How do Medicaid Prescription Caps Impact Adherence?
States have instituted multiple policies to control prescription drug costs, including limits on the number of reimbursable prescriptions.
States have instituted multiple policies to control prescription costs, including limits on the number of reimbursable prescriptions (caps). From 2001 to 2011, the number of states that implemented such caps increased from 12 to 20. Prior research has shown a substantial negative impact of caps on both patients and the health care system.
In 2010, Medicaid insured 51.5 million low-income Americans at a cost of almost $390 billion. With the optional Medicaid expansion in the Patient Protection and Affordable Care Act (ACA) and recession-induced budgetary shortfalls, states face increasing pressure to control costs for an expanding Medicaid population.
With $13.7 billion in spending in 2010, prescription drugs are viewed as a cost-control target for Medicaid. However, since many drugs are highly effective at decreasing morbidity and mortality, broad and untargeted limitations on drug availability may be a counterproductive strategy.
Analyzing the Impact of Medicaid Caps
Lieberman et al, BMC Health Services Research (2016), analyzed Medicaid cap policies from 2001—2010 for both overall caps (applying to all prescriptions), or brand caps (caps on branded medications only). Using state-level, aggregate prescription data, the study evaluated the impact of implementing overall caps and brand caps in a subset of states with data available before and after cap initiation.
For overall caps, the study examined the use of essential medications, which were classified as preventive or as providing symptomatic benefit. For brand caps, the study evaluated the use of all branded drugs, as well as branded and generic medications among classes with available generic replacements.
Medicaid Cap Implementation
The number of states with caps increased from 12 in 2001 to 20 in 2010. While in 2001 there were no states with both overall and brand caps, the analysis revealed considerable increases in the use of overall caps and brand caps. These findings are summarized in the table below:
Medicaid Prescription Cap Policies 2001 & 2010a
Average Cap Level (range)
Average Cap Level (range)
5.6 (3 to 10)
6.2 (3 to15)
3.25 (2 to 5)
a Cap policies for three states in 2001 and one state in 2010 were not identified.b One state in 2001 and three in 2010 had overall caps affecting limited groups of Medicaid recipients.c States with both cap types separately included in overall and brand average calculations.
The Impact of Prescription Drug Caps on Medication Adherence
Overall cap implementation led to slightly decreased use of preventive essential medications, but not essential medications that provide symptomatic benefit, the study found. This suggests that when faced with caps, some patients are willing to forgo medications with little symptomatic benefit to maintain the use of those that provide short-term benefit.
Preventive essential medications include highly effective drugs for common conditions, such as hypertension and diabetes, which affect tens of millions of Medicaid recipients. These are also medications for which patients are often poorly adherent. When faced with caps, some patients are willing to forgo medications with little symptomatic benefit to maintain the use of those that provide a short-term benefit.
Whether overall caps actually produce economic savings is unknown. The study found that overall caps generated relative savings for some groups of medications; however, a conservative estimate of the costs due to increased nursing home admissions approximately equaled those savings.
A policy that selectively decreases the use of such medications may not be cost-effective or even cost-saving when clinical consequences, such as decreased use of essential medications and nursing home admissions, are considered.