trends in medicaid prescription drug utilization and payments, … · 2019. 9. 19. · scription...

The rising cost of prescription drugs hascaused public officials to restructure pre-scription drug coverage and payment poli-cies in Medicaid. This study examinesMedicaid utilization and payments for pre-scription drugs from 1990 to 1997.Medicaid prescription drug payments grewfrom $4.4 billion in 1990 to almost $12 bil-lion in 1997, representing an average annu-al increase of 15.3 percent. In 1997 pre-scription drug payments per recipient were$1,379 for the blind and disabled, more than10 times the amount for children. Thesefindings will aid policymakers in setting pre-paid plan rates for prescription drugs andmonitoring access to care in Medicaid.

INTRODUCTION

The Medicaid program provides pre-scription drugs to certain low-income fam-ilies with dependent children and low-income persons who are aged, blind, ordisabled. The Medicaid program isfinanced by both the Federal Governmentand the States. Even though coverage ofoutpatient prescription drugs is optional inMedicaid, every Medicaid jurisdiction haschosen to cover prescribed drugs for atleast Medicaid categorically needy eligiblepersons. The Federal Governmentfinances between 50 and 83 percent of theexpenditures for any individual State.States administer the Medicaid program

within broad guidelines established by theFederal Government (Pine, Clauser, andBaugh, 1993).

The rising cost of prescription drugs hascaused public officials to restructure pre-scription drug coverage and payment poli-cies in Medicaid. Information concerningtrends in Medicaid prescription drug expen-ditures is needed to inform policymakers.The purpose of this article is to provideinformation on Medicaid utilization andexpenditures for outpatient prescriptiondrugs from 1990 to 1997. The informationis provided as a descriptive historicaloverview, using aggregate data on Medicaidrecipients and payments for outpatient pre-scription drugs by eligibility group.

Legislative changes had an importantimpact on the Medicaid prescription drugprogram during the study period. Twomajor legislative acts attempting to curtailthe rising costs of the Medicaid outpatientprescription drug program were theOmnibus Budget Reconciliation Act of1990 (OBRA 90) and the Omnibus BudgetReconciliation Act of 1993 (OBRA 93).OBRA 90 amended Title XIX of the SocialSecurity Act by requiring drug manufac-turers to provide a drug rebate for all cov-ered outpatient drugs dispensed throughthe Federal Medicaid program. In generalOBRA 90 required that a manufacturerhave in effect a rebate agreement with theFederal Government before FederalMedicaid matching funds would be avail-able to States for covered outpatient drugs.Prior to this legislation, many States had

HEALTH CARE FINANCING REVIEW/Spring 1999/Volume 20, Number 3 79

The authors are with the Office of Strategic Planning, HealthCare Financing Administration (HCFA). The views and opin-ions expressed in this article are those of the authors and do notnecessarily reflect the views of HCFA.

Trends in Medicaid Prescription Drug Utilization andPayments, 1990-97

David K. Baugh, M.A., Penelope L. Pine, and Steven Blackwell, Ph.D., J.D., R.Ph.

limited drug formularies. The legislationopened individual State formularies to allmanufacturers who have rebate agree-ments with the Federal Government.Implementation by State Medicaid agen-cies occurred during 1991.

OBRA 93 amended Title XIX of theSocial Security Act by changing the pricingschedule of single-source and innovatormultiple-source drugs approved by theFood and Drug Administration afterOctober 1990. In general OBRA 93 had animpact on the computation of the unitrebate amount for covered outpatientdrugs. The effective date for implementa-tion of OBRA 93 was October 1, 1993.Presently, more than 500 manufacturershave rebate agreements with the FederalGovernment which, in turn, addressapproximately 55,000 drug products(Gaston, 1999).

METHODOLOGY

Data and Information Sources

Three sources used by the FederalGovernment to analyze expendituresincurred in the Medicaid program are theHCFA-2082, the HCFA-64, and the nationalhealth expenditures (NHE) statistics.Although each source addresses Medicaidexpenditures, each differs in presentationof expenditure information.

HCFA-2082

The HCFA-2082 form “Statistical Reporton Medical Care: Eligibles, Recipients,Payments and Services” is an annual statis-tical report for each Federal fiscal year(FY) on Medicaid enrollment, recipients,payments, and utilization that is based ondata submitted by State Medicaid agenciesto HCFA. Some States submit thesereports directly to HCFA. Other States

submit person-level enrollment and claimsdata to HCFA for the Medicaid StatisticalInformation System (MSIS). For theseStates HCFA uses the MSIS data to pre-pare a HCFA-2082 report. The HCFA-2082report includes schedules of enrollees,recipients, and payments, by type of ser-vice and basis of Medicaid eligibility.

For this study detailed data by basis ofMedicaid eligibility, without respect tocash-assistance status, are combined intofour major eligibility groups: aged, blindand disabled, children and adults,1 and anall-recipients group that includes a smallnumber of individuals who are not report-ed in the other four groups. The blind anddisabled group includes individuals of anyage who were determined to be eligiblebecause of disability. The children’s groupincludes foster care children.

HCFA-64

The HCFA-64 form “The QuarterlyMedicaid Statement of Expenditures for theMedical Assistance Program” is a statementof expenditures for the Medicaid programthat individual States submit to HCFA on aquarterly basis. The report is an accountingstatement of actual expenditures made byStates for which they are entitled to receiveFederal reimbursement under Title XIX forthat quarter (Health Care FinancingAdministration, 1998). Data from quarterlyHCFA-64 reports are combined to producea summary report for each Federal FY. TheHCFA-64 data are limited to payments bytype of service and do not include detail bybasis of Medicaid eligibility.

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1 This study contains detailed data for the 50 States and theDistrict of Columbia. The HCFA-2082 data, as reported by eachMedicaid State agency, contain some errors, inconsistencies, andomissions. To the extent possible, HCFA staff adjusted the datato correct for these problems. A small number of State Medicaidagencies did not submit HCFA-2082 data for all years. For exam-ple, data for Hawaii are missing for FY 1997. One State,Oklahoma, submitted data for total recipients in FY 1997 but didnot provide detailed data by eligibility group (Foltz, 1999).

It should be noted that the HCFA-64 andHCFA-2082 data on payments differ forseveral reasons. They were produced atdifferent points in time and may differ inthe way they capture services rendered toMedicaid recipients during a calendar timeperiod. They were produced for differentpurposes. Finally, the HCFA-64 data con-tain aggregate payments and adjustmentsthat are not included in the HCFA-2082data. Most of the data presented in thisanalysis are extracted from the HCFA-2082reports in order to present prescriptiondrug recipient and payment data by select-ed Medicaid eligibility groups.

National Health Expenditures

Each year HCFA’s Office of the Actuaryestimates expenditures for national healthspending (NHE) in the United States.Designed as a matrix, NHE measuresexpenditures by type of service (e.g., hos-pital care, physician services, nursinghome care, and prescription drugs)matched against the sources that pay forthese services (e.g., Medicare, Medicaid,private health insurance, and out-of-pocketspending). The current time series of theNHE estimates runs from 1960 through1997. Estimates are based on informationcollected from public organizations such asthe U.S. Bureau of the Census, HCFA, theU.S. Bureau of Labor Statistics, and otherFederal and State government agenciesthat fund medical programs and from pri-vate organizations such as the AmericanHospital Association and the HealthInsurance Association of America.

Expenditures for prescription drugsmeasure spending for retail purchases of these products by consumers.Prescription drugs purchased as part of ahospital stay or directly from a physicianare included with either hospital or physi-cian services. Prescription drug spending

is based most recently on data from IMSHealth, which collects data on pharmacytransactions in different retail outlets.Expenditure estimates for earlier years arebased on information collected by the U.S.Bureau of the Census in the Census ofRetail Trade series called MerchandiseLine Sales. This survey collects data onthe value of prescription drug sales fromretail outlets such as drug stores and gro-cery stores (Levit, 1999).

Medicaid Managed Care Enrollment

Annually HCFA’s Center for Medicaidand State Operations produces a reportknown as the Medicaid Managed CareEnrollment Report, which contains profilesof Medicaid managed care programs on aplan-specific basis. The information pre-sented in the report is collected from StateMedicaid agencies by HCFA regional officestaff. The report includes the State in whichthe plan operates, the plan name, plan type,the geographic areas within the Stateserved by the plan, and number of Medicaidenrollees covered by the plan (Health CareFinancing Administration, 1997).

In 1992, approximately 12 percent of theMedicaid population was enrolled in someform of managed care. By 1997, nearly 48percent of the Medicaid population wasenrolled in managed care.2 States increas-ingly have been relying on the flexibility ofwaivers of the Social Security Act to restruc-ture their existing Medicaid programs byimplementing incremental and comprehen-sive reform initiatives. There are two typesof waivers available to States that allow flex-ibility in providing high-quality, efficienthealth services through the Medicaid pro-gram: section 1915(b) program waivers


2 This percentage is for all types of managed care including prima-ry care case management. Enrollees covered under primary carecase management typically have services paid under fee-for-ser-vice (FFS) arrangements. An estimated 36 percent of enrollees arecovered under prepaid plans.

and section 1115 research and demonstra-tion waivers. Both types of waivers aredesigned to exempt States from statutoryrequirements in the Social Security Act.

