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Medicaid Pharmacy Benefit Use and Reimbursement - Introduction and Chartbooks

What’s New in April 2013!

The MAX 2009 Medicaid Pharmacy Benefit Use and Reimbursement Chartbook and Compendium Tables are now available.  The Chartbook is available through the link in the “Downloads” section.  The Compendium Tables are available at the  Medicaid Analytic Rx eXtract (MAX Rx) Table Listing page.

What’s New in March 2013!

A new issue brief is now available titled “Trends and Patterns in the Use of Prescription Drugs Among Medicaid Beneficiaries: 1999 to 2009.”  This issue brief highlights the changes in volume of drugs used per person, changes in drug costs per person, and changes in the use of generic drugs between 1999 and 2009.  The analysis focuses in particular on drug use and costs for beneficiaries with disabilities and chronic illnesses, whose drug use is much more extensive than that of children and nondisabled adults.  It also focuses on some specific types of drugs that are especially costly for Medicaid:  antipsychotics, antiasthmatics, ulcer drugs, antidiabetics, and antidepressants. The issue brief is available through the links in the “Downloads” section.

Introduction

Under a research contract from CMS’s former Office of Research, Development and Information (ORDI), now the Office of Information Products and Data Analytics, Mathematica Policy Research, Inc. (MPR) is producing a series of research products related to pharmacy benefit use and reimbursement in Medicaid.  MPR is using the Medicaid Analytic eXtract (MAX) data files for calendar year 1999 and later years for these research products.  The MAX files are constructed from claims and eligibility data that states submit to CMS electronically through the Medicaid Statistical Information System (MSIS).

One set of products is the Statistical Compendium:  Medicaid Pharmacy Benefit Use and Reimbursement (hereafter “the Compendium”) for calendar years 1999 and 2001-2009.  The Compendium for each year provides detailed state-by-state and national data on the use of and reimbursement for prescription drugs in Medicaid.  (A Compendium was not produced for calendar year 2000.)

Using the detailed data from the Compendium, MPR has also prepared Chartbooks for 1999 and 2001-2009.  The Chartbooks present selected highlights from the Compendium and include comparisons across states.  The 2001-2009 Chartbooks also include comparisons to earlier years.

The Statistical Compendium and Chartbook for 2009 do not include eight states (Hawaii, Idaho, Maine, Missouri, New Hampshire, Oklahoma, Utah, and Wisconsin) because their Medicaid Statistical Information System (MSIS) files were unavailable or contained significant data problems.  These eight states accounted for approximately 7 percent of total Medicaid enrollment in 2009.

Medicare Coverage of Prescription Drugs for Dual Eligibles in 2006 and Later Years

The Compendiums and Chartbooks for 2006-2009 illustrate the effects of the shift of most prescription drug coverage for beneficiaries dually eligible for Medicaid and Medicare to Medicare Part D beginning January 1, 2006. As a result of this shift in coverage responsibility, Medicaid expenditures for prescription drugs for dual eligibles dropped from $21.85 billion in 2005 to $1.59 billion in 2006, $1.26 billion in 2007, $1.24 billion in 2008, and $1.02 billion in 2009, and total Medicaid expenditures for prescription drugs for all beneficiaries dropped from $40.19 billion in 2005 to $20.03 billion in 2006, rising to $20.53 billion in 2007, $22.51 billion in 2008, and $22.54 billion in 2009.   

STATISTICAL COMPENDIUMS

The Statistical Compendiums show use and reimbursement by beneficiary demographic characteristics (age, sex, and race), basis of eligibility (children, adults, disabled, and aged), and Medicare and Medicaid dual eligible status. The compendiums are arranged as sets of national-level or state-specific tables covering use and reimbursement for all beneficiaries (available for 1999 and 2001-2009); for only “nondual” Medicaid beneficiaries who are not also eligible for Medicare (available for 2001-2009); and for “dual eligible” Medicaid beneficiaries who are eligible for both Medicare and Medicaid (available for 1999 and 2001-2009). There is also a set of national comparison tables available for each of those years.

