Achieving Results in Medicaid Pharmacy Management

1. Clinical Pharmacy Management Initiative Achieving Results in Medicaid Pharmacy Management Anna Fallieras Director, State Purchasing Programs September 2003

2. Presentation Overview • Current State Environment • Development of Clinical Pharmacy Management Initiative (CPMI) • Case Studies • State Resources

3. Budget Crises Forcing States to Target Medicaid Cutbacks $48.8 $30.7 $14.5 SOURCE: National Association of State Budget Officers; Reuters

4. Medicaid Spending • Total annual State General Fund spending= $467 Billion • Medicaid accounts for approximately 15% of annual State General Fund expenditures ($70 Billion) • Prescription drugs account for nearly 10% of state Medicaid spending ($25 Billion) • Medicaid and State Employee Health Plans account for 20% of total prescription spending in the U.S. ( $28 Billion)

5. Medicaid Prescription Drug Growth Rate is Significant Average Annual Rate of Growth 1998-2000 SOURCE: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of HCFA-64 data.

6. Pharmacy Accounts For A Growing Percentage Of State Medicaid Expenditures • Pharmacy Costs: Double digit increases in pharmacy expenditures, due to price inflation, utilization, and types of prescriptions used. • Enrollment Growth:Rising Medicaid enrollment due to past program expansions and increase in numbers of uninsured, and changing mix of Medicaid population have contributed to prescription drug spending increase. • Management:Until recently, insufficient use/execution of pharmacy and clinical management strategies.

7. Containing Prescription Drug Costs Is a Stated Priority Number of states reporting: Controlling drug cost Reducing/ Freezing Provider Payment Reducing/ Restricting Eligibility Reducing Benefits Increasing Co-Payments SOURCE: KCMU survey of Medicaid officials in 50 states and DC conducted by Health Management Associates, June 2002.

8. States Have Access To A Range Of Mechanisms That Manage The Pharmacy Benefit • Pharmacy management strategies fall into several categories: Price (e.g., PDLs, Rebates, etc.) Drug Mix (e.g., generic substitution, step therapy, etc.) Utilization (e.g., quantity limitations, DUR, etc.) Clinical Management (e.g., profiling, pharmacy case management, disease management, etc.) • Currently focus is on preferred drug lists with supplemental rebates to bring down price and change drug mix.

9. Strategies Based Only On Price and Mix May Come Up Short • Use of prior authorization/preferred drug list with supplemental rebates will certainly result in immediate program savings. • Price/Mix: Does result in immediate reduction in cost of drug and a share shift to lower cost, therapeutically equivalent drugs. • Utilization: May not result in appropriate care and may affect quality of care. • Clinical Management & Quality: Does not address quality health issues related to complex, chronically ill populations resulting in potential expenditures in other service areas, e.g.,inpatient, ER, physician visits, issues related to beneficiary confusion, etc.

10. Strategies Based Only On Price and Mix May Come Up Short (cont.) • Incorporating additional utilization and clinical management strategies as part of a comprehensive approach can result in additional savings while protecting and improving patient care: • Improved information to providers and consumers • Improved disease monitoring and timeliness of interventions • Improved compliance with proven “best practices” • Improved coordination and communication among caregivers and patients • Measurable improvements in outcomes and costs

11. Goal of the Clinical Pharmacy Management Initiative Toassist states in developing clinical pharmacy management initiatives that have the potential to generate Medicaid program savings while improving beneficiary care

12. Clinical Pharmacy Management Initiative (CPMI) • Center for Health Care Strategies - Health Strategies collaboration to: • Build the case for integrating quality into pharmacy cost management strategies • Identify models that pursue both clinical improvement and cost reduction goals • Provide a framework for states to develop new clinical pharmacy management initiatives • Provide technical assistance to states Note: CPMI was developed in response to a request from State Medicaid Directors and with expert input from the CHCS Managed Care Solutions Forum on Pharmacy.

