So far, Managed Medicaid is not having a dramatic effect on patient care or costs, says IMS Institute

A shift from fee-for-service to managed care for Medicaid patients

Medicaid existed before the Affordable Care Act of 2010, of course, and after ACA is fully implemented in 2014, it will continue, with some expansion of enrollment. But ACA and other procedural changes at CMS are driving states (which run and partially fund Medicaid) toward putting more Medicaid patients in managed care systems, a trend that began around 2011 and will reach 15 states in the near future. The IMS Institute for Healthcare Informatics posed the question, “How does this shift affect prescribing patterns?” both to get a sense of quality of care, and of potential cost effects. And the answer that came back, from a longitudinal study of Managed Medicaid services in four states (KY, NJ, NY and OH), and three therapeutic areas (antipsychotics, respiratory and diabetes) is: there are slight to significant changes in prescribing patterns, but there is unclear evidence of either better care or lower costs (at least insofar as prescribing costs are concerned).

One factor—not a surprise, but not widely recognized—that plays into all this is that Medicaid has emerged in recent years as not only a component of healthcare that approaches Medicare in size, but that it has become a significant part of both federal and state budgets, all on its own. It has been growing faster than overall federal healthcare spending since 1999 (with the exception of 2006, when the pharmacy benefit for dual-eligible Medicaid/Medicare patients were mostly shifted from Medicaid to Medicare Part D), and now represents 11% of the entire federal budget, and 24% of aggregated states’ budgets. “Medicaid is a growing part of the healthcare landscape, and pharma companies need to pay more attention to it and to engage with states on how Medicaid population is treated,” asserts Murray Aitken, executive director at the Institute. While there are 48 million Americans under Medicare, there are 60 million under Medicaid today.

IMS Institute used its Vector One and Life Link data services to compare managed-care and fee-for-service populations in the four states. Out of this comes a number of conclusions:

  • All four states made greater use of antipsychotic generics, when available, under Managed Medicaid.
  • More New York patients received diabetes treatments under Managed Medicaid; likewise, more Kentucky patients received more respiratory meds.
  • Whether on Managed Medicaid or conventional coverage, there remain significant variations from state to state in healthcare. For example, in New Jersey, average use of antipsychotics per Fee-for-Service Medicaid patient is 40% lower than in the other states studied, while use of respiratory medicines by Managed Medicaid plan participants is 40% higher (the geographic variation in healthcare generally, not just in Medicaid, is one of the great mysteries of the US system).

The IMS study, Shift from Fee-for-Service to Managed Medicaid: What is the Impact on Patient Care?, has been presented at the Academy of Managed Care Pharmacy Annual Meeting (San Diego, Apr. 3-5), and was undertaken solely at IMS’ initiative. “States will be struggling with managing the cost of care for the foreseeable future,” notes Aitken. “They will be looking for guidance from pharma companies and others to cost-effectively manage these programs.” IMS Institute will follow up with additional studies on outcomes and related results, he says.