The reason for creating separate sets of tables for dual eligibles and non-duals, which started with the 2001 tables that Mathematica produced in calendar year 2006, is that Medicare assumed responsibility for almost all prescription drug coverage for dual eligibles on January 1, 2006 under the new Part D Medicare program.  As a result, states are now interested primarily in prescription drug use and reimbursement for Medicaid beneficiaries who are not dual eligibles, while use and reimbursement for dual eligibles is now of interest primarily to those concerned with Medicare Part D.  By providing a full set of tables for each of these two main subgroups of Medicaid beneficiaries for 2001-2009, the Compendium facilitates separate analysis of the results by states and those interested in Part D.  With the addition of data for 2006-2009, it is now possible to determine in detail the volume and types of drugs for dual eligibles that Medicaid continued to pay for in those years. As discussed further below, there are tables that highlight use and reimbursement for some drugs that are excluded by statute from Part D coverage, and that most states remain responsible for to varying degrees.  

Inclusions  

  • The data tables provide statistics for all Medicaid beneficiaries who had fee-for-service (FFS) pharmacy benefit coverage for at least one month during the calendar year, whether or not they filled a prescription in that month.
  • There are national tables and state-level tables for 50 states and the District of Columbia.
  • The Medicaid prescription drug reimbursement amounts, as reported by states in MSIS, are gross amounts prior to the receipt of rebates from prescription drug manufacturers.

Exclusions

  • Beneficiaries who were in capitated managed care arrangements for the entire year for their prescription drug benefits are excluded.
  • For beneficiaries who were in capitated managed care for part of the year and FFS for part of the year, only their FFS months are included.

The download “Exhibit 1” shows counts of the included and excluded groups for 2001.  Exhibits 4, 7, 10, 13, 16, 19, 22, and 25 show the same information for 2002 to 2009.   In the detailed state and national tables, the beneficiaries who are included are generally referred to as the “study population.”  

A number of states include beneficiaries in capitated managed care arrangements, but pay for their prescription drugs through the FFS system. We have sought to the extent possible to include both these beneficiaries and their prescription drugs in the study population, but it is not always possible to identify the specific benefit coverage features of managed care arrangements with complete confidence. As a result, there may be situations in some states in which beneficiaries are included in the study population while their drugs are not, and vice versa.

Use and Reimbursement “Per Benefit Month”  

Most of the tables in the Compendium show service use and reimbursement for Medicaid prescription drugs “per benefit month.” This is the average amount of use and reimbursement per month for all months during the year in which beneficiaries had FFS pharmacy benefit coverage, whether or not they received a prescription in those months. This is essentially the same approach that actuaries use to calculate “per member per month” estimates in capitated managed care settings.  

Exceptions.  In Tables 3, ND.3, ND.11, D.3, and D.11 there are estimates of use and reimbursement “per beneficiary.”  This includes all use and reimbursement during the year for the number of months of coverage.  Thus, some beneficiaries in these tables may have had only one month of coverage, while others were covered for 12 months.  Similarly, Supplemental Tables 1 and 1A-1D that show mean annual reimbursement for dual eligibles and annual reimbursement per-dual-eligible beneficiary in $500 increments ($0, $1 to $500, $501 to $1,000, etc.) include all dual eligible beneficiaries for the number of months of Medicaid pharmacy coverage they had in 2001 to 2009.  Since most dual eligible beneficiaries are continuously enrolled, the average number of enrolled months for dual eligibles in 2009 was 10.5 months at the national level.  As discussed in more detail below in the “Supplemental $500 Increment Tables for Dual Eligibles” subsection of the “Major Tables Features,” the data in these supplemental tables can be combined with data in Table D.2 to calculate monthly or annualized 12-month per-beneficiary measures of use and reimbursement.

Drug Types

The tables show drug use and reimbursement by brand status (patented brand name, off-patent brand name, and generic), therapeutic category (cardiovascular agents, central nervous system drugs, etc.) and drug group (anti-psychotics, anti-depressants, ulcer drugs, etc.).     
Medicaid prescription drug use and reimbursement could not be reported at this level of detail prior to 1999, since that was the first year that all states were required to submit person-level data electronically under MSIS.  

State-by-State Managed Care Penetration Rates

In a feature added to the Compendium for 2002 and subsequent years, Appendix Tables A.3 and A.6 in the national tables for nonduals and duals show capitated managed care penetration rates by state and by eligibility category.  The tables show the number and percent of beneficiaries who were enrolled in comprehensive managed care plans (MCOs, HMOs, or HIOs) for the full year. Appendix Table A.3 shows penetration rates for all nonduals combined and for aged/disabled and adults/children nondual eligibility categories.  Appendix Table A.6 shows penetration rates for all dual eligible beneficiaries combined and for aged duals and duals who are in disabled, adult, or children eligibility categories.  

