Medicaid Prescription Drug Coverage Could Get Cut


When state budgets fall short of required funding for their Medicaid programs, prescription drug coverage is among the optional services that are potentially cut.

Medicaid was named for its good intentions to provide “aid” to the poor. With more than 62 million enrollees nationwide, the Medicaid program is providing aid to a substantial amount of poor Americans.

As some states have opted to expand their programs under the Affordable Care Act, Medicaid has become an example of what government-run health care could look like. But the harsh reality is that there’s only so much state funding available for Medicaid programs.

In Alabama, the state legislature passed a budget that provided its Medicaid program with funding that falls $85 million short of what it requires. Ultimately, the legislature overrode the governor’s veto to ensure its passage.

Although this is disheartening, it’s hard to be outraged when the only potential source for funding the difference was the state's education budget. It's a no-win situation that’s becoming more and more common across the country.

With a state budget that falls $85 million short of what’s needed to continue providing Medicaid services, Alabama is faced with looking at where it can save money and making difficult decisions. To do so, the state will have to take a hard look at its optional Medicaid services.

That’s right: Medicaid has both mandatory and optional services.

Federal guidelines mandate Medicaid coverage for certain services, including hospitalizations, physician visits, laboratory and imaging tests, and family planning. However, the services that states can elect not to cover may come as a surprise. For instance, states aren’t required to cover physical therapy, prosthetics, or hemodialysis.

Another surprising optional coverage is the provision of prescription medications for adults. As of this year, however, all 50 states include prescription drugs among their covered services. Such coverage has become a sort of expected part of the Medicaid program.

When state budgets fall short of required funding for their Medicaid programs, however, prescription drug coverage is among the optional services that are potentially cut.

Faced with an $85 million shortfall, Alabama is seriously considering becoming the first state to eliminate Medicaid coverage of prescription medications for adult beneficiaries. The state is also considering removing outpatient dialysis, eyeglasses, prosthetics, and other optional benefits from its list of provided services.

Removing each of these services would save a substantial amount of money, but the elimination of the prescription drug benefit would provide the largest financial savings at an estimated $50 to $60 million annually, which alone would cover most of the shortfall. However, it's important to consider how this would impact providers and patients.

Without a prescription drug benefit, patients would have to either go without their medications or rely on reduced or free medications provided by retail pharmacies, including $4 generics.

Although discounted drugs lists aren’t perfect, they’re extremely helpful for patients on limited incomes. Arthritis, non-insulin-dependent type 2 diabetes, glaucoma, hypertension, depression, neuropathy, and hypothyroidism could all be treated at least initially with medications on those discounted lists.

On the other hand, it’s important to consider what conditions can’t be effectively treated when solely relying on those lists. While they include some antibiotics, they usually include older agents that bacteria have developed resistance to, making it difficult to treat many of the pneumonias, urinary tract infections, and skin and soft tissue infections in these patients.

Although a patient with asthma could get bronchodilators for a nebulizer, there are no rescue inhalers or long-acting agents listed among the discounted medications. Insulin is also missing, which presents a barrier for patients with insulin-dependent diabetes.

It’s possible to manage heart failure with some of the medications included in discount programs, but only if the patient is responsive to furosemide. When furosemide is no longer effective and the patient requires more potent loop diuretics, he or she will face a financial hurdle.

These 4 situations alone have the potential to result in a sharp increase in hospitalizations. Remember, Medicaid coverage for hospital services is mandatory, so if patients are continuously hospitalized for uncontrolled diseases and conditions, it may actually cost the state more money than the savings generated from cutting the prescription drug benefit.

While eliminating prescription medication coverage is a low-hanging fruit in state budget issues, it could have far-reaching implications. The issue may currently be confined to a single state, but it could crop up in any government health care program.

Pharmacists and other members of the interdisciplinary health care team will need to come together to create creative and effective solutions to ensure that the impact on morbidity and mortality is minimized. The right answer may not be yet known, but we need to start thinking about what could be the solution.

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