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Medicare Part D Drug Rebates Reduced Drug Spending, OIG Report Shows

October 4, 2019

Increases in rebates for brand-name drugs in Medicare Part D substantially reduced the growth in reimbursement for those drugs from 2011 to 2015, but not enough to prevent an overall spending increase, according to a new analysis by the HHS Office of Inspector General. Medicare Part D spent an additional $2 billion for more than 1,500 brand-name drugs with rebates in 2015 than it spent four years earlier, even though the total number of prescriptions for brand-name medications reviewed decreased 33%.

by Jinghong Chen

Increases in rebates for brand-name drugs in Medicare Part D substantially reduced the growth in reimbursement for those drugs from 2011 to 2015, but not enough to prevent an overall spending increase, according to a new analysis by the HHS Office of Inspector General. Medicare Part D spent an additional $2 billion for more than 1,500 brand-name drugs with rebates in 2015 than it spent four years earlier, even though the total number of prescriptions for brand-name medications reviewed decreased 33%. Over the same period, total rebates for drugs reviewed grew from $9 billion to $17 billion, whereas 42% of medications reviewed saw decreases in unit rebates. By analyzing spending on drugs with Part D reimbursement and rebates in every year from 2011 to 2015, the report found that although unit reimbursement increased for more than 95% of the drugs, unit rebates declined for 39% of those medications. In addition, unit rebates as a percentage of unit reimbursement dropped for over 50% of the drugs reviewed.

NOTE: Percentages do not sum to 100 because of rounding.

SOURCE: “Rebates for Brand-Name Drugs in Part D Substantially Reduced the Growth in Spending from 2011 to 2015,” Office of Inspector General, U.S. Department of Health & Human Services. Visit https://bit.ly/2kVktur.

Medicaid Expansion Increases Hospital Use, Emergency Visits Among Newly Insured

September 27, 2019

As voters in Missouri and Oklahoma consider ballot initiatives to expand Medicaid, a new study from the Brookings Institution suggests that Medicaid expansion led to a 20% increase in hospital visits between 2012 and 2015. The analysts asserted that expansion caused the newly insured and more medically needy population to seek out inpatient services, particularly deferrable emergency department (ED) visits.

by Carina Belles

As voters in Missouri and Oklahoma consider ballot initiatives to expand Medicaid, a new study from the Brookings Institution suggests that Medicaid expansion led to a 20% increase in hospital visits between 2012 and 2015. The analysts asserted that expansion caused the newly insured and more medically needy population to seek out inpatient services, particularly deferrable emergency department (ED) visits. Researchers focused on data from 20 states, including some that expanded Medicaid and some that did not. States that expanded Medicaid saw significantly more ED visits from Medicaid members, while uninsured visits dropped, causing the Brookings analysts to conclude that the Affordable Care Act successfully provided coverage to some of the most medically needy Americans, but greater understanding of the expansion population’s behavior is needed to encourage the newly eligible to seek out treatment in a primary care setting rather than the emergency room.

NOTE: Due to changes in AIS’s research methodology and CMS reporting practices, the above analysis does not include approximately 1.2 million Medicaid beneficiaries in Puerto Rico.

SOURCE: All Medicaid Expansions Are Not Created Equal: The Geography and Targeting of the Affordable Care Act, Brookings Papers on Economic Activity, August 2019; DHP, AIS’s Directory of Health Plans; CMS. View the Brookings study: https://brook.gs/2kCmpI5.

