Occasional LTC Policy Paper Series
© 1997 Duke LTC Resources
Pharmaceutical Assistance Programs for
the Low-Income Elderly: A Review of Findings from a Survey of
the Literature.
by Stuart Bratesman, Jr., MPP
Policy Analyst
Duke Long Term Care Resources
The Problem
Is there a way to improve North Carolina's current informal
arrangement of varied and scattered local private initiatives
in pharmaceutical assistance? |
Are there viable alternatives that could
improve North Carolina's current informal arrangement of varied
and scattered local private initiatives in pharmaceutical assistance
for the non-Medicaid eligible low-income elderly?
- How adequate are the existing programs?
- What scope of services should be offered by programs?
(e.g. direct assistance, counseling and education, etc.)
- Might the informal local networks be replicated in new
areas in the state?
- Might some kind of partnership with state government to
lay the groundwork for a pharmaceutical assistance program
that would serve an unmet need of poor frail older adults
across all of North Carolina be a better choice?
- What are some important considerations to keep in mind
with the aim of maximizing the benefits for the given amount
of money being spent regardless of the strategy chosen?
Methodology
Nearly every article on pharmaceutical assistance is based
on studies of state government programs. |
In order to address these issues, several
major on-line databases of academic and professional journals
were searched to identify the available literature on pharmaceutical
assistance for the elderly. The literature review revealed that
nearly every article on pharmaceutical assistance is based on
studies of state government programs. The numerous locally-based
pharmaceutical assistance programs in North Carolina were reviewed
in only one article (Upchurch, 1994). The review of state pharmaceutical
programs identified in the literature review, was supplemented
by telephone interviews with government officials from several
states, including states that operate non- Medicaid pharmaceutical
assistance programs and states that do not.
Findings
Private sector and non-profit initiatives, like those
found in North Carolina, appear to be uncommon in other
states.
Pharmaceutical assistance programs in other states appear
to have reduced hospital and nursing home admissions.
Every state official we spoke to cited program cost as
their main concern.
Any new program should pay close attention to the design
of cost controls. |
The North Carolina Experience is Atypical
With the exception of one church-based medical clinic for the
homeless in Jacksonville, Florida, and one hospital-based program
in Detroit, officials we spoke to in several state pharmaceutical
assistance programs or state offices on aging were unaware of
programs that fit the existing North Carolina model of community
initiatives.
Although the following discussion is aimed primarily at the
design and concerns of statewide programs, many of these
same points can be applied to more local pharmaceutical
assistance initiatives. In contrast, eleven states have taken
responsibility for statewide programs.
Benefits of Pharmaceutical Assistance Programs Are Reported
While a lack of adequate data sources has prevented direct measurement
of the connection between pharmaceutical assistance programs
and enrollee health status, there is evidence of a positive
relationship between patient compliance with doctors' prescription
orders and state of health. Among the low-income elderly, there
is also a strong relationship between and the high price of
medications and lack of compliance in their use. This suggests
thatpharmaceutical assistance programs do improve enrollee health.
Furthermore, the available data have shown that pharmaceutical
assistance programs:
- increase the usage of prescription medications by making them
more affordable to the non-Medicaid low-income elderly;
- reduce enrollees' consumption of Medicare-reimbursable health
services, especially in-patient hospital costs; and
- reduce the rate of admissions to nursing homes.
Some of the more common cost controls suffer from the
unintended consequence of discouraging appropriate drug
use.
Co-payments can prompt unwise patient decisions.
Drug purchasing caps can increase nursing home admissions.
Strict formularies don't work well without sufficient
physician education and cooperation. |
Costs Are a Key Concern
Since 1977, eleven states have created their own pharmaceutical
assistance programs for the non-Medicaid low-income elderly.
These programs vary widely in program design and cost. Every
state official we spoke with cited program cost as their main
concern. Vermont spends about a $380,000 per year to offer limited
coverage to 4,400 enrollees while Pennsylvania spent $249 million
in FY1995-96 to provide much more generous coverage to their
331,000 enrollees. There are wide differences among state programs
in the range of medications covered, enrollee copayments and
income eligibility limits.
