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August 2002, Vol 92, No. 8 | American Journal of Public Health 1238-1243
© 2002 American Public Health Association

RESEARCH AND PRACTICE

Medicaid Managed Care and Coverage of Prescription Medications

Robert J. Buchanan, PhD

Robert J. Buchanan is with the Department of Health Policy and Management, School of Rural Public Health, The Texas A&M University System Health Science Center, College Station.

Correspondence: Requests for reprints should be sent to Robert J. Buchanan, PhD, Department of Health Policy and Management, School of Rural Public Health, TAMU 1266, The Texas A&M University System Health Science Center, College Station, TX 77843-1266 (e-mail: buchanan{at}srph.tamu.edu).


   INTRODUCTION
TOP
 INTRODUCTION
SURVEY METHODOLOGY
 RESULTS
 DISCUSSION
 References
 
Almost 19 million Medicaid recipients were in managed care during 2000, or 55.8% of all Medicaid recipients.1 Most Medicaid managed care contracts specify coverage of prescription drugs without further description, but some states specify limitations and exclusions of pharmacy benefits.2 States may "carve out" pharmacy benefits from managed care contracts and cover medications under fee-for-service Medicaid payments. Carving out allows separate reimbursement for a particular service that may contain higher costs, such as HIV-related medications.2 Section 1115 waivers allow the states, subject to federal approval, to deviate from many standard Medicaid requirements when implementing managed care programs.2,3 The objective of this brief is to present the results of a survey that focused on state Medicaid coverage of prescription medications in managed care settings.


   SURVEY METHODOLOGY
TOP
 INTRODUCTION
 SURVEY METHODOLOGY
RESULTS
 DISCUSSION
 References
 
The survey collected Medicaid policy data on managed care coverage of prescription medications during 2000 and included questions about drug formularies (including HIV antiretrovirals), off-label use, utilization limits, and any copayment responsibilities from enrollees. This Medicaid survey was sent to the policy information contact person for the Medicaid Drug Rebate Program in each state. A mailing list of the policy contact person in each state was obtained from the Health Care Financing Administration.4 The survey began in January 2000, with 10 additional mailings of the questionnaire sent at 6-week intervals to Medicaid programs not responding. By February 2001, responses had been received from 50 Medicaid programs. The survey results were summarized into tables and mailed to respondents in April 2001 for any updates. During this verification process, a completed questionnaire was received from the 51st Medicaid program, so that the study now included all states and the District of Columbia. The verification process was completed in July 2001.


   RESULTS
TOP
 INTRODUCTION
 SURVEY METHODOLOGY
 RESULTS
DISCUSSION
 References
 
At least a dozen Medicaid programs reported in their responses to the survey that prescription medications were "carved out" of managed care and covered under the fee-for-service Medicaid program during 2000. Table 1Go illustrates that many state Medicaid programs allowed managed care organizations (MCOs) to limit the number of medications that Medicaid recipients in MCOs received during 2000. Table 1Go also shows that in almost all states that allowed MCOs to limit the utilization of medications, these MCOs had to allow exceptions for medical necessity. Table 1Go shows that many Medicaid programs allowed MCOs to require copayments for medications from Medicaid recipients during 2000.


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  		TABLE 1— —Medicaid Managed Care and Prescription Drug (Rx) Coverage
 
The survey included several questions about off-label use of medications. Off-label use occurs when a physician prescribes a medication for a use other than the labeled indications. As Table 2Go illustrates, slightly more states did not require MCOs to allow off-label use than states that did and in few of these states did MCOs make exceptions to allow off-label use for Medicaid recipients with AIDS or HIV infection. A number of states reported that off-label use was allowed at the discretion of the MCO. Table 2Go also presents the references that MCOs used to allow off-label use and how the off-label use policy was enforced.