These waivers allow States to pursueprogram options not available through theState plan-amendment process. The sec-tion 1915(b) waivers enable States to man-date participation in a managed care pro-gram and restrict the providers fromwhom recipients receive Medicaid coveredservices. Section 1115 waivers are muchbroader in scope and allow comprehensivestatewide health reform, including expand-ing Medicaid coverage to uninsured popu-lations, modifying the Medicaid benefitpackage, and restricting access to certainproviders (Rotwein et al., 1995).

Enrollment in prepaid plans grew rapidlyduring the 1990s, and the rate of growth var-ied by State. For enrollees in prepaid plans,Medicaid pays a single premium to a plan forall covered services. There are no separateclaim or service records in the data for pre-scription drugs when the premium includesprescription drugs. Therefore, it is not pos-sible to identify prescription drug recipientsor payments for prescription drugs whenthose prescription drugs are covered undera prepaid plan. For this reason, Medicaidprescription drug recipients and paymentsreported in the HCFA-2082 and HCFA-64are understated. Hence, it is important toidentify individual States that have experi-enced substantial growth in the number ofenrollees covered by prepaid plans. For thisstudy, the number of Medicaid enrollees inmanaged care and information on the typesof plans in which they were enrolled werecompiled to determine the extent to whichenrollment in managed care affectedMedicaid recipient and payment totals.

Analytic Measures

Medicaid Payments

The study contains two measures ofMedicaid payments from the HCFA-2082report: total payments and prescriptiondrug payments. Payments are presentedin actual dollars for each FY, according topayment date. Payments are presented asgross amounts prior to the receipt ofrebates to the States by prescription drugmanufacturers. Data are presented for the50 States and the District of Columbia.Medicaid payments include all paymentsfor services provided under a FFS setting(i.e., services for which Medicaid paid aprovider claim). Similarly Medicaid pre-scription drug payments include all pay-ments for prescription drugs providedunder a FFS setting (i.e., prescriptiondrugs for which Medicaid paid a pharmacyclaim). As previously noted, it is not possi-ble to identify prescription drug paymentswhen they are covered by a prepaid plan.

Medicaid Recipients

This study contains two measures ofMedicaid recipients: Medicaid recipientsand Medicaid prescription drug recipients.A Medicaid recipient is a Medicaidenrollee who received at least one coveredservice of any kind for which Medicaidpayment was made during the FY. A Medicaid prescription drug recipient is aMedicaid enrollee who received at leastone covered prescription drug during theFY. If an enrollee was covered under aprepaid plan, providing either partial orcomprehensive coverage during the year,and had at least one FFS claim for a pre-scription drug during the FY, that enrollee


is counted both as a recipient and a pre-scription drug recipient. Similarly, if anenrollee was covered under a prepaid planand received at least one FFS claim,excluding prescription drugs, that enrolleeis counted as a recipient but not as a pre-scription drug recipient. Otherwise,enrollees covered under prepaid plans areexcluded from recipient counts because itwas not possible to identify plan enrolleeswho received Medicaid-covered services.

Medicaid Prescription Drug Payments per Recipient

Payments per recipient are defined asMedicaid payments for prescription drugsdivided by the number of Medicaid enrolleeswho received at least one covered prescrip-tion drug during the FY. A consistentapproach has been taken to define the numer-ator and denominator of this statistic. AMedicaid enrollee is represented in the pay-ment amount (in the numerator) and as a pre-scription drug recipient (in the denominator)if and only if there was a FFS claim for a pre-scription drug for that person during the FY.

NHE

The NHE data on prescription drug pay-ments by calendar year are presented forall payers and the two major payment cate-gories, out-of-pocket and third-party.Third-party payments are split between pri-vate and public payments. Public pay-ments are split between Medicaid andother public payments.

Data Limitations

There are some limitations to be notedregarding the analyses presented in thisstudy:• Several factors may result in recipient

and payment amounts that are under-

stated in these Medicaid data.Prescription drugs provided to Medicaidenrollees during their hospital stay aretypically included in an inpatient hospitalclaim. Also, prescription drugs may beincluded in claims for other types of ser-vices, such as nursing home and homehealth care, in some instances. In theseinstances, it is not possible to identify useand payment for these prescriptiondrugs. Furthermore, the Medicaid datado not include any out-of-pocket pay-ments that Medicaid enrollees may makefor their prescription drugs. For thesereasons, the Medicaid data do not cap-ture use and payment for all prescriptiondrugs provided to Medicaid enrollees.

• Another factor that affects analysis ofthese Medicaid data is State programvariation. During any given time period,there is substantial variation amongMedicaid States in terms of options eachState has chosen. Program policy choic-es include optional eligibility groups, cov-erage of selected prescription drugs,restrictions on prescription drug use(such as limits on the number ofMedicaid covered prescriptions permonth), and payment methods. Also,these policy choices may have changedwithin individual States during the studytime period. Furthermore, States havevaried greatly in terms of implementingmanaged care plans, including full or par-tially capitated plans under either section1915(b) or section 1115 provisions. State-specific data have been annotated in thedata tables to identify individual Statesthat have covered large numbers of theirMedicaid enrollees in prepaid plans.Nevertheless, the effects of these varia-tions have not been fully measured.

• External factors may also have affected thefindings of this study. Data on paymentspresented in this study are actual dollarsthat have not been adjusted for inflation.


However, the effect of inflation on pay-ments is moderate because the rate of infla-tion was low in the study period comparedwith earlier time periods. Finally, the analy-ses do not adjust for major Medicaid policychanges such as welfare reform, economicvariables that affect an individual’s decisionto apply for Medicaid enrollment, andchanges in the practice of medicine.

FINDINGS

Prescription Drug Payments

Total Medicaid payments for outpatientprescription drugs grew from $4.4 billionin 1990 to almost $12 billion in 1997, whichrepresents an average annual rate ofgrowth of 15.3 percent (Table 1).3,4 Thelargest single-year increases wereobserved between 1990 and 1991 (22.7 per-cent) and between 1991 and 1992 (24.7 per-cent), when the prescription drug rebateprogram was being implemented. Severalfactors caused these large increases. In1991, implementation of the rebate pro-gram expanded prescription drug cover-age (opened formularies) in many States.Reported payment data are gross amountsprior to the receipt of rebate payments.Poverty-related eligibility expansions dur-ing this time period increased the numberof program enrollees.5 Furthermore, therecession in 1990 and 1991 may have led toincreased numbers of Medicaid enrollees.

By eligibility group, the highest amountof payments for each year were for theblind and disabled at $1.9 billion in 1990and $6.5 billion in 1997. Also, the blind anddisabled had the highest annual averagerate of growth in this time period of 19.6percent. The aged had the next highestamount of payments, $1.5 billion in 1990and $3.3 billion in 1997, with an averageannual rate of growth of 12.1 percent.Payments for children were the lowest in1990, $445 million, but grew to $1.1 billionin 1997, with an annual rate of growth of13.8 percent. Payments for adults were$571 million in 1990 and $881 million in1997, with the lowest average annual rateof growth of 6.4 percent. Figure 1 showsthe increase in payments for prescriptiondrugs by eligibility group and emphasizesthe rapid rate of growth in prescriptiondrug payments for the blind and disabledfor this period.

Figure 2 shows Medicaid prescriptiondrug payments as a percent of totalMedicaid payments by eligibility group for1990-97. For all recipients, prescriptiondrug payments increased from 6.8 percentof total Medicaid payments in 1990 to 9.7percent of total payments in 1997. Asnoted earlier the blind and disabled hadthe highest amount of prescription drugpayments in every year. In 1990 prescrip-tion drug payments for the blind and dis-abled were 7.6 percent of total Medicaidpayments and increased to 12.0 percent oftotal payments by 1997. Prescription drugpayments as a percent of total Medicaidpayments grew slightly for the agedbetween 1990 and 1997 from 7.0 percent to8.9 percent. For adults, prescription drugpayments remained at about 7 percent oftotal payments for all years in the studyperiod. The percent of prescription drugpayments for children was 4.9 percent in1990, rose to 6.4 percent in 1996, and thendeclined slightly to 6.3 percent in 1997.


3 This increase is comparable to the average annual increase of14.9 percent, obtained from the HCFA-64 summaries (data notshown). 4 In the HCFA-64 summary for FY 1997, prescription drugrebates were nearly $2.2 billion or about 18 percent of reportedprescription drug payments prior to rebates.5 OBRA required State Medicaid agencies to extend eligibility topregnant women and children (up to age 6) born after September30, 1983, with incomes below 133 percent of the Federal povertylevel (FPL). OBRA required State Medicaid agencies to extendeligibility to children under the age of 19 born after September30, 1983, with family incomes below 100 percent of the FPL. Thissecond provision means that all children under age 19 and livingin poverty will become eligible by 2002.