13. What is Clinical Pharmacy Management? Improved coordination and communication among caregivers and patients Improved compliance with proven “best practices”, Rx therapies Improved information to providers and consumers Improved disease monitoring and timeliness of interventions Measurable improvements in outcomes and costs Current efforts largely focused on Pharmacy Case Management (e.g., AZ, MS, UT) Physician Profiling (e.g., FL, TX, WA)

14. Pharmacy Case Management • Identify and manage patients that meet at least one of the following criteria: • Generate high Rx costs • Take high number of Rx • Have a certain chronic disease(s) • Program typically triggered when beneficiary: • Reaches certain drug limit • Generates claims above set level • Is diagnosed with a particular disease • Interventions can vary significantly: • Patient managed by healthcare professional • Direct mail/disease education campaigns

15. Physician Profiling • Technique used to identify providers who prescribe outside guidelines • Typically triggered through drug utilization reviews • Intervention might include • Education of prescribing protocols • Pharmacist consultation to review patient-specific issues

16. CPMI: Framework

17. Case Studies • In-depth profile of 4 models that optimize the CHCS framework • Washington Therapeutic Consultation Service • Texas Medication Algorithm Project • Americhoice of PA Behavioral Pharmacy Management System • North Carolina Nursing Home Polypharmacy Initiative

18. Washington State Therapeutic Consultation Service (TCS) Identification/ Stratification Patients with 5th brand in calendar month or non-preferred drug. Promote appropriate pharmaceutical care and promote cost-effective drug therapies. Clinical Goals Pharmacists review entire drug regimen and perform any necessary prior authorization. Average 8,545 edits/month needing intervention. Outreach/ Intervention Monitoring/ Evaluation Savings for FY 2002 estimated at $8.75 Million (5 months of TCS). Net savings for first 12 months was $31 Million.

19. Texas Medication Algorithm Project (TMAP) Providers of patients diagnosed with schizophrenia, major depression, and bipolar disorder identified through claims data. Identification/ Stratification Improve clinical outcomes, reduce use of inappropriate medications, standardize care throughout the state. ClinicalGoals Outreach/ Intervention Algorithms given to providers; patient and family education describes prescribing guidelines; documentation of prescribing practices and clinical outcomes. Monitoring/ Evaluation Two-year longitudinal study showing “superior clinical outcomes”, such as improved cognitive functioning for schizophrenics. Economic analysis will be released later this year.

20. AmeriChoice of PA Behavioral Pharmacy Management System Physicians with “outlier” prescribing patterns are identified using an evidence-based algorithm of physician prescribing patterns. Identification/ Stratification ClinicalGoals Reducing duplications and inappropriate dose patterns. Physicians are sent letter and guideline materials, followed by “peer-to-peer” education call re: evidence-based guidelines and best practices. Outreach/ Intervention Five quality edits are monitored for improvement. During 2001-2002, an 11% increase in behavioral health pharmacy costs among all prescribing MDs; MDs receiving the intervention had no related cost increases. Monitoring/ Evaluation

21. North Carolina Nursing Home Polypharmacy Initiative Patients in select nursing homes 18+ medications in 90 day period. Identification/ Stratification Reduce inappropriate drugs, duration of therapy, dosing, duplications, adverse reaction, and non-preferred drugs. Clinical Goals State-hired physician/pharmacist teams review patient drug regimens, determine if a drug therapy problem exists, recommend a change and perform follow-up to verify change. 8559 out of 9208 patients required recommendations. Outreach/ Intervention Monitoring/ Evaluation 74% of recommendations acted upon. Cumulative savings from intervention expected to total $15 million this year.

22. Design and Implementation Issues • How will those targeted for the intervention be identified, e.g., claims data, physician referral? • What will be the basis for stratifying the intervention population, e.g., risk assessment, costs, other metrics? • Who will participate in the development of the program objectives and quantifiable clinical goals? • Will the program be rooted in evidence-based practices and are they currently available?

23. Design and Implementation Issues (cont) • How will provider and member participation be encouraged? • How will any additional services be reimbursed, e.g., performance-based, risk-based, service-based? • How will the enrollment process be designed, e.g., opt-in versus opt-out? • Will the program be designed and administered in-house or through a vendor? • What measures will be established to identify process achievements, cost savings, and clinical outcomes based on identified program objectives?

24. CPMI Technical Assistance Products • Report comparing fiscal impact of state pharmacy programs to health plan pharmacy management efforts (January 2003) • Introductory report outlining the Clinical Pharmacy Management Initiative and Best Practices (April 2003) • Issue brief on nursing home pharmacy (Draft Available) • Issue brief on behavioral health pharmacy (November 2003) • Purchasing Institute Sessions for Medicaid Directors and Executive Staff (November 2003) • CHCS State Technical Assistance Series (Winter 2003)

25. Additional Information • For additional pharmacy resources and inquiries on CPMI, please contact: • Anna Fallieras or Sylvia Couvertier • (609) 895-8101 • www.chcs.org