OVERVIEW OF BENEFICIARY CHARACTERISTICS AND SOME ILLUSTRATIVE MEASURES

The download “Exhibit 2” shows the distribution of Medicaid beneficiary characteristics in 2001 for those beneficiaries included in the study population.  Exhibits 5, 8, 11, 14, 17, 20, 23, and 26  show the same information for 2002 to 2009.

The download “Exhibit 3” shows some illustrative measures of pharmacy benefit use and reimbursement for 2001.  Exhibits 6, 9, 12, 15, 18,  21, 24, and 27 show the same information for 2002 to 2009.

MAJOR TABLE FEATURES

How To Find the Tables

The Statistical Compendium Tables are available through the “Medicaid Analytic eXtract (MAX) Rx Table Listing” link in the “Related Links” section.  The tables are available in either PDF or Excel formats.  There are national and state-specific tables, which are categorized into 3 sets:  (1) All Beneficiaries, (2) Nonduals, and (3) Duals.

Within the set of national and state-specific tables for All Beneficiaries, Table 1 provides an overview of the beneficiary selection criteria for the study population that is featured in the tables.   The subsequent six tables cover all Medicaid beneficiaries in the study population (Tables 2-7).  Additionally, in the national set of tables only, there are eight “National Comparison Tables” (Tables N.1a and N.1b and N.2 through N.7) that show a variety of state-by-state comparisons, as well as state-by-state comparisons of managed care penetration rates for nonduals (Table A.3) and duals (Table A.6) starting in 2002.  

Within the set of national and state-specific tables for Nonduals, there are 12 tables that focus just on nondual beneficiaries (Tables ND.2-ND.13) and two appendix tables (A.1 and A.2).  

Similarly, in the national and state tables for Duals, Tables D.2-D.13 and Tables A.4 and A.5 focus just on dual eligible beneficiaries.  In addition, there are six “supplemental” tables in the set of duals tables that show annual pharmacy reimbursement in $500 increments for all dual eligibles, disabled duals under age 65, all duals age 65 and older, and duals ages 65-74, 75-84, and 85 and over.

Brand Name vs. Generic Comparisons

Comparisons of use and reimbursement for patented brand name, off-patent brand name, and generic drugs are in Tables 5 and 6 for all Medicaid beneficiaries combined, Tables ND.5, ND.6, and ND.9 for nondual beneficiaries, and Tables D.5, D.6, and D.9 for dual eligible beneficiaries.  National comparison tables (N.2 and N.5) show data for all 50 states and the District of Columbia.

Nursing Facility Comparisons

There are six tables that show pharmacy benefit use and reimbursement for full-year residents of nursing facilities, since there is extensive prescription drug utilization in those settings. Tables ND.8, ND.9, and ND.10 show the data for all nondual Medicaid beneficiaries, while Tables D.8, D.9, and D.10 show the data for dual eligible beneficiaries.  

Therapeutic Categories

There are three tables that show pharmacy use and reimbursement in 18 broad therapeutic categories.  Table 6 shows the data for all Medicaid beneficiaries combined, Table ND.6 for nonduals, and Table D.6 for duals.  

Top 10 Drug Groups

Four sets of tables show use and reimbursement in the top ten drug groups, which are narrower than the therapeutic categories.  The top 10 groups differ by state, as shown in Tables N.4 and N.7 in the national comparison section, so that, for example, the top drug group in one state might rank third in another.  

  • The top 10 drug groups for all Medicaid beneficiaries combined are in Table 7.
  • The top 10 drug groups for nondual Medicaid beneficiaries are in two sets of multi-part tables:  Tables ND.7 through ND.7D for all nonduals, and Tables ND.10 through ND.10D for nondual all-year nursing facility residents.
  • The top 10 drug groups for dual eligible beneficiaries are also in two sets of multi-part tables:  Tables D.7 through D.7D for all duals, and Tables D.10 through D.10D dual eligible all-year nursing facility residents.

Drugs Excluded by Statute from Medicare Part D

The statute that established the Medicare Part D drug benefit excluded from coverage several types of drugs (benzodiazepines, barbiturates, nonprescription drugs, cough and cold medications, etc.) that Medicaid has been allowed since 1990 to exclude from coverage, but that most states have chosen to cover to varying degrees.  CMS requires state Medicaid programs to continue providing coverage of these drugs for dual eligibles after January 1, 2006 if they are covered for any other Medicaid beneficiaries.  Subsequent statutory changes extended Part D coverage to benzodiazepines and barbiturates, but not until 2013.  Tables ND.11 through ND.13 provide information on the utilization and cost of these drugs for nonduals in 2001-2009, and Tables D.11 through D.13 provide the same information for dual eligible beneficiaries.