Figure 3 displays the percent of totalMedicaid prescription drug payments byeligibility group. In 1990, 34.4 percent ofprescription drug payments were for theaged and 42.5 percent were for the blindand disabled. By 1997 the percent of pre-scription drug payments for the ageddecreased to 28.2 percent, but the percentfor the blind and disabled increased to 55.0percent. The percent of total Medicaid pre-scription drug payments for children was10.1 percent in 1990, grew to 12.1 percentin 1994, then decreased to 9.3 percent in1997. The percent of total prescriptiondrug payments for adults was 13.0 percentin 1990 and steadily decreased to 7.4 per-cent in 1997. The observed trends for bothchildren and adults may have been causedby increased enrollment in managed care,welfare reform,6 and the health of theNation’s economy. These factors may haveled to lower growth rates in the number ofenrollees for children and adults thanamong aged and blind and disabledenrollees (U.S. General Accounting Office,1998; Ellwood and Ku, 1998).

Table 2 presents Medicaid prescriptiondrug payments for 1997 by State and eligi-bility group. There was great variation inState Medicaid programs, including thepercent of enrollees in managed care byeligibility groups. California and New Yorkhad the largest total payments for prescrip-tion drugs, $1.34 billion and $1.09 billion,respectively. Also, California and NewYork had the largest prescription drug pay-ments for the blind and disabled ($759 mil-lion and $685 million, respectively) andadults ($126 million and $86 million,respectively). California and Texas hadthe largest total prescription drug pay-ments for the aged ($320 million and $259

million, respectively). For children, Texashad the largest payments for prescriptiondrugs ($171 million), followed byCalifornia ($124 million).

Prescription Drug Recipients

In 1990, there were more than 17 millionMedicaid prescription drug recipients in theUnited States (Table 3). The number steadi-ly increased to almost 24.5 million in 1994.This represented an average increase ofnearly 10 percent per year between 1990and 1994. From 1994 to 1997, the numberdecreased to just under 21 million. Thedecrease after 1993 was caused, in part, bya large increase in the number of Medicaidenrollees who were covered under prepaidplans. The most noteworthy decreasesafter 1993 were for adults and children, whowere more likely to be covered by prepaidplans than the other two groups during thistime period. Overall, the number ofMedicaid recipients increased by an annualaverage of 2.8 percent per year.

A similar pattern to that of total prescriptiondrug recipients was observed for each of themajor eligibility groups with the exception ofthe blind and disabled (Figure 4). That is, thenumber of prescription drug recipients grewinitially and then declined. In addition, thetotal number of adult prescription drugrecipients actually declined between 1990and 1997. This finding could be the result ofthe healthy national economy in the 1990s,State and Federal welfare reform initiatives,and other factors. In contrast, the number ofblind and disabled prescription drug recipi-ents grew steadily from 3 million in 1990 tomore than 4.7 million in 1996, with a smalldecrease between 1996 and 1997. The aver-age annual rate of growth for the blind anddisabled was 6.6 percent.

Between 1990 and 1997, the compositionof the prescription drug recipient popula-tion changed dramatically (Figure 5).


6 The Personal Responsibility and Work Opportunities Act of1996, commonly known as welfare reform, ended the direct con-nection between receipt of cash benefits under the Aid toFamilies with Dependent Children program and eligibility forMedicaid.

Children increased from 42.9 percent to46.8 percent of the population from 1990 to1993, possibly as a result of the Medicaideligibility expansions for children enactedin 1989 and 1990. After 1993, both childrenand adults declined as a percent of the pre-scription drug recipient population: chil-dren from 46.8 to 44.3 percent and adultsfrom 23.1 to 18.9 percent. Because ofincreasing numbers of blind and disabledprescription drug recipients and decliningnumbers of prescription drug recipientsfor the other eligibility groups after 1994,the blind and disabled recipients increasedsteadily from 17.5 percent of the prescrip-tion drug recipient population in 1990 to23.0 percent in 1997. As previously noted,increased coverage under prepaid plansled to declines in the numbers of prescrip-tion drug recipients for adults and chil-dren, while the numbers of disabled pre-scription drug recipients continued togrow. These factors explain the observedchanges in Figure 5.

For the all-recipients group, the percentof total Medicaid recipients who receivedat least one prescription drug during theFY (Figure 6) declined approximately 10percentage points between 1990 and 1997(from 72.1 to 62.4 percent). Each of themajor eligibility groups experienced a sim-ilar decline. The decline was approximate-ly 9 percentage points for the aged (80.9 to72.0 percent), 5 percentage points for theblind and disabled (82.5 to 77.1 percent),10 percentage points for children (67.3 to57.8 percent), and 15 percentage points foradults (72.2 to 57.3 percent). These find-ings cannot be explained by increased cov-erage of Medicaid enrollees in prepaidplans. This is because enrollees who werecovered under prepaid plans are excludedfrom both the numerator and denominatorof these statistics. Increased enrollmentfor Qualified Medicare Beneficiaries(QMBs), Qualified Disabled and Working

Individuals (QDWIs), and Specified Low-Income Medicare Beneficiaries (SLMBs),who did not receive the full scope ofMedicaid-covered services, may explainthis finding for the aged and disabledgroups. However, further research will benecessary to explain this finding for adultsand children.

Table 4 presents the numbers ofMedicaid prescription drug recipients byState and eligibility group for Federal FY1997. Typically the largest number of pre-scription drug recipients among the foureligibility groups in each State was chil-dren. Blind and disabled persons made upthe second largest group, followed byadults and the aged. By State the largestnumber of prescription drug recipientswas found in California. Additional Stateswith more than 1 million prescription drugrecipients were Florida, Illinois, New York,and Texas. Together, these five States rep-resented 42 percent of the Nation’sMedicaid prescription drug recipients.

Figure 7 compares the percent of totalMedicaid prescription drug recipients rep-resented by each of the four major eligibili-ty groups with the percent of total Medicaidprescription drug payments represented byeach of those groups. Children and adultstogether represented 63.2 percent of totalprescription drug recipients (44.3 and 18.9percent, respectively) but only 16.7 percentof prescription drug payments. In contrast,the blind and disabled represented 23 per-cent of total prescription drug recipients but55 percent of prescription drug payments.Similarly, the aged represented less than 14percent of prescription drug recipients butmore than 28 percent of prescription drugpayments. These differences would proba-bly be even greater, given higher utilizationof inpatient hospital services by the blindand disabled and the aged, if it were possi-ble to isolate prescription drugs from inpa-tient hospital payments.


Prescription Drug Payments perRecipient

Between 1990 and 1997, prescription drugpayments per recipient grew by an annualaverage of 12.2 percent, from $256 per recip-ient to $572 per recipient (Table 5).Payments per recipient varied greatly by eli-gibility group, from a high of $1,379 perrecipient for the blind and disabled to a lowof $120 for children in 1997. The rate ofgrowth between 1990 and 1997 was greatest,at 13.5 percent, for the blind and disabled.Despite the fact that payments per recipientwere lowest for children in 1997, the rate ofgrowth in payments per recipient for chil-dren, 12.8 percent, was nearly as high as therate for the blind and disabled. The trend inprescription drug payments per recipient isshown in Figure 8. As previously noted, thelarger percentage of children and adultsamong all recipients (compared with theblind and disabled, and the aged) means thatpayments per recipient for the all-recipientsgroup is closer to that of children and adultsthan to the other groups.

The same general patterns in paymentsper recipient by eligibility group that wereobserved in the national data also persistedin data for individual States (Table 6).However, there were noteworthy varia-tions among the States. Prescription drugpayments per recipient ranged from $886to $1,575 for the aged, $958 to $2,396 forthe blind and disabled, $73 to $165 for chil-dren, and $97 to $476 for adults. These dif-ferences may be explained by State varia-tions in recipient demographic characteris-tics and State Medicaid program differ-ences, such as dispensing fee reimburse-ments, drug formularies, and prescriptionlimits per month. The variation around thenational prescription drug payments perrecipient of $572 from a high of $1,383 to alow of $343 was affected in part by the rel-

ative size of the major eligibility groups inthe State. For example, prescription drugpayments per recipient ($1,383) were highin Connecticut because the recipient popu-lation contained a much larger percentageof blind and disabled and aged recipientsthan other States. This was becauseConnecticut was covering large numbersof adults and children in prepaid plans.

National Health Accounts

Data on prescription drug payments forall payers in the United States are present-ed in Table 7 so that the Medicaid findingscan be viewed in a broader context. For allpayers, prescription drug paymentsincreased from more than $37 billion in1990 to nearly $79 billion in 1997, an aver-age annual increase of 11.1 percent.However, there was a sharp contrast overthis period in increases for the two majorcategories of payments. Out-of-pocket pay-ments increased by an annual average rateof only 3.4 percent during the period, whilethird-party payments increased by 16.2 per-cent. In 1990 payment amounts for out-of-pocket ($18.2 billion) and third-party pay-ments ($19.5 billion) were roughly compa-rable. As a result of the differential rates ofincrease, by 1997 out-of-pocket payments($23 billion) represented less than 30 per-cent of all payments. In contrast, by 1997third-party payments ($55.9 billion) repre-sented more than 70 percent of all pay-ments. This finding suggests that the pre-dominance of third-party coverage increas-es the likelihood that patients will havetheir prescriptions filled (Levit et al., 1998).

