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State Officials Consider Patient Preferences when Evaluating Telehealth Evidence

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When exploring new evidence about the effectiveness of telehealth, state policymakers want to know which interventions consumers prefer and are scalable for a range of populations. In addition to working to ensure that new telehealth tools are evidence-based and effective, officials want to make sure both patients and providers are interested in utilizing them.

The National Academy for State Health Policy’s (NASHP) Telehealth Affinity Group recently convened to discuss two studies funded by the Patient-Centered Outcomes Research Institute (PCORI):

  • One ongoing study in rural Alaska is testing how well a new school-based screening and referral process – combined with a telemedicine consultation – can expedite the diagnosis of hearing loss in children. In the 15 participating communities, children are screened for hearing loss at school. Under the usual model, parents of children identified as needing a follow-up consultation are sent a letter with a request to take their child to a clinic. Under the intervention, the school and clinic work together to schedule a telemedicine appointment, during which a community health aide who is on-site at the local clinic works with specialists at a remote location to do follow-up testing. While the study does not yet have full results, the region saved $18 million in 2016 and 91 percent of patient travel to specialists was avoided. Data will be collected until February 2020.
  • Another study investigated the use of patient portals – secure websites where patients can view health records and electronically communicate with doctors – among adults with chronic diseases in the Kaiser Permanente Northern California health system. Researchers wanted to understand how portal use impacted patients’ utilization of health care services. Among the eligible participants, 68 percent of patients created a patient portal. Portal use was associated with more office visits, fewer emergency department visits, and fewer preventable hospitalizations. Although portal use was connected to better outcomes, the results were somewhat limited as the study focused on a closed health care system. It is also difficult to discern if patients’ portal engagement impacted their behavior. For instance, it is unclear if these patients may have been proactive participants in their care even without the portal.

In response to these telehealth studies, affinity group members expressed their interest in understanding:

  • How can an intervention be scaled to diverse populations? Would the rural, school-based intervention also work in urban areas? Could a similar telehealth invention be successful for adults who need follow-up care?
  • How do patient preferences impact the adoption of telehealth? To what extent does the evidence support the success of a specific intervention itself, versus a specific population’s interest in utilizing it?
  • What is the appropriate role of state officials in promoting evidence-based telehealth?

Scaling Interventions to Broad Populations

As affinity group members explore new evidence about telehealth, they expressed the desire to better understand how an intervention can be scaled to meet the needs of the populations they serve. The Alaska hearing loss study is of particular interest to officials because it offers a promising approach that could be adapted to connect a range of rural or underserved communities to specialists. The affinity group was very interested in the projected savings and how the community-focused design could be applied to their own states.

Members expressed skepticism about the applicability of the patient portal tool for the populations they serve. State officials questioned how this intervention might be scaled beyond a closed, integrated health system like Kaiser Permanente. For example, would an investment into an online portal for a state’s Medicaid population – some of whom may not have the same access to the internet as other higher-income populations – yield the same improved health outcomes?

Patient Preferences Impact Telehealth Adoption

 A prominent theme from the discussions of both of the studies was the importance of patient preferences for care. Officials noted that evidence-based interventions that improve outcomes or lower costs must still be supported by patients and providers in order to warrant investment. As more telehealth evidence emerges, particularly relating to patient-focused tools, policymakers want to understand how likely members of their targeted populations are to use telehealth.

The Role of State Officials in Promoting Telehealth

Beyond adaptability, state officials want to know how they can invest or most effectively promote the adoption of telehealth through their roles as payers and/or regulators. Officials wonder if there could be opportunities to use existing funding to pay for or incentivize use of patient-directed telehealth tools, like an online portal, to work toward improved health outcomes for targeted populations. There is also interest among the affinity group in considering how state agencies could promote or encourage community-level collaboration, similar to the Alaska example, to implement a successful telehealth intervention.

While the two studies prompted more questions, state officials value the research investment in telehealth. While the affinity group discussions often raise issues outside the scope of testing specific interventions, researchers may benefit from understanding the broader context state officials work within when making or changing policy. It is critical for state officials to understand scalability, how to engage diverse, dynamic populations or to have tools to decide whether or not their states can make the investments needed to implement new interventions.

NASHP’s Telehealth Affinity Group will continue to meet and discuss emerging PCORI research on telehealth in the coming months. To learn about the group’s first meeting, read the NASHP blog, States Explore Emerging Evidence to Learn New, Innovative Uses of Telehealth.

What We’ve Learned from Early Adopters of Drug Price Transparency, and What We’ll Learn from the Next Wave

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As prescription drug price increases greatly outpace inflation and new specialty drugs priced in the millions of dollars enter the market, several states have led the way as early adopters of drug price transparency legislation and are taking the first steps to curb costs with the help of transparent drug pricing information.

Read NASHP’s new report, What Are We Learning from State Reporting on Drug Pricing?, to discover what early reports from California, Maine, Nevada, Oregon, and Vermont’s drug price transparency laws reveal.

A new National Academy for State Health Policy (NASHP) report, What Are We Learning from State Reporting on Drug Pricing?, offers a cross-state analysis of drug price transparency findings through August 2019, based on reports from California, Maine, Nevada, Oregon, and Vermont. States are:

  • Learning which drugs cost the most – and are the best targets for focused strategies;
  • Tracking the percentage of health premiums attributed to drug spending – and identifying opportunities to leverage reporting on drug spending, such as implementing spending caps; and
  • Beginning to capture information on net price – and profit – along the supply chain to inform fair and balanced policy approaches to ensure affordability.