National Comparison Tables

The national comparison tables show use and reimbursement for 50 states and the District of Columbia, using measures that are designed to facilitate comparisons and highlight state-by-state differences.  Examples of these measures include:

  • Total reimbursement per benefit month, and percentage of total prescriptions that are for patented brand name, off-patent brand name, and generic drugs (Tables N.2 [nonduals] and N.5 [duals])
  • Share of benefit months, reimbursement per benefit month, and share of total Medicaid pharmacy reimbursement by aged, disabled, adult, and child eligibility categories for nonduals (Table N.3) and duals (Table N.6)
  • Top 10 drug groups in each state for nonduals (Table N.4) and duals (Table N.7)

Supplemental $500 Increment Tables for Dual Eligibles

Supplemental Tables 1 and 1A through 1E for 2001-2009 in each set of dual eligible tables may be especially useful for those interested in Medicare Part D, since drug use by dual eligibles represents a large portion of Part D drug costs.  These six tables show annual pharmacy reimbursement per dual eligible beneficiary in $500 increments, the number and percent of dual eligible beneficiaries in each increment, and the amount and percent of total Medicaid pharmacy reimbursement in each increment.  There are separate tables for all dual eligibles combined, disabled duals under age 65, all duals age 65 and over, and duals ages 65 to 74, 75 to 84, and 85 and above.  The tables also show the total number of dual eligibles in each of these age categories, the total Medicaid pharmacy reimbursement, and the mean reimbursement per beneficiary in the category.  

The tables include all dual eligibles who had Medicaid FFS pharmacy benefit coverage during some or all months of Medicaid enrollment in the calendar year. The average number of months of enrollment per beneficiary nationally for duals of all ages was 10.5 months for 2001, 10.2 months for 2002, 10.6 months for 2003, 10.5 months for 2004, 10.6 months for 2005, 10.5 months for 2006, 10.6 months for 2007, 10.5 months for 2008, and 10.5 months for 2009.  The average may vary by beneficiary characteristics and by state.  These averages by state and by beneficiary characteristics can be calculated from the information shown in Table D.2 in the main table set for each state by dividing the number of benefit months by the number of beneficiaries.  Users can then use the average number of benefit months to calculate the amount of reimbursement per benefit month by dividing mean annual reimbursement per beneficiary by the average number of months enrolled.  Annualized 12-month estimates can then be made by multiplying the amount per benefit month by 12.    

Illustrative example.  In Table D.2 for the United States as a whole for 2009, for example, there are    6,103,966 dual eligible beneficiaries and    63,833,502 dual eligible benefit months, so the average dual eligible is enrolled for 10.46 months (63,833,502/6,103,966 = 10.46 months).  There are    1,506,407 dual eligibles age 65-74 in Table D.2, and   15,842,953 benefit months, so the average enrollment for this age group of duals is 10.52 months.  In Supplemental Table 1C, the mean annual pharmacy reimbursement for dual eligible beneficiaries age 65-74 is $189.  Dividing that number by 10.52 months produces an average monthly reimbursement of $17.97, and an annualized 12-month reimbursement of $216 (12 x $17.97 = $216).

COMPARISONS BETWEEN 1999 AND 2001-2009

The 2001-2009 Statistical Compendiums contain tables that were not produced in 1999, mainly Tables ND.11-13 and D.11-13 dealing with drugs excluded by statute from Part D coverage.  In addition, the tables for 2001-2009 show data separately for all Medicaid beneficiaries who are not dual eligibles, and for all those who are.  In 1999, by contrast, the tables were divided between those covering all Medicaid beneficiaries (including dual eligibles), and those covering dual eligibles alone.  The order of the tables has also changed somewhat between 1999 and 2001-2009.  However, the basic structure of each table has remained essentially the same in order to facilitate comparisons between 1999 and 2001-2009.

