A Dose of Managed Care: Controlling Drug Spending in Medicaid

Dranove, David; Ody, Christopher; Starc, Amanda

doi:10.3386/w23956

Cited by 11 publications

(9 citation statements)

References 16 publications

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“…An interesting new pathway for improved efficiency is the incentive introduced under the ACA that encourages states to carve in drug benefits in their managed-care contracts. A multistate study by Dranove et al (9) offers empirical evidence of decreases in spending on drugs, with utilization remaining unchanged. The savings are related to lower point-of-sale prices at pharmacies for identical drugs and greater use of generic substitutes and therefore imply efficiency gains.…”

Section: Efficiencymentioning

confidence: 99%

“…The savings are related to lower point-of-sale prices at pharmacies for identical drugs and greater use of generic substitutes and therefore imply efficiency gains. Savings were larger in states in which HMOs were allowed to create their own formularies for Medicaid patients (9), which raises concerns about HMOs cherry-picking enrollees and merits further research.…”

Section: Efficiencymentioning

confidence: 99%

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Medicaid Managed Care's Effects on Costs, Access, and Quality: An Update

Montoya

Chehal

Adams

2020

Annu. Rev. Public Health

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Medicaid is integral to public health because it insures one in five Americans and half of the nation's births. Nearly two-thirds of all Medicaid recipients are currently enrolled in a health maintenance organization (HMO). Proponents of HMOs argue that they can lower costs while maintaining access and quality. We critically reviewed 32 studies on Medicaid managed care (2011–2019). Authors reported state-specific cost savings and instances of increased access or quality with implementation or redesign of Medicaid managed-care programs. Studies on high-risk populations (e.g., disabled) found improvements in quality specific to a state or a high-risk population. A unique model of managed care (i.e., the Oregon Health Plan) was associated with reduced costs and improved access and quality, but results varied by comparison state. New trends in the literature focused on analysis of auto-assignment algorithms, provider networks, and plan quality. More analysis of costs jointly with access/quality is needed, as is research on managing long-term care among elderly and disabled Medicaid recipients.

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Section: Efficiencymentioning

confidence: 99%

Section: Efficiencymentioning

confidence: 99%

Medicaid Managed Care's Effects on Costs, Access, and Quality: An Update

Montoya

Chehal

Adams

2020

Annu. Rev. Public Health

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“…While previous research has compared generic use between MCOs and FFS Medicaid, 2,12 this study is the first to examine differences in biosimilar and generic use for drugs with large increases in prices. As more of these complex drugs reach the market and their prices increase, they will provide increasingly larger rebates to states.…”

Section: ■■ Discussionmentioning

confidence: 99%

“…1 Since then, states have increasingly "carved-in" drug benefits, shifting their provision to MCOs. 2 Rebates to states for drugs administered by MCOs create differential incentives for drug use between FFS and MCOs. Because MCOs do not benefit from statutory rebates (which are collected by states), they are incentivized to use generics and biosimilars with lower list prices.…”

mentioning

confidence: 99%

Differences Between Managed Care and Fee-for-Service Medicaid in the Use of Generics for High-Rebate Drugs: The Cases of Insulin Glargine and Glatiramer

Hernandez

Gellad

2020

JMCP

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BACKGROUND: Statutory rebates and preferred drug lists (PDLs) may result in differential use of biosimilars and generics between Medicaid fee-forservice (FFS) and managed care organizations (MCOs), particularly for branded drugs with large price increases subject to large inflation rebates, which are not retained by MCOs. OBJECTIVE: To compare the use of 2 biosimilar/generics of branded drugs whose list price tripled in 2008-2018 across states with only FFS Medicaid, with MCOs not subject to statewide PDLs, with MCOs subject to statewide PDLs, and with MCOs where drug benefits have been carved out.METHODS: Using 2018 Medicaid drug utilization data, we extracted reimbursement records in Q1-Q3 2018 for insulin glargine 100 IU/mL and glatiramer. We calculated the market share of the biosimilar insulin glargine and generic glatiramer among the corresponding drugs. We compared the market share of these products across 4 state groups: states with only FFS Medicaid, states with MCOs not subject to statewide PDLs for each drug, states with MCOs subject to PDLs, and states with MCOs where drug benefits have been carved out into FFS. We evaluated the correlation between state-level penetration of MCOs and share of biosimilar/generic products. RESULTS: Nationally, the market share of these biosimilar/specialty generics was higher among MCOs than FFS (60.5% vs. 3.7% for biosimilar insulin glargine; 59.4% vs. 5.7% for generic glatiramer; all P < 0.001). The market share of these products was highest in states where MCOs were not subject to statewide PDLs for these drugs (59.1% for biosimilar insulin glargine, 52.8% for glatiramer) compared with states with MCOs subject to PDLs (2.4%, 18.0%); states with only FFS Medicaid (0.9%, 1.7%); or states where drug benefits have been carved out of MCOs (0.0%, 1.0%; all P < 0.001). There was a significant correlation between state-level MCO penetration and share of generic/biosimilar products (R = 0.50 for biosimilar insulin glargine and 0.57 for glatiramer; all P < 0.001). CONCLUSIONS: For 2 drug classes with large price increases, use of biosimilars/generics was greater in MCOs than FFS Medicaid, specifically in states without PDL requirements for MCOs. These findings may reflect financial incentives for MCOs to use drugs with lower list prices because they do not benefit from statutory Medicaid rebates.

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“…In contrast, the justification for health-related social needs interventions has largely been market-oriented. 6,[8][9][10] Some of this may be due to contemporary trends-particularly neoliberal approaches to healthcare cost containment 11,12 and the ethos of value-based care, which emphasizes the efficient use of resources as a guiding principle for allocating healthcare, and draws upon examples from free-market enterprise to achieve its goals. 13 The market-oriented justification often fosters interventions that target Bsuperutilizers^-those who are at increased risk of accruing high healthcare expenditures due to a combination of morbidity and social need.…”

mentioning

confidence: 99%