HealthLeaders-InterStudy, a leading provider of managed care industry intelligence, reports that TennCare, Tennessee's state Medicaid program, experienced a reduction in overall pharmacy spending, decreasing from $2.44 billion in 2005 to $1.20 billion in 2006. According to the latest Tennessee Health Plan Analysis, implementing drug limits, centralized management and beefing up the state's prior authorization process have made a difference in pharmacy spending.
"According to BlueCross BlueShield of Tennessee, Tennessee has the highest drug utilization rate in the country," states Don Mooradian, HealthLeaders- InterStudy market analyst and author of the report. "This makes drug spending a critical issue to tackle and work to overcome."
One of TennCare's first moves to control pharmacy costs was choosing First Health, the pharmacy benefits management (PBM) arm of Coventry Corp., in 2003 to consolidate the program's pharmacy management. Prior to the consolidation, each of the eight TennCare managed care organizations managed pharmacy benefits through their own vendors. Not only did TennCare benefit from the economies of scale with one PBM, they also had gained access to consolidated data which uncovered utilization patterns, as well as assisted in understanding what prescriptions were being written, what was being paid and how that money was being managed.
In 2005 and 2006, the TennCare program joined a multi-state purchasing pool, instituted prescription limits, revamped the preferred drug list, put more drugs into its prior authorization program and focused heavily on generic drug use. TennCare has also saved money because of the new Medicare prescription drug benefit, which shifted dual-eligibles to Medicare, rather than Medicaid rolls.
There have been critics of the decrease in spending, including the Tennessee Justice Center, an advocacy group for TennCare enrollees, who believes the state's characterization of the savings is inaccurate and that other factors are not being scrutinized closely enough. They argue that most of the reductions in spending come from enrollees who were cut from the program and imposing limits on prescription drug usage, with no consideration of downstream medical costs for those who might not receive adequate or appropriate prescriptions.
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