Comments of Consumers Union to the Texas Health and Human Services Commission regarding proposed rules on Medicaid cost-sharing (Nov. 2002).

Consumers Union appreciates the opportunity to submit comments to the Texas Health and Human Services Commission regarding proposed rules on Medicaid cost-sharing and related rules, published in the October 11, 2002, Texas Register, Vol. 27, No. 41 at 1 TAC ¤354.1875 and 1 TAC ¤354.3200.

Consumers Union is not opposed to cost sharing and believes the Medicaid dollar limits set by the federal government on co-payments attempt to avoid creating major barriers for most people covered by the program. However, these policies place the cost-sharing burden on some of the states' most vulnerable citizens -- frail elders and people with disabilities with very low incomes. Most in these groups have permanently limited incomes and more health care needs than the general population. Most are already subject to severe limits on prescription drugs, with coverage for only three prescriptions per month. Their trips to the emergency room are not typically the unnecessary visits cited as problems and are likely to involve complex multiple health problems that may not be solved by a visit to a primary care provider.

We appreciate the efforts of the Commission to include stakeholders in discussions about the development of this policy and strongly support some of the protections eventually built into the policy, such as a monthly cap on expenses.

The theory behind cost sharing for prescription drugs and emergency room care is that it will change the behavior of participants in the Medicaid program by creating a disincentive (co-payment) for patients to use brand named drugs or emergency room services for non-emergency purposes. However, the actual purpose of the cost-sharing proposal is to effect cost savings for the state. It is unlikely that either of these purposed will be actualized. With that said, we have the following comments about this proposal.

There should be no co-payment for generic drugs. If the goal is truly to steer clients to using generic drugs whenever appropriate, then there should be a distinct difference in the cost. The greatest incentive would be to have no cost sharing for generics, sending a clear message to people on Medicaid that they have a real alternative to brand name drugs. Furthermore, it is a clear waste of administrative effort for a pharmacist to collect 50 cents in order to prevent a 25-cent reduction in reimbursement. If there were a need to count dollars saved, it would be preferable to charge $3.50 for brand name drugs and no co-payment for generics. The greatest potential for savings from this policy will not come from the decrease in reimbursement but from the decrease in use of brand named drugs.

RECOMMENDATION: Eliminate co-payments for generic drugs.

The policy is based on a flawed theory that significantly more generic prescribing can occur within the current law. Currently, the Medicaid program's use of generics is over 90% and there is not much more that can be done to increase the use of generics without changing some fairly significant pharmacy related regulations and laws. The real savings in Medicaid can be effected by physicians prescribing appropriate therapeutic alternatives to the latest brand name drugs. A number of states, including Texas, are exploring the use of evidence-based medicine in the prescription drug arena and developing policies to steer patients and their health care prescribers to lower cost drugs that are as effective as the brand name drugs. However, this proposed cost sharing policy doesn't even recognize that cost savings could be significant if people were not simply being prescribed the latest brand drug being advertised on television and pushed on doctors by drug company detailers.

The proposal places incentives on the wrong health care providers. This policy places the pressure on pharmacists to switch the patient to a generic drug so the pharmacist will not lose as much in reimbursement from the state. Pharmacists have already proven to be successful in switching patients to equally effective generics in the Medicaid program. However, when a physician writes a prescription for a brand name drug that has no generic, there is really nothing the pharmacist alone can do to change that prescription. Only a physician can make the decision to prescribe a less costly therapeutic alternative. Only the physician can determine whether such a therapeutic alternative is appropriate for a particular patient. This policy places no incentives on physicians to consider equally effective lower cost alternatives. When a patient with no money for a co-payment presents to the pharmacy, some of these pharmacists will take the time to call the doctor and see if some other prescription would work. But the reimbursement rate creates a disincentive for the pharmacist to take that extra time.

The policy creates confusion for patents and perverse incentives for pharmacists and hospitals. Fundamentally, this is a complex and confusing policy -- mostly due to federal regulations and the state's attempts to mitigate the barriers for low-income people. The Commission should build diligent monitoring activities into the implementation plan, especially at the pharmacy level, and be prepared to change the policy if it is found to create barriers to needed prescription drugs.

RECOMMENDATION: Begin monitoring calls to the Medicaid Hotline, STARLink line, Vendor Drug Program regional pharmacists, and HMO customer service lines by creating a new category of calls relating to cost sharing issues. The helpline and other appropriate staff should meet quarterly to assess the types of problems being identified and make recommendations for altering the policy, if warranted.

