Smarter Medicaid practices could save billions

The economic crisis and budget shortfalls have federal and state governments scrambling to cut healthcare costs in Medicaid and other programs. But some of the most effective tools for saving healthcare costs are right in front of budget-cutters and are relatively easy to implement, the National Association of Chain Drug Stores told policy-makers recently.

Among the most effective savings tools, said NACDS president and CEO Steve Anderson, is installing systems within the Medicaid payment and adjudication system that would encourage doctors and pharmacists to prescribe and dispense more low-cost generic drugs to patients enrolled in the massive federal health program. Boosting generic drug utilization alone would be a major source of cost savings, Anderson told leaders in Congress and the White House last month.

Combined with lower-cost “step” therapies and electronic prescribing, higher generic dispensing rates could help pharmacies cut more than $6 billion a year in Medicaid healthcare costs, Anderson said. He made that point in a letter to three of the most powerful national leaders influencing the shape of tomorrow’s healthcare system: Senate Finance Committee chairman Max Baucus, D-Mont., secretary of Health and Human Services Kathleen Sebelius and Nancy-Ann DeParle, director of the White House Office of Health Reform.

The retail pharmacy community, he told the officials, could help reduce healthcare costs and improve patient care to the tune of $6.38 billion in just the first year that Medicaid adopted efficiency standards, innovation and improved information and communications technology. “Community pharmacies are uniquely qualified to assist in efforts to reduce healthcare costs and improve health outcomes,” Anderson wrote. “Recognizing the importance of using the nation’s limited healthcare dollars wisely, NACDS has identified significant savings that could be achieved through the efficient structuring of pharmacy benefits and the appropriate use of medication.”

Greater utilization of generics, he noted, would yield big savings. Noting the “wide variation in the dispensing of generic drugs in state Medicaid programs,” Anderson pointed out that “the top five states nationwide have a generic dispensing rate of 72.7%, compared with the nationwide average of 65.1%.

In addition, as a result of inconsistent use of preferred drug lists, step therapy and other best practices, states also differ widely in what they pay for brand-name drugs,” Anderson added. “Five states with the lowest average brand-drug reimbursement, excluding rebates, have an average reimbursement for brand drugs of $183.29, compared with the national average of $204.54.”

Anderson pointed to several cost-saving steps the government could adopt to encourage cost-effective use of medications and cut Medicaid costs. Among them:

Increasing generic substitution rates to the levels employed by the top five states;

Mandating the use of e-prescribing;

Employing a stepped approach to medication therapy, “using lower-cost therapies before moving to more costly therapies;”

Requiring prior authorization for the prescribing and dispensing of high-cost drugs or drug classes; and

Encouraging, and paying for, drug utilization reviews, whereby pharmacists review patients’ medication profiles.

Anderson also urged expanded support of and funding for medication therapy management by retail pharmacists. “MTM has the potential to decrease healthcare costs by reducing adverse drug events and increasing compliance with medication regimens,” he told policy-makers.

“For example, the North Carolina ChecKmeds NC program, which offers eligible seniors one-on-one MTM consultations with pharmacists, saved an estimated $10 million in healthcare costs and avoided numerous health problems in the first year of the program for the more than 15,000 seniors receiving medication therapy management services,” Anderson added.