal copayments.
20 percent of non-elderly adult Medicaid enrollees report difficulty affording RX (Cunningham, 2005).
Medicaid enrollees are 3X more likely than persons covered by eployer-sponsored insurance (ESI) to live in families with high health care financial burdens (Banthin and Bernard, 2006).

Slide 3

Medicaid Pharmacy Cost Containment Policies

By 2004, most states had implemented at least some cost-containment policies:
- Copayments.
- Quantity limits (number of prescriptions).
- Prior authorization.
- Generic substitution.
Goal is to reduce costs.
May affect access (Cunningham, 2005; Soumerai, 1994).

Slide 4

Data: Medical Expenditure Panel Survey (MEPS), 2004-05

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

Nationally representative household survey consisting of 12,000 households and 33,000 individuals.
Includes data on insurance coverage, health care utilization and expenditures, health status, medical conditions, & more.
Most accurate source of data on out of pocket spending for medical care.
Released on public use files, tables, statistical briefs: http://www.meps.ahrq.gov

Slide 5

Sample of 'Medicaid Families'

Goal: study the extent to which families covered by Medicaid are at risk of having high health care burdens.
Medicaid families: individuals are included only if their entire family was covered by Medicaid/State Children's Health Insurance Program (SCHIP) for the entire year.
Sample includes:
- Low income parents and their children.
- Non-elderly adults with disabilities.
Sample excludes low income elderly:
- Medicare coverage affects burden.
- Since 2006, drug coverage through Medicare Modernization Act (MMA).

Slide 6

Research Questions

What percentage of non-elderly Medicaid enrollees live in families with health care spending burdens in excess of 5% (10%) of disposable family income?
What is the contribution of out-of-pocket (OOP) spending for prescription drugs to overall health care burdens?
Are cost containment policies associated with:
- Higher OOP spending for drugs?
- Greater level of financial burdens?

Slide 7

Method of Calculating Health Care Financial Burdens

Numerator: total out of pocket spending across all individuals in the family.
Denominator: total family income and adjusted for taxes.
We identify individuals living in families that spend more than 5% or more than 10% of disposable family income on out of pocket expenses.
Results are presented in terms of numbers or percent of individuals living in families with high financial burdens.

Slide 8

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

14.6 million non-elderly persons in 'Medicaid families'
- Subset of Medicaid population.
- 'Medicaid family' = all persons in the family were continuously enrolled in Medicaid or SCHIP.
16.5% have high burdens.
- Spend 5% or more of income for health care.
10.2% have very high burdens.
- Spend 10% or more of income for health care.

Slide 9

Comparison of Families Above/Below 5% Spending Threshold

The slide presents two bar graphs measuring "Average Disposable Income" and "Average OOP Spending."

Average Disposable Income (2005 Dollars)
- Above Threshold: $6,273
- Below Threshold: $15,468*
Average OOP Spending (2005 Dollars)
- Above Threshold: $1,081
- Below Threshold: $118*

Note: *P <.05 for difference between groups.

Slide 10

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

The bar graph measures the "Percent¹ of OOP Spending by Type of Service."

Percent¹ of OOP Spending by Type of Service
- Emergency Room: 2.0%
- Other: 3.5%
- Home Health: 4.8%
- Hospital: 9.8%
- Dental: 11.6%
- Office-Based: 16.6%
- Drug: 51.6%

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

Slide 11

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

Sample = persons with a high (5%) burden
How many would continue to have a high burden if OOP spending for each service was set to zero?
- Emergency Room: 98.1%
- Other: 95.5%
- Home Health: 99.6%
- Hospital: 95.1%
- Dental: 92.0%
- Office-Based: 89.0%
- Drug: 39.4%

Slide 12

Evaluating the Effects of State Cost Containment Policies

We consider: prior authorization, generic substitution, copayments, quantity limits.
Many states have multiple policies.
Compare mean OOP RX spending in.
- States with <3 polices.
- States with 3+ policies.
Use "raking post-stratification" weight adjustments to control for differences across policy groups.

Slide 13

Association of Cost Containment Policies with OOP Drug Spending

The slide presents two bar graphs measuring "Full 'Medicaid Family' Population" and "Persons with High (5%) Burdens."

Full 'Medicaid Family' Population (2005 Dollars)
- Less than 3 Policies: $102
- 3 Plus Policies: $163*
Persons with High (5%) Burdens (2005 Dollars)
- Less than 3 Policies: $357
- 3 Plus Policies: $628*

Note: *P <.05 for difference between groups.

Slide 14

Conclusion

Many states have responded to financial pressures by implementing Medicaid pharmacy cost containment policies.
In implementing these polices, state programs may face a trade-off between.
- Reducing pharmacy costs.
- Maintaining appropriate access to prescription drugs and shielding Medicaid enrollees from high spending burdens.

Current as of January 2009

Internet Citation:

Prescription Drug Expenditures and Healthcare Burdens in the Medicaid Population. Slide Presentation from the AHRQ 2008 Annual Conference (Text Version). January 2009. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/about/annualmtg08/090908slides/Banthin3.htm