There were important changes occur-ring during the 1990s that caused theobserved increases in third-party pay-ments. During this time, increases in pre-scription drug payments exceeded the all-payer average for both of the major compo-


nents of third-party payments, private pay-ments (17.4 percent), and public payments(13.7 percent). For private payments amajor factor causing the increase couldhave been expanded coverage of prescrip-tion drugs under private insurance plans.The largest component of public payments,Medicaid, grew at an average rate of 14.7percent during these years. In contrast,other public payments grew by only 9.6 per-cent over this time period (Levit, 1999).

CONCLUSIONS

The following are highlighted findingsfrom this study:• Medicaid payments for prescription

drugs grew from $4.4 billion in 1990 toalmost $12 billion in 1997, with an annualrate of growth of 15.3 percent (Table 1).The largest single-year increases wereobserved between 1990 and 1991 (22.7percent) and between 1991 and 1992 (24.7percent), when the prescription drugrebate program was being implemented.By eligibility group, the blind and dis-abled had the highest amount of pay-ments for each year and the highest annu-al average rate of growth in paymentsbetween 1990 and 1997 (Figure 2). ByState, the largest total payments for pre-scription drugs were found in California,followed by New York (Table 2).

• As a percent of total Medicaid payments,prescription drug payments increasedfrom 6.8 percent in 1990 to 9.7 percent in1997. This percent also increased between1990 and 1997 for each of the major eligi-bility groups, with the exception of adults,for whom the percentage remained around7 percent for all years in the study period.This percentage increased dramatically forthe blind and disabled from 7.6 percent in1990 to 12.0 percent in 1997.

• The number of Medicaid prescriptiondrug recipients grew from 17.3 million in1990 to 24.5 million in 1994 and thendecreased to just under 21 million in1997 (Table 3). A similar pattern wasobserved for each major eligibilitygroup, with the exception of the blindand disabled. By eligibility group, chil-dren had the largest number of recipi-ents in every year of the study period, 7.3million in 1990 and 9.1 million in 1997(Figure 4). By State, the largest numberof prescription drug recipients wasfound in California (Table 4). AdditionalStates with more than 1 million prescrip-tion drug recipients were Florida,Illinois, New York, and Texas.

• Medicaid prescription drug payments perrecipient grew from $256 per recipient in1990 to $572 per recipient in 1997, with anaverage annual rate of growth of 12.2 per-cent (Table 5). Use of prescription drugswas quite different among the major eligi-bility groups. The blind and disabled hadthe highest prescription drug paymentsper recipient ($1,379) in 1997 (Table 6),more than 6 times the amount for adults($226) and more than 10 times theamount for children ($120). The blindand disabled also had the highest pay-ments per recipient for each year in thestudy period and the highest averageannual rate of growth in payments perrecipient between 1990 and 1997 (Figure8). The same general patterns in pay-ments per recipient by eligibility groupthat were observed in the national dataalso persisted in data for individual States.

• From the NHE data, total payments forall payers for prescription drugs grewfrom $37.7 billion in 1990 to $78.9 billionin 1997, with an annual rate of growth of11.1 percent. However, in this time peri-od, there was a major change in type of


payer. In 1990, out-of-pocket paymentswere $18.1 billion and increased to $23.0billion in 1997, with an annual rate ofgrowth of 3.4 percent. In contrast, third-party payments grew from $19.5 billionin 1990 to $55.9 billion in 1997, with anannual rate of growth of 16.2 percent. Asa result of the differential rates ofincrease for these two groups, by 1997out-of-pocket payments were less than 30percent of total payments, and third-party payments were 70 percent of pay-ments (Table 7). This finding suggeststhat the availability of third-party paymentincreases the likelihood that patients willhave their prescriptions filled.The findings from this study begin a

process to examine prescription drug useand payment for Medicaid enrollees. Theobserved decline in the percent of totalMedicaid recipients who received at leastone prescription drug in a FY during thestudy period is counterintuitive and unex-plained at this time. Prescription drug uti-lization data should be examined in greaterdepth. Also, future research is needed toexamine the mix of prescription drugs thatare being provided to Medicaid enrolleesby eligibility group and type of medicalcondition. This research will aid policy-makers in identifying special-needs groupsas they are enrolled in prepaid plans and indetermining if access to care is adequateafter enrollees are covered under prepaidplans. The research should also aid policy-makers as they set prepaid prices for bene-fit packages that include prescriptiondrugs. The latter need will become evengreater as State Medicaid agencies movetoward risk-adjusted payments to plans.

ACKNOWLEDGMENTS

The authors received input and guid-ance from Paul Eggers, John Hoover, JohnKlemm, John Poisal, and Larry Reed in the

development of this article. RogerBuchanan and Clarence Small, Jr., provid-ed information on file specifications for theState-reported HCFA-2082 data files.Unpublished HCFA-64 data were providedby Miles McDermott. Roger A. Milam pre-pared and executed the programming toextract HCFA-2082 and HCFA-64 data fromthe files for this study. Comparison datafrom the NHE series were produced byAnna M. Long. Paul Eggers, Cindy Foltz,John Klemm, Michael Keogh, JohnHoover, Miles McDermott, and John Poisalprovided useful comments on a draft of thearticle. The article was substantiallyimproved by the contributions of theseindividuals.

REFERENCES

Ellwood, M., and Ku, L.: Welfare and ImmigrationReforms: Unintended Side Effects for Medicaid.Health Affairs 17(3):137-151, May/June 1998.Foltz, C.: Personal communication. Baltimore, MD:March 15, 1999.Gaston, S.: Personal communication. Baltimore,MD: March 11, 1999.Health Care Financing Administration: 1997Medicaid Managed Care Enrollment Report. Centerfor Medicaid and State Operations, Data andSystems Group. Baltimore, MD. 1997.Health Care Financing Administration: MedicaidStatistics: Program and Financial Statistics, FiscalYear 1996. Center for Medicaid and StateOperations. Baltimore, MD. March 1998.Levit, K.: Personal communication. Baltimore, MD:March 16, 1999. Levit, K., Cowan C., Braden, B., et al.: NationalHealth Expenditures in 1997: More Slow Growth.Health Affairs 17(6):99-110, November/ December,1998.


Pine, P., Clauser, S., and Baugh, D.: Trends inMedicaid Payments and Users of Covered Services,1975-91. Health Care Financing Review. 1992Annual Supplement. October 1993.Rotwein, S., Boulmetis, M., Boben, P., et al.:Medicaid and State Health Care Reform: Process,Programs, and Policy Options. Health CareFinancing Review 16(3):105-107, Spring 1995.

U.S. General Accounting Office: MEDICAID -Early Implications of Welfare Reform forBeneficiaries and States. Report NumberGAO/HEHS-98-62. Washington, DC. February1998.

Reprint Requests: David K. Baugh, Health Care FinancingAdministration, 7500 Security Boulevard, Baltimore, MD 21244-1850. E-mail: [email protected]



Tabl

e 1

Med

icai

d P

resc

riptio

n D

rug

Pay

men

ts,

1by

Elig

ibili

ty G

roup

and

Yea

r: F

eder

al F

isca

l Yea

rs 1

990-

97

Ann

ual

Rat

e of

Elig

ibili

ty G

roup

219

9019

9119

9219

9319

9419

9519

9619

97G

row

th3

Pay

men

ts in

Mill

ions

All-

Rec

ipie

nts

$4,4

19.6

$5,4

23.6

$6,7

63.9

$7,9

69.2

$8,8

74.0

$9,7

90.7

$10,

696.

1$1

1,97

0.9

15.3

Age

d1,

506.

41,

822.

72,

190.

72,

440.

72,

650.

32,

861.

03,

075.

53,

342.

712

.1B

lind

and

Dis

able

d1,

863.

42,

296.

52,

922.

53,

572.

34,

146.

44,

794.

15,

544.

36,

517.

519

.6C

hild

ren

444.

958

9.6

806.

296

5.1

1,06

2.9

1,11

6.5

1,11

4.8

1,09

8.5

13.8

Adu

lts57

0.7

680.

280

5.1

919.

696

0.7

938.

985

2.0

880.

86.

4

1 M

edic

aid

pres

crip

tion

drug

pay

men

ts a

re g

ross

am

ount

s pr

ior

to t

he r

ecei

pt o

f re

bate

s to

the

Sta

tes

by p

resc

riptio

n dr

ug m

anuf

actu

rers

. M

edic

aid

pres

crip

tion

drug

pay

men

ts in

clud

e al

l pay

men

ts f

or

pres

crip

tion

drug

s pr

ovid

ed u

nder

a f

ee-f

or-s

ervi

ce s

ettin

g (i.

e.,

pres

crip

tion

drug

s fo

r w

hich

Med

icai

d pa

id a

pha

rmac

y cl

aim

).