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  		TABLE 2— —Medicaid Managed Care and Prescription Drug (Rx) Policies
 
As Table 2Go presents, the states were about evenly divided between Medicaid programs allowing MCOs to implement open or restrictive drug formularies during 2000. Table 2Go also shows that almost all Medicaid programs that allowed MCOs to implement restrictive drug formularies required these MCOs to cover all protease inhibitors, nucleoside reverse transcriptase inhibitors, and nonnucleoside reverse transcriptase inhibitors (medications used in the treatment of HIV infection). A few Medicaid programs reported that some or all of these medications used in the treatment of HIV infection were carved out of the MCO agreement and reimbursed through fee-for-service Medicaid during 2000.


   DISCUSSION
TOP
 INTRODUCTION
 SURVEY METHODOLOGY
 RESULTS
 DISCUSSION
References
 
More than 50% of the people living with AIDS and up to 90% of all children with AIDS received Medicaid coverage during 2001.5 In addition, a study of people with HIV infection receiving medical care indicated that 29% were covered by Medicaid and another 19% were covered by Medicare, usually in combination with Medicaid.6 Placing people with HIV disease in Medicaid managed care presents many challenges, including those of developing adequate Medicaid capitation rates7 and ensuring that recipients have access to comprehensive drug coverage within managed care formularies.8 The results of the survey conducted for this research indicate that some states allow MCOs to implement policies that could adversely affect access to needed medications, such as utilization limits, copayment responsibilities, restrictive formularies, or off-label use. Almost half of the drugs used to treat HIV disease are prescribed for off-label indications.9 However, many states did not require Medicaid MCOs to allow off-label use during 2000. To enable Medicaid recipients with HIV in managed care to have access to needed prescription drugs, many states have implemented a range of strategies, such as medication carve outs, as found in this study, or risk-adjusted capitation rates or special HIV and AIDS rates.3,7


   Acknowledgments
 
This research was funded by a grant from the Agency for Healthcare Research and Quality (HSO9819-02).

Human Participant Protection
No IRB approval was required for this study.


   Footnotes
 
Peer Reviewed

Accepted for publication December 13, 2001.


   References
TOP
 INTRODUCTION
 SURVEY METHODOLOGY
 RESULTS
 DISCUSSION
 References
 
1. Health Care Financing Administration. Managed care trends. Available at: http://www.hcfa.gov/medicaid/trends00.pdf. Accessed August 18, 2001.

2. Shalala D. Report to Congress: safeguards for individuals with special health care needs enrolled in Medicaid managed care. November 6, 2000. Available at: http://www.hcfa.gov/medicaid/11060rpt.pdf. Accessed August 15, 2001.

3. Conviser R, Kerrigan D, Thompson S. The adequacy of reimbursement for HIV under Section 115 Medicaid Waivers. AIDS Public Policy J.1997;12(3):112–127.[Medline]

4. Center for Medicaid and State Operations. MDRI detailed state contact information (current listing). Available at: http://www.hcfa.gov/medicaid/drugs/drugcon.pdf. Accessed May 17, 2002.

5. Health Care Financing Administration. Fact sheet: Medicaid and acquired immunodeficiency syndrome (AIDS) and human immunodeficiency virus (HIV) infection. February 2001. Available at: http://www.hcfa.gov/medicaid/obs11.htm. Accessed August 18, 2001.

6. Bozette S, Berry S, Duan N, et al. The care of HIV-infected adults in the United States. N Engl J Med.1998;339:1897–1904.[Abstract/Free Full Text]

7. Conviser R, Murray M, Lau D. Medicaid managed care reimbursement for HIV and its implications for access to care. Am J Managed Care.2000;6:990–999.[Medline]

8. The Kaiser Family Foundation. Financing HIV/AIDS care: a quilt with many holes. October 2000. Available at: http://www.kff.org/content/2000/1607/financingisbrf.pdf. Accessed August 18, 2001.

9. Brosgart C, Mitchell T, Charlebois E, et al. Off-label drug use in human immunodeficiency virus disease. J Acquir Immune Defic Syndr Hum Retrovirol.1996;12:56–62.[Medline]




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