Costs Are Not Static
Several programs experienced sharply rising costs in their early
years. These increases were attributed to rising enrollments
and to the tendency for new enrollees to increase their purchase
of covered medications in the second and third years as they
become more familiar with program benefits. Thus, the admonition
we heard from each state was: Any new program should pay close
attention to the design of cost controls.
Cost Controls Can Extend Program Benefits
Cost controls should be designed, experience suggests, so that
a program can offer the greatest benefit to the greatest number
of low-income elderly, given a budget of limited program resources.
The manager of one state program recommends that it is much
easier to loosen tight cost controls than to start loose and
have to cut benefits and access to medications later. Well-designed
cost controls promote the dispensation of subsidized medications
to those elderly persons who need them most, and who could not
otherwise reasonably afford them. Cost controls achieve these
ends by discouraging the purchase of unnecessary, inappropriate
or ineffective medications, and by recovering a modest degree
of program revenue from enrollment fees.
Commonly used controls include:
- income eligibility limits (for single persons, these range from
$8,750 in Maryland to $17,500 in New York);
- deductibles (fixed or sliding-scale) and copayments (most
states set a fixed dollar amount per prescription while others
use a sliding-scale, a fixed percentage of cost, or a fixed
percentage on purchases above the first $800 per year);
- purchasing caps (annual dollar limits, number of medications
per month, or number of doses per month);
- annual enrollment fees;
- formularies; and
- utilization review
Design Cost Controls to Avoid Unintended Consequences
Program designers, experience suggests, need to beware of
the many unintended consequences of some of the more
popular cost controls. Poorly designed deductibles and
copayments, often meant to discourage the purchase of
unnecessary or ineffective medications, are too often likely to
discourage the purchase of medications that are effective at
preventing or controlling life-threatening disease.
The poor and near-poor elderly often lack adequate medical
knowledge or sufficient income to make a wise choice in the
face of prohibitive copayments. Copayments as-low-as 50
cents per prescription (in 1977) have been shown to
significantly reduce the use of effective cardiovascular
medications and diuretics. The best copayments are scaled
to the enrollee's ability-to-pay so as to avoid undue impact on
the poorest poor.
Though purchasing caps may seem reasonable at first, they
actually represent the harshest form of copayment - they shift
the full burden of a 100% copayment onto an enrollee once
the cap has been reached. In 1980, New Hampshire began a
three-medication-per-month limit for Medicaid outpatients.
Among those recipients who previously received three-or-
more medications a month, the cap induced an immediate
35% decline in the use of cardiovascular drugs and a
doubling in nursing home admission rates. Eleven months
later, when the cap was replaced by a $1.00 copayment per
prescription, usage rates and nursing home admissions
returned to normal.
Formularies are meant to reduce costs, in part by preventing
reimbursement for ineffective drugs or "minor" medications.
Strict formularies forbid coverage for non-listed medications.
Some states go further and restrict coverage to a few limited
classes of medications. Other formularies are less restrictive.
If a doctor prescribes a non-listed medication, he or she is
requested, but not compelled, to substitute from the
formulary.
Strict formularies don't work well unless they are combined
with a sufficient level of physician education and cooperation.
The removal of "minor" or "non-essential" medications from
the reimbursement list typically leads to the substitution of
other medications that remain on the list. While some of
these sub-situations are medically beneficial, other
substitutions are irrational (given the diagnosis) and/or much
more expensive, as in documented cases of major
tranquilizers substituted for minor ones. Strict formularies
should not be created or changed without physician
participation and a good program to educate and counsel
doctors on the best practice in light of the restricted
prescription choices.
Utilization review is often limited to after-the-fact detection of
fraud and abuse such as duplicate claims and abnormal
patterns and charges. More elaborate, though more
expensive, utilization reviews compare prescriptions to
diagnoses and lab results and provide physicians with useful
feedback with the aim of reducing the incidence of
inappropriate medication choices and drug interactions.
However, such feedback appears to have little lasting effect
on a doctor's prescribing patterns unless presented , in-
person, by a medically respected figure such as a senior
physician within the same group practice or by a clinical
pharmacist with a medical school affiliation. While such
prescription review feedback systems can lead to
measurable improvements in patient care, documented
overall cost-savings are negligible.
