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Drug Use Helps Lower Medicaid Recipients’ Medical Spending

By September 14, 2015Commentary

Okay, wise guys, we are talking prescription drugs here, not the illegal kind.  A study in Health  Affairs confirms the oft-used drug company argument that high prices for their products are justified because they keep people out of the hospital and lower overall spending.   (HA Article)   Many Medicaid members have chronic diseases and other health issues which are treated by medications.  There are now 70 million people covered by Medicaid, so it is a large market for the drug companies.  Drug coverage often has no cost-sharing in Medicaid, so there shouldn’t be financial barriers to use.  The researchers looked at eight chronic diseases and tried to determine if sticking to drug treatments led to lower overall costs in the Medicaid population.  Data from 11 states across the country for years 2008, 2009 and 2010 were used, although only fee-for-service members were used, which may limit applicability, since many if not most Medicaid beneficiaries are now in a managed care plan.

Looking at allowed amounts on claims in four categories–total non-drug costs, inpatient costs, outpatient costs and other spending.  Prescription drug fills related to the eight chronic diseases were comapred with the outcomes.  Other demographic and health supply variables were considered in the analysis.  Many of the people in the studied population had very high numbers of prescriptions.  In the general adult Medicaid group, for each one percent increase in drug usage, there was a .17 percent decrease in total non-drug costs.  The effect was significant, but smaller for blind or disabled adults and for children.  The greatest declines were seen in general inpatient and outpatient spending.  Looking at the specific chronic conditions some of the relationships between drug use and medical spending achieved significance but many did not.  The results suggest that Medicaid should adopt policies that encourage medication adherence, including avoiding financial barriers, but further studies would be useful to validate the somewhat limited findings from this research.

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