Medicaid sustainability: Drug formularies, not work requirements

Massachusetts, long a beacon in health care access and among the first states to expand its Medicaid program (a.k.a. MassHealth) substantially in the 1990s, is trying a new approach to rein in costs for that program and it is one worthy of support: creating a closed drug formulary.

Medicaid — once an overlooked health insurance program that focused on covering the marginalized while Medicare covered the mainstream — has become a national treasure, covering those left out of a rising economic tide and proving itself a true lifeline to impoverished elders and those with a disability.

{mosads}The program has grown to become a vital piece of the national health coverage puzzle, with many states having broadly expanded eligibility to the program as a result of the Affordable Care Act. But as it has grown, it has also become unaffordable. That is why the federal government and some states are experimenting with restrictive new approaches, such as requiring adults to be employed.

But Massachusetts is taking a different tack. It has filed a federal waiver request that would allow it to be the first state in the nation to limit the medications to which its members have access.

Medicaid pharmacy programs have historically covered all medications with minimal restrictions, such as a prior authorization requirement to ensure that prescribed medications are medically necessary. When drug costs began to threaten coverage under Medicaid, drug manufacturers offered states rebates to lower the cost, although many would say the rebates have not been substantial enough.

Today, drug prices continue to soar for Medicaid programs across the country. New therapies, like those for hepatitis C, command six-figured reimbursement for a relatively brief course of therapy.

A closed drug formulary would allow MassHealth to select the drug in each therapeutic class that it believes would work best. It would then use the expanded volume for these drugs to negotiate substantial discounts from drug manufacturers. The savings that would be achieved as a result of a formulary would be used to preserve access to other Medicaid services.

The waiver faces some serious opposition. Drug manufacturers are obviously opposed as they worry about the loss of leverage and, potentially, volume. They also fear that what is created in Massachusetts could be replicated in 49 other states, as the state has long been an innovator that others have followed.

Patient advocates are also worried that those they represent may lose access to particular therapies that have worked well for them. It is important to note, however, that no class of therapy will be eliminated. An option will remain in every category of medication. And the state has pledged an appeals process that will allow any individual to request any drug. If their provider can demonstrate why a non-covered drug is better for them, they will get it.

I have spent my whole adult life working to help the less fortunate gain health insurance coverage. I am opposed to any effort — such as work requirements — that create barriers to care. I support the waiver request because it will ultimately preserve access for a program that has grown dramatically and now consumes 40 percent of the state budget in Massachusetts. 

If the waiver request is denied, access could be imperiled.

The leadership of our state and MassHealth have the capability to innovate. Our governor oversaw Medicaid expansions over two decades ago when he was the human services secretary and later was the CEO of one of the region’s largest health plans. Our Medicaid director hails from one of the world’s preeminent consulting companies. I trust the assembled team to get it right, to protect access and improve outcomes, and achieve meaningful cost savings. 

We serve the greater good by trying innovative approaches in managing Medicaid. The people who rely on Medicaid, in fact, depend on it.

Gerard A. Vitti is the president & CEO of Healthcare Financial, Inc., a Boston-based firm that specializes in enrolling the uninsured into health programs.