Recommendations
We recommend that policy makers convene a small consensus
conference to discuss and compare the merits of state
versus private-sector strategies. |
Given that lack of guidance from the literature
about the choice between local programs and statewide initiatives,
we recommend that policy makers consider convening a small consensus
conference to discuss and compare the merits of state versus
private-sector strategies, including what lessons from the broad
state initiatives are useful for programs at the local level.
Such a conference should include experienced experts
from the field within North Carolina, one or two representatives
from N.C. state government, a pharmaceutical assistance manager
from one of the existing state programs, and at least one outside
academic consultant who has experience with an established statewide
pharmaceutical assistance program.
Such a work group could also discuss the
options which lay between individual local
programs and a program managed by state
government - including an option for a
block-funded initiative by a foundation or in
partnership with state government.
Should the work group decide that the best
(or only politically feasible) choice is to
continue to support the funding of locally-
based programs, we recommend that they
proceed, only after implementing a plan of
careful monitoring in order to:
1. measure which local models of pharmaceutical assistance hold
the best promise of offering cost-effective real benefit to
their target populations; and
2. systematically disseminate the lessons
learned from the study to enhance
informed decision-making.
A Selection of Recommended Articles
Soumerai, Stephen B., et.al., "A Critical
Analysis of Polices: Research in Need of Discipline," The Milbank
Quarterly, vol. 71, no. 2, 1993, pp. 217-252.
Soumerai, Stephen B. and Dennis Ross-Degnan, "Experience of
State Drug Benefit Programs," Health Affairs, Vol. 9, No. 3,
Fall 1990, p. 42.
Stephen Soumerai and Dennis Ross-Degnan of the Harvard School
of Medicine are the most widely published authorities in the
field of pharmaceutical assistance. They've examined the impact
costs controls and their unintended consequences and performed
critical reviews of the pharmaceutical assistance literature.
Lingle, Earl W., Jr., et.al., "The Impact of Outpatient Drug
Benefits on the Use and Costs of Health Care Services for the
Elderly." (1987), Inquiry, vol. 24, no. 3, pp. 203- 11.
This study found that the introduction of New Jersey's pharmaceutical
assistance program (PAAD) reduced the consumption of most Medicaid
reimbursable medical services among the New Jersey elderly who
were eligible for PAAD enrollment.
Lavizzo-Mourey, Risa J. and John M. Eisenberg, "Prescription
Drugs, Practicing Physicians, and the Elderly," Health Affairs,
Fall 1990, vol. 9, no. 3, pp. 20-35.
This article examines the impact of pharmaceutical assistance
cost controls on the doctor-patient relationship.
Stuart, Bruce, et.al., "Patterns of Outpatient Prescription
Drug Use Among Pennsylvania Elderly," Health Care Financing
Review, Spring 1991, vol. 12, no. 3, pp. 61-72.
This study determined that the rise in per capita purchase of
prescriptions by Pennsylvania pharmaceutical assistance participants
during their second and third years of enrollment was due to
the insurance effect and increasing familiarity with program
benefits.
Upchurch, Gina, et.al., "Access to Medications for Low-Income
North Carolina Citizens," North Carolina Medical Journal, May
1994, vol. 55, no. 5, pp. 173-7.
The article categorizes nine locally-based North Carolina's
pharmaceutical assistance programs by type and analyses the
benefits and drawbacks of each approach.
Acknowledgements
I wish to thank Dr. George Maddox and Sandra Crawford Leak for
their ideas, advice, and support. I also thank Gina Upchurch
of Senior PharmAssist and Ann Johnson of the North Carolina
Coalition on Aging for their suggestions and help in understanding
the current state of pharmaceutical assistance programs in North
Carolina.
State pharmaceutical assistance program officials from several states were generous
with their time to participate in telephone interviews. These included Thomas Snedden,
Director of the Pennsylvania Bureau of Pharmaceutical Assistance, Marcia Mains and
Evelyn Sebastian of Connecticut's ConnPACE program, Sue Coombe of the Illinois
Pharmaceutical Assistance Program, and others who preferred to be interviewed
without attribution.
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