The “Comparisons Between 1999 and 2001-2009 Tables” download below lists all the tables for 2001-2009 on the left and all the tables for 1999 on the right, with an indication in both cases of whether there is or is not a corresponding table in the other year or years.  Where there are corresponding tables in both 1999 and 2001-2009, they are shown in the same row, even though the numbering of the tables may be different in the two periods.  As noted above, the main reason for lack of correspondence between the two periods is that most of the tables for 2001-2009 separate dual eligible and nondual beneficiaries, while many of the tables for 1999 show all Medicaid beneficiaries combined.

CHARTBOOKS

The Chartbooks for 2001 and 2002 (see the links in the “Downloads” section below) contain 37 tables, charts, and graphs that present highlights from the Statistical Compendiums, including comparisons of use and reimbursement for major eligibility groups (aged, disabled, adults, children, dual eligibles) and types of drugs, and state rankings on key measures.  The 2003 through  2007 Chartbooks contain 54 tables, charts, and graphs, since a number of additional graphs were added to show trends from 1999 to 2007.  The 2008 and 2009 Chartbooks contain three additional graphs (Exhibits 55-57) that show comprehensive managed care penetration rates for nondual aged/disabled and adult/children beneficiaries, and for dual eligible beneficiaries.  

ISSUE BRIEFS

There are two issue briefs readily available, which highlight information in the statistical compendiums.

  • “Trends and Patterns in the Use of Prescription Drugs Among Medicaid Beneficiaries: 1999 to 2009” highlights the changes in volume of drugs used per person, changes in drug costs per person, and changes in the use of generic drugs between 1999 and 2009.  The analysis focuses in particular on drug use and costs for beneficiaries with disabilities and chronic illnesses, whose drug use is much more extensive than that of children and nondisabled adults.  It also focuses on some specific types of drugs that are especially costly for Medicaid:  antipsychotics, antiasthmatics, ulcer drugs, antidiabetics, and antidepressants. The issue brief is available through the links in the “Downloads” section.
  • "Prescription Drug Use and Cost Among Medicaid Beneficiaries with Disabilities and Chronic Illness":  With the shift of prescription drug coverage for Medicaid-Medicare dual eligibles to Medicare in 2006, Medicaid prescription drug spending is now highly concentrated among nondual Medicaid-only beneficiaries under age 65 with disabilities and chronic illnesses. They accounted for 62 percent of nondual Medicaid prescription drug spending in 2007, although representing just 12 percent of nondual Medicaid beneficiaries. They often have significant behavioral health needs and complex co-existing physical and behavioral health conditions. They represent about 12 percent of the Medicaid-covered residents of nursing facilities and increasingly are being included in capitated managed care programs. This Issue Brief is available on the Mathematica Policy Research, Inc. website.

DESCRIPTION OF EXHIBITS

A number of exhibits were referenced on this website. They are available through the links in the “Downloads” section.  Here is a brief description of the exhibits:

  • Exhibit 1:  Inclusions and Exclusions from the Study Population, 2001
  • Exhibit 2:  Beneficiary Characteristics, 2001
  • Exhibit 3:  Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2001
  • Exhibit 4:  Inclusions and Exclusions from the Study Population, 2002
  • Exhibit 5:  Beneficiary Characteristics, 2002
  • Exhibit 6:  Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2002
  • Exhibit 7:  Inclusions and Exclusions from the Study Population, 2003
  • Exhibit 8:  Beneficiary Characteristics, 2003
  • Exhibit 9:  Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2003
  • Exhibit 10:  Inclusions and Exclusions from the Study Population, 2004
  • Exhibit 11:  Beneficiary Characteristics, 2004
  • Exhibit 12:  Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2004
  • Exhibit 13:  Inclusions and Exclusions from the Study Population, 2005
  • Exhibit 14:  Beneficiary Characteristics, 2005
  • Exhibit 15:  Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2005
  • Exhibit 16:  Inclusions and Exclusions from the Study Population, 2006
  • Exhibit 17:  Beneficiary Characteristics, 2006
  • Exhibit 18:  Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2006
  • Exhibit 19: Inclusions and Exclusions from the Study Population, 2007
  • Exhibit 20: Beneficiary Characteristics, 2007
  • Exhibit 21: Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2007
  • Exhibit 22:  Inclusions and Exclusions from the Study Population, 2008
  • Exhibit 23:  Beneficiary Characteristics, 2008
  • Exhibit 24:  Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2008
  • Exhibit 25:  Inclusions and Exclusions from the Study Population, 2009
  • Exhibit 26:  Beneficiary Characteristics, 2009
  • Exhibit 27:  Illustrative Measures of Pharmacy Benefit Use and Reimbursement, 2009