Co-pays, drug cuts to save Medicaid $11 bln:report
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A federal commission on Thursday recommended $11 billion in Medicaid savings over 5 years from raising prescription drug co-payments, drug pricing reforms and curbs against asset transfers to qualify for benefits.
The controversial Medicaid Commission, charged in May with finding $10 billion in immediate savings, delivered its first of two reports to Congress and Health and Human Services Secretary Michael Leavitt.
Costs for the state-federal health care program for the poor have grown dramatically in recent years, reaching $329 billion in the fiscal year ended June 30, according to the National Governors’ Association.
It provides care to more than 53 million Americans, but some states, including Tennessee and Missouri, have cut benefits due to cope with growing costs.
The panel’s efforts have been sharply criticized by congressional Democrats as being one-sided because only members appointed by President George W. Bush were allowed to vote.
The most controversial suggestion is to allow states flexibility to increase co-payments beyond nominal amounts in certain cases to encourage use of more cost-effective drugs.
The commission, co-chaired by former Tennessee Gov. Don Sundquist and former Maine Gov. Angus King, said this move would save $2 billion over the five-year period.
Currently, drug co-payments are capped at $3 and are prohibited for some patients and services. The commission’s report said co-payments should remain nominal for people at or below the federal poverty line and for “preferred” drugs.
Some public health advocates have criticized co-payment proposals, saying they would cost more in the long run because many beneficiaries cannot afford even nominal co-payments. Rather than pay, they will put off treatment or turn to hospital emergency rooms for uncompensated care.
“It’s an illusory cost-shift,” said Dr. Georges Benjamin, executive director of the American Public Health Association. “These people just don’t have the money.”
TEPID RECEPTION
The suggestions received a tepid reception from Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, who said they would be considered in budget reconciliation talks to meet a September 16 deadline.
“It’s premature to discuss the likelihood that any one option will be included in the Finance Committee package,” he said in a statement.
The commission said $4.3 billion could be saved if states were allowed to establish drug reimbursement prices based on average manufacturer prices rather than the current method of using average wholesale prices, which are typically higher than prices actually paid by pharmacies.
Another $2 billion would be saved by allowing states to collect drug manufacturer rebates on behalf of Medicaid managed care health plans. Currently federal laws prohibit this, which means they are missing out on average rebates of 15.1 percent of average manufacturer prices for brand name drugs and 11 percent for generic drugs.
The commission also recommended rule changes to prevent patients from improperly transferring assets in order to qualify for Medicaid nursing home care benefits, which would save $1.5 billion, and closing tax loopholes for managed care organizations, which would save $1.2 billion.
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