Bec

ause

Med

icai

d pa

ys a

sin

gle

prem

ium

to

a pr

epai

d pl

an f

or a

ll co

vere

d se

rvic

es,

it is

not

pos

sibl

e to

iden

tify

pres

crip

tion

drug

pay

men

ts w

hen

they

are

cov

ered

by

a pr

epai

d pl

an.

To

this

ext

ent,

Med

icai

d pr

escr

iptio

n dr

ug p

aym

ents

pre

sent

ed h

ere

may

und

erst

ate

tota

l Med

icai

dpa

ymen

ts f

or p

resc

riptio

n dr

ugs.

2 T

he M

edic

aid

elig

ibili

ty g

roup

iden

tifie

s th

e ba

sis

on w

hich

Med

icai

d el

igib

ility

was

det

erm

ined

, reg

ardl

ess

of c

ash-

assi

stan

ce s

tatu

s.

The

Blin

d/D

isab

led

grou

p in

clud

es in

divi

dual

s of

any

age

who

wer

e de

ter-

min

ed to

be

elig

ible

bec

ause

of d

isab

ility

. The

Chi

ldre

n’s

grou

p in

clud

es fo

ster

car

e ch

ildre

n.

The

All-

Rec

ipie

nts

grou

p in

clu

des

a sm

all n

umbe

r of

indi

vidu

als

that

are

not

rep

orte

d in

the

othe

r fo

ur g

roup

s.3

Ave

rage

ann

ual p

erce

nt o

f gr

owth

fro

m 1

990-

97.

NO

TE

: D

ata

are

repo

rted

for

the

50

Sta

tes

and

the

Dis

tric

t of

Col

umbi

a.

SO

UR

CE

: H

ealth

Car

e F

inan

cing

Adm

inis

trat

ion,

Cen

ter

for

Med

icai

d an

d S

tate

Ope

ratio

ns:

HC

FAF

orm

-208

2, 1

990-

97.


Figure 1

Medicaid Prescription Drug Payments, 1 by Eligibility Group and Year: Federal Fiscal Years 1990-97

0

4

8

12

2

6

10

1990 1991 1992 1993 1994 1995 1996 1997

Pay

men

ts in

Bill

ion

s

Year

$14

Aged Blind and Disabled

Eligibility Group2

Children�zAdults

��y{��{|��yz��yz{|��z|��yz��yz{|��yz�z�z�z

1 Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States by pre-scription drug manufacturers. Medicaid prescription drug payments include all payments for prescription drugsprovided under a fee-for-service setting (i.e., prescription drugs for which Medicaid paid a pharmacy claim).Because Medicaid pays a single premium to a prepaid plan for all covered services, it is not possible to identifyprescription drug payments when they are covered by a prepaid plan. To this extent, Medicaid prescription drugpayments presented here may understate total Medicaid payments for prescription drugs.2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless ofcash-assistance status. The Blind/Disabled group includes individuals of any age who were determined to beeligible because of disability. The Children’s group includes foster care children. A small number of individualsthat are not reported in these four groups have been excluded.

NOTE: Data are reported for the 50 States and the District of Columbia.

SOURCE: Health Care Financing Administration, Center for Medicaid and State Operations: HCFA Form-2082,1990-97.


Figure 2

Medicaid Prescription Drug Payments, 1 as a Percent of Total Medicaid Payments, by EligibilityGroup and Year: Federal Fiscal Years 1990-97

0

4

8

12

2

6

10

1990 1991 1992 1993 1994 1995 1996 1997

Per

cen

t o

f P

aym

ents

Year

14

Eligibility Group2

All-RecipientsAgedBlind and DisabledChildrenAdults

1 Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States byprescription drug manufacturers. Medicaid prescription drug payments include all payments for prescriptiondrugs provided under a fee-for-service setting (i.e., prescription drugs for which Medicaid paid a pharmacyclaim). Because Medicaid pays a single premium to a prepaid plan for all covered services, it is not possibleto identify prescription drug payment when they are covered by a prepaid plan. To this extent, Medicaid pre-scription drug payments presented here may understate total Medicaid payments for prescription drugs.2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardlessof cash-assistance status. The Blind/Disabled group includes individuals of any age who were determined tobe eligible because of disability. The Children’s group includes foster care children. The All-Recipients groupincludes a small number of individuals that are not reported in the other four groups.




Figure 3

Percent of Medicaid Prescription Drug Payments, 1 by Eligibility Group and Year: Federal Fiscal Years 1990-97

��

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yyyyy

zzzzz

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||||||

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��

��

��

yyyyy

zzzzz

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||||||

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��

��

��

yyyyy

zzzzz

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||||||

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��

zzzzz

||||||

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��

yyyyy

{{{{{{

��

��

��

��

yyyyy

zzzzz

{{{{{{

||||||

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��

��

��

yyyyy

zzzzz

{{{{{{

||||||

��

��

yyyyy

{{{{{{

0

50

70

90

10

20

30

40

60

80

1990 1991 1992 1993 1994 1995 1996 1997

Per

cen

t

Year

100


Eligibility Group2

Adults�yChildren�y�y�y

1 Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States by prescrip-tion drug manufacturers. Medicaid prescription drug payments include all payments for prescription drugs provid-ed under a fee-for-service setting (i.e., prescription drugs for which Medicaid paid a pharmacy claim). BecauseMedicaid pays a single premium to a prepaid plan for all covered services, it is not possible to identify prescrip-tion drug payments when they are covered by a prepaid plan. To this extent, Medicaid prescription drug paymentspresented here may understate total Medicaid payments for prescription drugs.2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless ofcash-assistance status. The Blind/Disabled group includes individuals of any age who were determined to be eli-gible because of disability. The Children’s group includes foster care children. A small number of individuals thatare not reported in these four groups have been excluded.




Table 2

Medicaid Prescription Drug Payments, 1 by State and Eligibility Group: Federal Fiscal Year 1997

Medicaid Eligibility Group 2

State All-Recipients Aged Blind and Disabled Children Adults

Payments in MillionsTotal $11,970.9 $3,342.7 $6,517.5 $1,098.5 $880.8

Alabama 3 226.1 59.3 134.9 23.6 7.9Alaska 28.4 4.8 14.6 3.2 4.7Arizona 3,5 NA NA NA NA NAArkansas 135.8 41.6 74.7 8.3 11.3California 4 1,335.1 320.3 759.2 123.8 125.6Colorado 4 97.0 33.8 51.3 6.6 5.2Connecticut 4 166.7 62.1 99.4 2.9 2.3Delaware3 34.7 5.9 16.0 4.2 8.3District of Columbia 4 37.5 4.7 25.7 2.6 4.5Florida 4 772.8 197.3 474.0 55.8 43.9Georgia 4 339.3 64.9 187.0 57.1 29.3Hawaii 3,5 NA NA NA NA NAIdaho 45.0 14.5 22.2 4.0 4.0Illinois 4 523.6 111.2 311.9 51.2 49.3Indiana 4 293.3 105.5 148.7 26.1 12.7Iowa 4 123.9 41.7 58.7 12.0 11.5Kansas 4 104.6 33.5 51.1 12.0 6.5Kentucky 316.5 73.0 191.9 25.9 25.5Louisiana 315.4 113.6 139.0 44.8 17.9Maine 102.5 29.7 53.7 8.0 9.1Maryland 3 172.7 45.1 99.9 13.4 14.3Massachusetts 4 398.1 88.8 250.7 23.4 35.2Michigan 4 365.3 80.1 219.9 29.0 35.4Minnesota 3 155.8 39.1 97.7 9.5 9.5Mississippi 208.6 64.9 111.8 17.4 14.1Missouri 4 320.7 112.6 172.2 22.7 12.8Montana 4 35.5 8.7 18.5 3.1 4.2Nebraska 79.7 27.8 35.9 9.9 6.2Nevada 26.7 8.0 14.8 2.3 1.4New Hampshire 4 45.4 14.4 20.0 5.9 5.0New Jersey 4 369.8 101.0 245.7 12.1 10.5New Mexico 4 63.3 11.2 33.9 11.3 6.9New York 4 1,090.9 235.4 685.4 83.7 86.4North Carolina 4 403.8 141.4 177.9 47.2 37.3North Dakota 25.2 10.4 10.6 2.5 1.8Ohio 3 580.6 199.7 313.5 29.6 37.8Oklahoma 3,6 110.9 NA NA NA NAOregon 3 73.2 17.9 34.1 2.9 18.3Pennsylvania 4 552.3 215.5 267.6 39.9 28.9Rhode Island 3 52.2 17.3 33.9 0.7 0.3South Carolina 159.6 53.4 81.4 17.1 7.7South Dakota 27.6 9.4 14.4 2.8 1.0Tennessee 3,5 NA NA NA NA NATexas 4 750.1 259.4 248.0 171.3 71.3Utah 4 50.8 9.0 25.7 6.6 8.9Vermont 3 44.3 13.8 21.2 4.7 4.2Virginia 4 249.6 85.4 123.8 25.9 14.6Washington 4 205.0 56.1 136.4 6.4 5.9West Virginia 133.0 30.1 71.9 16.5 14.6Wisconsin 4 205.5 64.7 129.0 6.4 5.3Wyoming 14.9 4.4 7.0 2.1 1.2

