Medicaid drug cost control efforts may backfire

Health care plans that restrict members’ access to certain arthritis medications due to cost concerns may actually wind up spending more money on care, a new analysis of Medicaid expenses from Arizona shows.

“Our findings demonstrate the importance of weighing the costs and benefits associated with restrictions on formularies used to treat chronic conditions such as arthritis,” Dr. Tricia J. Johnson and Stephanie Stahl-Moncada of Rush University in Chicago conclude.

Many state Medicaid plans use formularies, or lists of preferred drugs, to keep spending on medications under control, the researchers note. But by restricting access to more effective drugs, health plans could end up increasing their costs, they add.

To investigate, the researchers looked at costs for rheumatoid arthritis (RA) and osteoarthritis patients belonging to 12 different health plans participating in Arizona’s Medicaid system. They classified five of the plans as lenient in regard to the use of non-steroidal anti-inflammatory drugs (NSAIDs) and the rest as restrictive.

RA patients belonging to plans with restrictive formularies had 22 percent fewer outpatient visits, but were hospitalized 29 percent more often, Johnson and Stahl-Moncada report in the latest issue of the American Journal of Public Health. Overall, drug costs were 45 percent higher for patients with RA who belonged to a plan that restricted NSAID use.

Patients with osteoarthritis who belonged to restrictive plans had 38 percent fewer arthritis-related outpatient visits, but 52 percent more hospitalizations. However, there was no difference in overall costs between the restrictive and lenient plans.

“Our findings indicate that restrictions on access to NSAIDs shifted care from the ambulatory (outpatient) to the inpatient setting for both rheumatoid arthritis and osteoarthritis,” the researchers write.

“The medical use and expenditure results taken together suggest that restrictive formularies significantly change the patterns of health care and prescription drug use and may have unintended consequences in terms of more frequent and, for those with rheumatoid arthritis, more expensive medical care,” they conclude.

SOURCE: American Journal of Public Health, July 2008.