While we strongly support the policy's monthly cap on a recipient's co-payment expenses, there is no system to advise health care providers when that limit has been met. Medicaid recipients will have to keep their receipts to demonstrate that they have reached the monthly limit. This will be especially problematic for those going to the emergency room -- typically not a 'planned' trip that they have had time to prepare for. If there are numerous members of a family covered, the process of keeping track of receipts becomes more complex.

To add to the confusion, tying a reduction in reimbursement to pharmacists for the collection of co-payments will likely make consumers feel pressured to pay. We support delaying this reduction in reimbursement for the first six months of implementation as long as there is some effort to use the lessons learned to make the policy more workable. However, we recognize this is a temporary delay.

Even though consumers cannot be denied services, that message to them will be secondary to the message that they must pay the co-payment. It will be easy for consumers to feel intimidated by the process if a zealous pharmacist demands payment. We cannot ignore the reality that when pharmacists begin to lose money every time they fail to collect the co-payment their behavior toward recipients may change. There could even be subtle barriers established after the person has reached her limit for the month when the pharmacist can no longer make up the loss of reimbursement. There could be pressures at the hospital level also, but since their reimbursement is not being reduced, the pressure on the patient is expected to be less.

Finally, there are tens of thousands of people involved in these transactions and very little way of knowing for sure how the policy will be communicated to consumers. Even though the materials clearly state that services cannot be denied when a co-payment cannot be made, the state cannot actually monitor how this message is delivered to consumers. Furthermore, the bill will be owed and could presumably mount quickly for a multiple resident household. Surely, a complex policy like this one will end up being garbled in the translation.

Some Medicaid recipients have many out of pocket expenses, which should be considered in cost-sharing policies or at least should be monitored. Consumers Union, with the help of the Lewin Group, released a report in 2000 about the growing health care divide between sick and well Americans. We looked at the out-of-pocket spending for Medicaid recipients, dividing them into six 'health spending' groups (ranging from low to high spending). By far, the sick, especially the elderly sick, face the largest burden of out-of-pocket costs. Looking at Medicaid recipients (on a national level) with incomes below 150% of the federal poverty level, the out-of-pocket payments ranged from the lowest at $1 per year to the highest at $632 per year.

Since most of those subject to the new cost sharing policy will also be under a three prescription per month limit, those who have the most health care needs will likely have significant out-of-pocket spending in addition to the co-payments required by this policy. Thus, someone with 5-6 prescriptions to fill could be paying a lot more than the $8 per month limit. While these recipients can get up to a 90-day supply of drugs and stagger their prescriptions, that policy has been evaluated for cost savings and could certainly change. The real problems come when a person released from a hospital needs six prescriptions immediately. The process of staggering of prescriptions also fails to work for people who move from managed care to fee for service Medicaid and need more than three prescriptions.

RECOMMENDATION: The Commission should build in a system to monitor general out-of-pocket spending by this population and be ready to adjust how the monthly cap is calculated if significant barriers are identified. For example, there may be a need to establish a monthly cap that includes all out-of-pocket expenses. A survey of affected Medicaid recipients, targeting elders and people with disabilities, would be one way to monitor out-of-pocket expenses.

Medicaid administrative systems are not capable of handling the bureaucracy created by this policy and administrative costs will zero out potential savings. The lack of adequate computer systems continues to be a potential for creating barriers for consumers. The challenge for health care providers will be to ensure that those who are not subject to the cost sharing do not get asked for co-payments and that those who have met the monthly limit are not pressured to pay more. We support the policy that depends on consumer self-declarations, such as advising that they are pregnant, to prove they are not subject to the co-payment. But we are skeptical about how this will actually play out. Will pregnant women be questioned at the pharmacy window? Even though they are not required to supply evidence, will they be asked for evidence? Will the policy of no cost sharing continue during the time after delivery when the woman is no longer pregnant? Will all of this be translated to every pharmacy assistant and hospital office worker collecting co-payments, since it may not be documented in a computer or on a card?

This policy is being implemented as per a directive from the Legislature and the Commission's goal is to save $3 million to the Medicaid program by requiring recipients to make co-payments. We strongly support the educational efforts by the Commission through Medicaid ID stuffers, frequently asked questions to the various parties involved, and other efforts to communicate this change to consumers. All of these efforts cost money, but we have yet to see an accounting of the administrative costs for the state to implement this policy. Additionally, health care providers will certainly incur additional costs. The question is whether the cost is worthy of the savings achieved. We believe there are other more effective ways of lowering prescription costs in the Medicaid program.

Thank you for the opportunity to submit these comments. Although clearly the public is being asked to formally comment on an HHSC rule after the policy addressed by the proposed rule has been implemented, the issues raised above will surely be debated during the legislative session. There are more fruitful ways to cut waste in the state prescription drug budget than trying to extract money from our poorest citizens.