1 Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States by prescription drug manufacturers. Medicaidprescription drug payments include all payments for prescription drugs provided under a fee-for-service setting (i.e., prescription drugs for whichMedicaid paid a pharmacy claim). Because Medicaid pays a single premium to a prepaid plan for all covered services, it is not possible to identifyprescription drug payments when they are covered by a prepaid plan. To this extent Medicaid prescription drug payments presented here mayunderstate total Medicaid payments for prescription drugs.2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless of cash-assistance status. The Blind/Disabledgroup includes individuals of any age who were determined to be eligible because of disability. The Children’s group includes foster care children.The All-Recipients group includes a small number of individuals that are not reported in the other four groups.3 These 12 States have comprehensive health care reform demonstrations that include fully capitated payment arrangements implemented as ofJune 1997.4 These 25 States have other managed care programs that have fully capitated payment arrangements as of June 1997.5 Data are not reported for these States.6 Data are not reported by eligibility group for this State.NOTES: Data are reported for the 50 States and the District of Columbia. NA is not available.SOURCE: Health Care Financing Administration, Center for Medicaid and State Operations: HCFA Form-2082, 1997.


Tabl

e 3

Med

icai

d P

resc

riptio

n D

rug

Rec

ipie

nts,

1by

Elig

ibili

ty G

roup

and

Yea

r: F

eder

al F

isca

l Yea

rs 1

990-

97

Ann

ual

Rat

e of

Elig

ibili

ty G

roup

219

9019

9119

9219

9319

9419

9519

9619

97G

row

th3

Rec

ipie

nts

in T

hous

ands

All-

Rec

ipie

nts

17,2

87.4

19,5

95.6

22,0

23.3

23,8

95.6

24,4

62.8

23,7

18.3

22,5

75.7

20,9

43.9

2.8

Age

d2,

590.

42,

735.

12,

872.

92,

953.

03,

010.

82,

980.

22,

966.

42,

846.

41.

4B

lind

and

Dis

able

d3,

021.

33,

287.

23,

664.

14,

117.

64,

427.

94,

569.

14,

755.

44,

726.

96.

6C

hild

ren

7,25

5.6

8,60

5.2

10,0

60.9

10,9

86.3

11,2

34.4

10,7

05.6

9,98

0.2

9,12

3.4

3.3

Adu

lts4,

055.

64,

604.

55,

048.

45,

409.

95,

381.

24,

969.

84,

336.

03,

893.

5-0

.6

1 A

Med

icai

d pr

escr

iptio

n dr

ug r

ecip

ient

is a

Med

icai

d en

rolle

e w

ho r

ecei

ved

at le

ast

one

cove

red

pres

crip

tion

drug

dur

ing

the

fisca

l yea

r. I

f an

enr

olle

e w

as c

over

ed u

nder

a p

repa

id p

lan,

pro

vidi

ng e

ither

pa

rtia

l or

com

preh

ensi

ve c

over

age

durin

g th

e ye

ar,

and

had

at le

ast

1 fe

e-fo

r-se

rvic

e cl

aim

for

a p

resc

riptio

n dr

ug d

urin

g th

e fis

cal y

ear,

that

enr

olle

e is

cou

nted

as

a pr

escr

iptio

n dr

ug r

ecip

ient

. O

ther

wis

e,en

rolle

es c

over

ed u

nder

pre

paid

pla

ns a

re e

xclu

ded

from

pre

scrip

tion

drug

rec

ipie

nt c

ount

s be

caus

e it

is n

ot p

ossi

ble

to id

entif

y th

e pl

an e

nrol

lees

who

rec

eive

d M

edic

aid

cove

red

serv

ices

. T

here

fore

, th

ese

data

may

und

erst

ate

the

num

ber

of r

ecip

ient

s an

d pr

escr

iptio

n dr

ug r

ecip

ient

s.2

The

Med

icai

d el

igib

ility

gro

up id

entif

ies

the

basi

s on

whi

ch M

edic

aid

elig

ibili

ty w

as d

eter

min

ed, r

egar

dles

s of

cas

h-as

sist

ance

sta

tus.

T

he B

lind/

Dis

able

d gr

oup

incl

udes

indi

vidu

als

of a

ny a

ge w

ho w

ere

dete

r-m

ined

to b

e el

igib

le b

ecau

se o

f dis

abili

ty. T

he C

hild

ren’

s gr

oup

incl

udes

fost

er c

are

child

ren.

T

he A

ll-R

ecip

ient

s gr

oup

incl

ude

s a

smal

l num

ber

of in

divi

dual

s th

at a

re n

ot r

epor

ted

in th

e ot

her

four

gro

ups.

3 A

vera

ge a

nnua

l per

cent

of

grow

th f

rom

199

0-97

.

NO

TE

: D

ata

are

repo

rted

for

the

50

Sta

tes

and

the

Dis

tric

t of

Col

umbi

a.

SO

UR

CE

: H

ealth

Car

e F

inan

cing

Adm

inis

trat

ion,

Cen

ter

for

Med

icai

d an

d S

tate

Ope

ratio

ns:

HC

FAF

orm

-208

2, 1

990-

97.


Figure 4

Number of Medicaid Prescription Drug Recipients, 1 by Eligibility Group and Year: Federal Fiscal Years 1990-97

0

5,000

15,000

25,000

10,000

20,000

1990 1991 1992 1993 1994 1995 1996 1997

Nu

mb

er o

f R

ecip

ien

ts in

Th

ou

san

ds

Year

30,000

Eligibility Group2


1 A Medicaid prescription drug recipient is a Medicaid enrollee who received at least 1 covered pre-scription drug during the fiscal year. If an enrollee was covered under a prepaid plan, providing eitherpartial or comprehensive coverage during the year, and had at least 1 fee-for-service claim for a pre-scription drug during the fiscal year, that enrollee is counted as a prescription drug recipient.Otherwise, enrollees covered under prepaid plans are excluded from prescription drug recipientcounts because it is not possible to identify the plan enrollees who received Medicaid covered services.Therefore, these data may understate the number of prescription drug recipients. 2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined,regardless of cash-assistance status. The Blind/Disabled group includes individuals of any age whowere determined to be eligible because of disability. The Children’s group includes foster care children. The All-Recipients group includes a small number of individuals that are not reported in the other four groups.


SOURCE: Health Care Financing Administration, Center for Medicaid and State Operations: HCFA Form-2082, 1990-97.


Figure 5

Percent of Total Medicaid Prescription Drug Recipients, 1 by Eligibility Group and Year: Federal Fiscal Years 1990-97

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0

20

40

60

80

1990 1991 1992 1993 1994 1995 1996 1997

Per

cen

t

Year

100


Eligibility Group2

Children�zAdults�z�z�z

1 A Medicaid prescription drug recipient is a Medicaid enrollee who received at least 1 covered prescription drugduring the fiscal year. If an enrollee was covered under a prepaid plan, providing either partial or comprehensivecoverage during the year, and had at least 1 fee-for-service claim for a prescription drug during the fiscal year, thatenrollee is counted as a prescription drug recipient. Otherwise, enrollees covered under prepaid plans are excludedfrom prescription drug recipient counts because it is not possible to identify the plan enrollees who receivedMedicaid covered services. Therefore, these data may understate the number of prescription drug recipients. 2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless ofcash-assistance status. The Blind/Disabled group includes individuals of any age who were determined to be eligiblebecause of disability. The Children’s group includes foster care children. A small number of individuals that are notreported in these four groups have been excluded.




Figure 6

Medicaid Prescription Drug Recipients, 1 as a Percent of Total Medicaid Recipients: Federal Fiscal Years 1990-97

0

50

70

10

60

80

1990 1991 1992 1993 1994 1995 1996 1997

Per

cen

t

Year

90

Eligibility Group2


1 A Medicaid prescription drug recipient is a Medicaid enrollee who received at least 1 covered prescriptiondrug during the fiscal year. If an enrollee was covered under a prepaid plan, providing either partial or com-prehensive coverage during the year, and had at least 1 fee-for-service claim for a prescription drug duringthe fiscal year, that enrollee is counted as a prescription drug recipient. Otherwise, enrollees covered underprepaid plans are excluded from prescription drug recipient counts because it is not possible to identify theplan enrollees who received Medicaid covered services. Therefore, these data may understate the numberof prescription drug recipients. 2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardlessof cash-assistance status. The Blind/Disabled group includes individuals of any age who were determinedto be eligible because of disability. The Children’s group includes foster care children. The All-Recipientsgroup includes a small number of individuals that are not reported in the other four groups.