Effects of Part D Redesign Proposals Vary by Payer

September 20, 2019

Among various proposals to redesign the Medicare Part D benefit, both a bill from the Senate Finance Committee and a model from the Medicare Payment Advisory Commission (MedPAC) would change how drugs are financed in the catastrophic coverage phase and drive plans to better manage beneficiaries with high drug spending. The graphs below, from a recent analysis published in the New England Journal of Medicine, show estimated 2020 spending on brand-name and biosimilar drugs by payer under current and proposed Part D benefit designs for beneficiaries with $25,000 and $100,000 in drug spending.

by Jinghong Chen

Among various proposals to redesign the Medicare Part D benefit, both a bill from the Senate Finance Committee and a model from the Medicare Payment Advisory Commission (MedPAC) would change how drugs are financed in the catastrophic coverage phase and drive plans to better manage beneficiaries with high drug spending. The graphs below, from a recent analysis published in the New England Journal of Medicine, show estimated 2020 spending on brand-name and biosimilar drugs by payer under current and proposed Part D benefit designs for beneficiaries with $25,000 and $100,000 in drug spending.

SOURCE: “Proposals to Redesign Medicare Part D — Easing the Burden of Rising Drug Prices,” The New England Journal of Medicine, Sept. 4, 2019.

Priority Health to Buy Smaller Michigan Insurer

September 13, 2019

Priority Health said on Aug. 29 that it plans to acquire Detroit-based Total Health Care, Inc. Combined, the two health insurers would cover more than 905,000 enrollees, according to AIS’s Directory of Health Plans. Grand Rapids-based Priority Health is the second largest health insurer in the state after Blue Cross Blue Shield of Michigan, with more than 810,000 covered lives.

by Jinghong Chen

Priority Health said on Aug. 29 that it plans to acquire Detroit-based Total Health Care, Inc. Combined, the two health insurers would cover more than 905,000 enrollees, according to AIS’s Directory of Health Plans. Grand Rapids-based Priority Health is the second largest health insurer in the state after Blue Cross Blue Shield of Michigan, with more than 810,000 covered lives. If the deal is approved by state regulators, Priority Health will have a stronger presence in the state’s commercial and Medicaid HMO markets. Priority Health and Total Health Care are not the only Michigan-based insurers to strike a deal recently. In June, Health Alliance Plan said it intends to acquire TRUSTED Health Plan to expand its Medicaid footprint.

SOURCE: AIS’s Directory of Health Plans, as of September 2019.

Few Patients Use Obesity Drugs

September 6, 2019

While about 38% of U.S. adults are obese, and the FDA has approved nine drugs to help treat obesity, relatively few people — about 660,000 annually — were estimated to have used an obesity drug between 2012 and 2016, according to a Government Accountability Office (GAO) report released Aug. 9. The GAO noted that coverage of obesity drugs varied across different types of health insurance.

by Jinghong Chen

While about 38% of U.S. adults are obese, and the FDA has approved nine drugs to help treat obesity, relatively few people — about 660,000 annually — were estimated to have used an obesity drug between 2012 and 2016, according to a Government Accountability Office (GAO) report released Aug. 9. The GAO noted that coverage of obesity drugs varied across different types of health insurance. Patients’ out-of-pocket payments made up most of the expenditures for these drugs (68%), while private insurers covered 25%, Medicaid 4% and Medicare 2%. State Medicaid programs or Medicaid managed care plans within states could choose to either cover or exclude obesity medications. In 2016 and 2017, over half of the prescriptions reimbursed under Medicaid were for the genetic obesity drug Phentermine.

NOTES: The Medicaid amount reimbursed includes state and federal reimbursement and dispensing fees. These amounts do not include all Medicaid spending for obesity drugs under Medicaid managed care — because managed care organizations can be paid for the drugs as part of their capitated payment for all Medicaid services, they are not reimbursed on a per-drug basis, and their payment amounts are not recorded as amounts reimbursed in CMS’s Medicaid State Drug Utilization data. The number of prescriptions reimbursed includes 144 prescriptions for obesity drugs that showed zero dollar amounts for Medicaid reimbursement in CMS’s Medicaid State Drug Utilization data.

SOURCE: U.S. Government Accountability Office, “Few Adults Used Prescription Drugs for Weight Loss and Insurance Coverage Varied.” Visit https://www.gao.gov/assets/710/700815.pdf.