Table 4

Medicaid Prescription Drug Recipients, 1 by State and Eligibility Group: Federal Fiscal Year 1997



Recipients in ThousandsTotal 20,943.9 2,846.4 4,726.9 9,123.4 3,893.5

Alabama 3 412.7 50.8 122.7 199.0 36.6Alaska 42.2 3.3 6.1 19.4 11.9Arizona 3,5 NA NA NA NA NAArkansas 254.1 39.7 74.4 65.0 74.1California 4 3,158.4 381.5 609.9 1,376.2 695.7Colorado 4 156.6 29.8 37.3 59.0 30.4Connecticut 4 120.5 45.9 45.2 16.9 12.6Delaware 3 68.7 4.4 10.6 33.5 19.1District of Columbia 4 64.5 4.5 17.6 24.4 18.0Florida 4 1,024.6 159.2 260.3 424.6 174.3Georgia 4 847.0 64.6 177.5 435.9 165.0Hawaii 3,5 NA NA NA NA NAIdaho 80.0 9.2 15.0 39.6 14.0Illinois 4 1,008.7 84.2 212.6 487.9 224.1Indiana 4 352.8 57.5 71.4 161.0 61.9Iowa 4 221.1 33.1 41.6 91.5 54.7Kansas 4 170.2 23.8 35.2 77.1 31.1Kentucky 494.3 47.5 146.5 208.9 89.3Louisiana 563.9 75.7 127.1 300.5 60.6Maine 139.5 21.2 33.3 55.1 27.6Maryland 3 256.4 34.8 64.8 106.5 50.3Massachusetts 4 559.2 82.4 156.1 202.8 117.9Michigan 4 688.9 76.1 175.6 279.6 152.6Minnesota 3 227.0 35.2 62.3 87.1 41.5Mississippi 391.3 57.0 116.7 136.2 80.9Missouri 4 395.5 77.0 94.9 161.6 60.7Montana 4 62.1 7.1 12.4 25.7 12.3Nebraska 152.0 21.8 25.0 78.5 26.7Nevada 55.9 8.2 14.0 23.4 8.9New Hampshire 4 71.7 10.7 10.2 38.2 12.4New Jersey 4 347.1 79.2 125.8 89.6 51.6New Mexico 4 184.5 11.9 31.4 110.3 30.6New York 4 1,667.9 216.0 447.8 719.3 284.8North Carolina 4 779.2 118.0 148.6 377.0 135.6North Dakota 39.7 7.8 6.9 17.2 7.6Ohio 3 786.3 130.7 207.0 277.1 171.5Oklahoma 3,6 207.4 NA NA NA NAOregon 3 149.5 21.2 29.1 32.5 66.6Pennsylvania 4 763.3 160.7 191.1 311.7 97.7Rhode Island 3 46.8 15.8 24.4 4.9 1.4South Carolina 359.9 60.3 86.2 159.7 53.7South Dakota 47.8 7.5 10.4 23.6 6.4Tennessee 3,5 NA NA NA NA NATexas 4 1,986.2 236.8 239.9 1,173.2 336.2Utah 4 105.7 7.1 15.0 54.0 27.0Vermont 3 83.1 12.4 13.7 37.3 18.3Virginia 4 396.7 64.2 83.0 185.4 64.1Washington 4 292.7 49.8 95.1 86.9 60.4West Virginia 280.6 25.1 66.4 136.3 52.7Wisconsin 4 266.0 56.7 99.2 71.1 38.2Wyoming 33.4 3.1 5.4 18.1 6.61 A Medicaid prescription drug recipient is a Medicaid enrollee who received at least 1 covered prescription drug during the fiscal year. If an enrolleewas covered under a prepaid plan, providing either partial or comprehensive coverage during the year, and had at least 1 fee-for-service claim for aprescription drug during the fiscal year, that enrollee is counted as a prescription drug recipient. Otherwise, enrollees covered under prepaid plansare excluded from prescription drug recipient counts because it is not possible to identify the plan enrollees who received Medicaid covered services.Therefore, these data may understate the number of recipients and prescription drug recipients.2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless of cash-assistance status. The Blind/Disabledgroup includes individuals of any age who were determined to be eligible because of disability. The Children’s group includes foster care children.The All-Recipients group includes a small number of individuals that are not reported in the other four groups.3 These 12 States have comprehensive health care reform demonstrations that include fully capitated payment arrangements implemented as of June 1997.4 These 25 States have other managed care programs that have fully capitated payment arrangements as of June 1997.5 Data are not reported for these States.6 Data are not reported by eligibility group for this State.NOTES: Data are reported for the 50 States and the District of Columbia. NA is not available.SOURCE: Health Care Financing Administration, Center for Medicaid and State Operations: HCFA Form-2082, 1997.


Figure 7

Percent of Total Medicaid Prescription Drug Recipients 1 and Payments, 2 by Eligibility Group andYear: Federal Fiscal Year 1997

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0

50

70

90

10

20

30

40

60

80

1997Recipients

1997Payments

Per

cen

t

100


Eligibility Group3

Adults�yChildren

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23.0

18.9

13.8

44.3

55.0

7.4

28.2

9.3

1 A Medicaid prescription drug recipient is a Medicaid enrollee who received at least 1 covered prescription drugduring the fiscal year. If an enrollee was covered under a prepaid plan, providing either partial or comprehensivecoverage during the year, and had at least 1 fee-for-service claim for a prescription drug during the fiscal year, thatenrollee is counted as a prescription drug recipient. Otherwise, enrollees covered under prepaid plans are exclud-ed from prescription drug recipient counts because it is not possible to identify the plan enrollees who receivedMedicaid covered services. Therefore, these data may understate the number of prescription drug recipients. 2 Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States by prescrip-tion drug manufacturers. Medicaid prescription drug payments include all payments for prescription drugs provid-ed under a fee-for-service setting (i.e., prescription drugs for which Medicaid paid a pharmacy claim). BecauseMedicaid pays a single premium to a prepaid plan for all covered services, it is not possible to identify prescrip-tion drug payments when they are covered by a prepaid plan. To this extent, Medicaid prescription drug paymentspresented here may understate total Medicaid payments for prescription drugs.3 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless ofcash-assistance status. The Blind/Disabled group includes individuals of any age who were determined to be eli-gible because of disability. The Children’s group includes foster care children. A small number of individuals thatare not reported in these four groups have been excluded.


SOURCE: Health Care Financing Administration, Center for Medicaid and State Operations: HCFA Form-2082.


Tabl

e 5

Med

icai

d P

resc

riptio

n D

rug

Pay

men

ts p

er R

ecip

ient

,1

by E

ligib

ility

Gro

up a

nd Y

ear:

Fed

eral

Fis

cal Y

ears

199

0-97

Ann

ual

Rat

e of

Elig

ibili

ty G

roup

219

9019

9119

9219

9319

9419

9519

9619

97G

row

th3

Pay

men

ts p

er R

ecip

ient

All-

Rec

ipie

nts

$256

$277

$307

$334

$363

$413

$474

$572

12.2

Age

d55

166

676

382

788

096

01,

037

1,17

411

.4B

lind

and

Dis

able

d56

769

979

886

893

61,

049

1,16

61,

379

13.5

Chi

ldre

n52

6980

8895

104

112

120

12.8

Adu

lts12

414

815

917

017

918

919

622

69.

0

1 M

edic

aid

pres

crip

tion

drug

pay

men

ts p

er r

ecip

ient

are

def

ined

to

be M

edic

aid

paym

ents

for

pre

scrip

tion

drug

s di

vide

d by

the

num

ber

of M

edic

aid

enro

llees

who

rec

eive

d at

leas

t 1

cove

red

pres

crip

tion

drug

durin

g th

e fis

cal y

ear.

Aco

nsis

tent

app

roac

h ha

s be

en t

aken

to

defin

e th

e nu

mer

ator

and

den

omin

ator

of

this

sta

tistic

. A

Med

icai

d en

rolle

e is

rep

rese

nted

in t

he p

aym

ent

amou

nt (

the

num

erat

or)

and

as a

pres

crip

tion

drug

rec

ipie

nt (

the

deno

min

ator

) if

and

only

if t

here

was

a f

ee-f

or-s

ervi

ce c

laim

for

a p

resc

riptio

n dr

ug f

or t

hat p

erso

n.2

The

Med

icai

d el

igib

ility

gro

up id

entif

ies

the

basi

s on

whi

ch M

edic

aid

elig

ibili

ty w

as d

eter

min

ed, r

egar

dles

s of

cas

h-as

sist

ance

sta

tus.

T

he B

lind/

Dis

able

d gr

oup

incl

udes

indi

vidu

als

of a

ny a

ge w

ho w

ere

dete

r-m

ined

to b

e el

igib

le b

ecau

se o

f dis

abili

ty. T

he C

hild

ren’

s gr

oup

incl

udes

fost

er c

are

child

ren.

T

he A

ll-R

ecip

ient

s gr

oup

incl

ude

s a

smal

l num

ber

of in

divi

dual

s th

at a

re n

ot r

epor

ted

in th

e ot

her

four

gro

ups.

3 A

vera

ge a

nnua

l per

cent

of

grow

th f

rom

199

0-97

.

NO

TE

: D

ata

are

repo

rted

for

the

50

Sta

tes

and

the

Dis

tric

t of

Col

umbi

a.

SO

UR

CE

: H

ealth

Car

e F

inan

cing

Adm

inis

trat

ion,

Cen

ter

for

Med

icai

d an

d S

tate

Ope

ratio

ns:

HC

FAF

orm

-208

2, 1

990-

97.


Figure 8

Medicaid Prescription Drug Payments per Recipient, 1 by Eligibility Group 2 and Year: FederalFiscal Years 1990-97

0

800

1,200

600

400

200

1,000

1,400

1990 1991 1992 1993 1994 1995 1996 1997

Pay

men

ts p

er R

ecip

ien

t

Year

$1,600

Eligibility Group2


1 Medicaid prescription drug payments per recipient are defined to be Medicaid payments for pre-scription drugs divided by the number of Medicaid enrollees who received at least 1 covered pre-scription drug during the fiscal year. A consistent approach has been taken to define the numeratorand denominator of this statistic. A Medicaid enrollee is represented in the payment amount (in thenumerator and as a prescription drug recipient in the denominator) if and only if there was a fee-for-service claim for a prescription drug for that person. 2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined,regardless of cash-assistance status. The Blind/Disabled group includes individuals of any age whowere determined to be eligible because of disability. The Children’s group includes foster care children. The All-Recipients group includes a small number of individuals that are not reported inthe other four groups.


SOURCE: Health Care Financing Administration, Center for Medicaid and State Operations: HCFAForm-2082, 1990-97.


Table 6

Medicaid Prescription Drug Payments per Recipient, 1 by State and Eligibility Group: Federal Fiscal Year 1997



Payments per RecipientTotal $572 $1,174 $1,379 $120 $226

Alabama 3 548 1,167 1,100 118 216Alaska 673 1,474 2,396 165 394Arizona 3,5 NA NA NA NA NAArkansas 534 1,049 1,004 128 153California 4 423 840 1,245 90 181Colorado 4 619 1,137 1,374 111 172Connecticut 4 1,383 1,352 2,200 173 185Delaware 3 505 1,333 1,504 126 431District of Columbia 4 582 1,028 1,459 107 251Florida 4 754 1,239 1,821 131 252Georgia 4 401 1,004 1,053 131 178Hawaii 3,5 NA NA NA NA NAIdaho 563 1,575 1,480 102 282Illinois 4 519 1,320 1,468 105 220Indiana 4 831 1,834 2,082 162 204Iowa 4 560 1,259 1,412 131 211Kansas 4 615 1,404 1,450 156 208Kentucky 640 1,535 1,310 124 285Louisiana 559 1,501 1,094 149 296Maine 735 1,401 1,613 145 329Maryland 3 674 1,296 1,541 126 284Massachusetts 4 712 1,078 1,606 115 299Michigan 4 530 1,052 1,252 104 232Minnesota 3 686 1,110 1,568 110 229Mississippi 533 1,139 958 128 174Missouri 4 811 1,462 1,815 140 211Montana 4 571 1,223 1,491 120 339Nebraska 525 1,274 1,436 127 230Nevada 477 984 1,051 100 155New Hampshire 4 633 1,342 1,959 156 400New Jersey 4 1,065 1,276 1,953 135 204New Mexico 4 343 939 1,081 103 224New York 4 654 1,090 1,531 116 303North Carolina 4 518 1,198 1,198 125 275North Dakota 636 1,321 1,524 142 242Ohio 3 738 1,528 1,514 107 221Oklahoma 3,6 535 NA NA NA NAOregon 3 490 844 1,170 90 275Pennsylvania 4 724 1,341 1,400 128 296Rhode Island 3 1,114 1,099 1,385 134 201South Carolina 443 886 945 107 144South Dakota 577 1,261 1,379 118 156Tennessee 3,5 NA NA NA NA NATexas 4 378 1,096 1,034 146 212Utah 4 481 1,269 1,714 123 329Vermont 3 533 1,114 1,550 125 231Virginia 4 629 1,329 1,491 140 228Washington 4 700 1,126 1,435 73 97West Virginia 474 1,197 1,082 121 277Wisconsin 4 773 1,142 1,300 90 140Wyoming 445 1,431 1,305 116 1791 Medicaid prescription drug payments per recipient are defined to be Medicaid payments for prescription drugs divided by the number of Medicaidenrollees who received at least 1 covered prescription drug during the fiscal year. A consistent approach has been taken to define the numerator anddenominator of this statistic. A Medicaid enrollee is represented in the payment amount (the numerator) and as a prescription drug recipient (thedenominator) if and only if there was a fee-for-service claim for a prescription drug for that person.2 The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless of cash-assistance status. The Blind/Disabledgroup includes individuals of any age who were determined to be eligible because of disability. The Children’s group includes foster care children.The All-Recipients group includes a small number of individuals that are not reported in the other four groups.3 These 12 States have comprehensive health care reform demonstrations that include fully capitated payment arrangements implemented as ofJune 1997.4 These 25 States have other managed care programs that have fully capitated payment arrangements as of June 1997.5 Data are not reported for these States.6 Data are not reported by eligibility group for this State.NOTES: Data are reported for the 50 States and the District of Columbia. NA is not available.SOURCE: Health Care Financing Administration, Center for Medicaid and State Operations: HCFA Form-2082, 1997.


Tabl

e 7

All-

Pay

er P

resc

riptio

n D

rug

Pay

men

ts a

nd P

erce

nt o

f Tot

al, b

y P

aym

ent C

ateg

ory

and

Yea

r: C

alen

dar

Yea

rs 1

990-

97

Ann

ual

Rat

e of

Pay

men

t C

ateg

ory2

1990

1991

1992

1993

1994

1995

1996

1997

Gro

wth

1

All

Pay

ers

Pay

men

ts in

Mill

ions

$37,

677

$42,

148

$46,

598

$50,

632

$55,

189

$61,

060

$69,

111

$78,

888

11.1

Per

cent

100.

010

0.0

100.

010

0.0

100.

010

0.0

100.

010

0.0

—

Out

-of-

Poc

ket

Pay

men

ts in

Mill

ions

$18,

189

$19,

295

$20,

400

$21,

175

$21,

368

$20,

702

$21,

797

$23,

016

3.4

Per

cent

48.3

45.8

43.8

41.8

38.7

33.9

31.5

29.2

—

Thi

rd-P

arty

Pay

men

ts in

Mill

ions

$19,

488

$22,

854

$26,

198

$29,

457

$33,

821

$40,

358

$47,

313

$55,

873

16.2

Per

cent

51.7

54.2

56.2

58.2

61.3

66.1

68.5

70.8

—

Priv

ate

Pay

men

ts in

Mill

ions

$12,

973

$15,

178

$17,

929

$20,

109

$23,

455

$28,

649

$33,

899

$39,

905

17.4

Per

cent

34.4

36.0

38.5

39.7

42.5

46.9

49.1

50.6

—

Pub

licP

aym

ents

in M

illio

ns$6

,515

$7,6

76$8

,269

$9,3

48$1

0,36

6$1

1,70

9$1

3,41

4$1

5,96

813

.7P

erce

nt17

.318

.217

.718

.518

.819

.219

.420

.2—

Med

icai

dP

aym

ents

in M

illio

ns$5

,073

$6,1

75$6

,707

$7,7

52$8

,553

$9,6

46$1

1,05

7$1

3,22

414

.7P

erce

nt13

.514

.714

.415

.315

.515

.816

.016

.8—

Oth

er P

ublic

Pay

men

ts in

Mill

ions

$1,4

42$1

,501

$1,5

62$1

,596

$1,8

13$2

,063

$2,3

57$2

,744

9.6

Per

cent

3.8

3.6

3.4

3.2

3.3

3.4

3.4

3.5

—

1 A

vera

ge a

nnua

l per

cent

of

grow

th f

rom

199

0-97

.2

All

paye

r pa

ymen

t am

ount

s ar

e sp

lit b

etw

een

out-

of-p

ocke

t am

ount

s (t

hose

am

ount

s pa

id o

ut o

f pe

rson

al f

unds

) an

d th

ird p

arty

pay

men

ts (

thos

e am

ount

s pa

id b

y in

sure

rs o

r pr

ogra

ms)

. Thi

rd p

arty

pay

-m

ents

are

fur

ther

spl

it by

whe

ther

the

insu

rer

and/

or p

rogr

am w

as e

ither

pub

lic o

r pr

ivat

e. F

inal

ly,

publ

ic w

as s

plit

betw

een

Med

icai

d an

d ot

her

publ

ic s

ourc

es.

SO

UR

CE

: H

ealth

Car

e F

inan

cing

Adm

inis

trat

ion,

Offi

ce o

f th

e A

ctua

ry,

Nat

iona

l Hea

lth E

xpen

ditu

res,

199

0-97

.

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