Honing in on the Costliest Drugs to Take Action Where It Matters Most

States with transparency laws are identifying the drugs creating the greatest affordability challenges for both payers and consumers. State transparency laws require gathering data from a variety of sources, including through required reporting by public and private health plans (California, Oregon, Vermont), or through all-payer claims databases (Maine), or proprietary databases (Nevada), in order to report lists of:

  • The costliest drugs in the state based on price and utilization;
  • The drugs with the highest year-over-year cost growth; and
  • The most commonly prescribed drugs.

A cross-state analysis of these reports identified 30 drugs that appear in common across drugs reported in three of five states. Many of the drugs reported are used for the treatment of diabetes, including Humalog, Lantus Solar, Novolog, Januvia, Metformin, and Victoza. Multiple drugs for the treatment of arthritis were also identified across states: Stelara, Cosentyx, Enbrel, and Humira.

Identifying the classes of drugs – and specific drugs within those categories – that are creating the greatest affordability challenges can help states hone in on strategies to address drug costs. For example, states working to leverage their purchasing power across agencies are seeking this type of information to guide potential approaches such as bulk purchasing or establishing single preferred drug list. State officials from Nevada have credited their transparency law, initially limited to diabetes medications and since expanded to include asthma medications, with bringing payers to the table to leverage their purchasing power through Nevada’s Silver State Scripts program.

Illuminating the Link between Rising Drug and Insurance Premium Costs

Several states (California, Vermont, and Oregon) require commercial health plans subject to state regulation to submit information on the impact of prescription drug spending on premiums rates. Results shared publicly to date include a range of prescription drug spending accounting for, on average, 13 percent in California, 15.67 percent in Vermont, and up to 18 percent of premiums in Oregon.  Tracking prescription drug spending, as part of rate review or other initiatives, represents an important leverage point for states to take action on drug spending. Doing so can enable, for example, monitoring and enforcement of prescription drug spending caps. Several states, including New York, Massachusetts, and Maine, have established caps for drug spending – New York and Massachusetts have the authority to negotiate supplemental rebates to meet their caps while Maine tasks its Drug Affordability Review Board with identifying strategies to meet its voluntary cap on drug spending for public plans.

Uncovering the Factors Driving Up Prices along the Drug Supply Chain

One of the questions at the heart of drug price transparency laws is: What factors are driving high price increases and high launch prices? The only way for a state to determine the actual causes of high drug prices – and the relative profit accrued by players in the supply chain – is by requiring reporting across the entire supply chain, including manufacturers, pharmacy benefit managers (PBMs), wholesalers, and health plans. In order to be meaningful, this information must shed light on the net cost of drugs – an otherwise closely guarded secret behind a black box of secret rebate negotiations between manufacturers and PBMs.

Some of the early adopter states, while laying the foundation for future transparency efforts, enacted laws with limitations in terms of their ability to shine a light on net prices or to uncover the interplay between players in the drug supply chain. California, for example, limits manufacturer reporting to information that is already in the public domain. While Nevada did require reporting of some information considered to be trade secrets, and required reporting by both manufacturers and PBMs, the lack of alignment in reporting requirements (e.g., state versus national level) makes it difficult to “follow the money” across the supply chain.

A new wave of tougher state transparency measures, including a 2019 Maine law, An Act To Further Expand Drug Price Transparency, will have the ability to shine a light on net drug prices – and profits – in order to guide fair and effective state policy solutions. The Maine law, based on NASHP’s model legislation, requires reporting by entities across the entire drug supply chain, including manufacturers, PBMs, wholesalers, and health plans.

Enforcement

In addition to establishing reporting requirements with the ability to produce meaningful, actionable data, states must also have the ability to enforce reporting their new requirements.  Early efforts at collecting data from manufacturers have yielded imperfect compliance at best.  California received data justifying price increase from only one-third of manufacturers required to report, and Nevada recently levied $17.4 million in fines on manufacturers for failure to report in that state. While non-reporters in Nevada face fines up to $5,000 a day, Maine’s new law increases that penalty to up to $30,000 a day.

Taking Action on What Transparency Reveals

As actionable information on net drug prices and profits across the supply chain becomes available, states will use the data to make informed, impactful policy decisions. Though state policymakers are challenged by a number of limits on their authority to regulate drug prices, and meaningful action at the federal level currently remains pending, states are advancing a number of policy options to address drug prices building on what transparency laws are revealing. One model is a state Drug Affordability Review Board (DARB) with the authority to review data on drugs deemed unaffordable, and if warranted, set an upper payment limit for that drug within the state. Transparency data is essential to DARBs and related efforts. Such approaches do not seek to prohibit profit along the supply chain, but to ensure that those profits are reasonably balanced with the need to preserve access to essential drugs by ensuring their affordability.

What Are We Learning from State Reporting on Drug Pricing?

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This report summarizes what states are learning from reporting required by prescription drug price transparency laws, which include reports on data submitted by health insurers, manufacturers, and pharmacy benefit managers (PBMs). The review period includes reports published by states through August 2019. The National Academy for State Health Policy’s Center for State Rx Drug Pricing, with support from Arnold Ventures, commissioned this analysis from experts affiliated with Mathematica.

Executive Summary

This report summarizes what states are learning from reporting required by prescription drug price transparency laws, including reports on data submitted by health insurers, manufacturers, and pharmacy benefit managers (PBMs). The review period includes reports published by states through August 2019.

Costliest Drugs across States

Five states — California, Nevada, Maine, Oregon and Vermont — have published reports identifying specific drugs that are high cost, for which costs are rising fastest, and/or that are most frequently prescribed. In Nevada, these drugs include only those related to the treatment of diabetes. California, Maine, Oregon, and Vermont reported up to 126 prescription drugs across therapeutic uses. These states reported many of the same drugs—including five drugs used for treatment of diabetes and four drugs used for treatment of psoriasis, psoriatic arthritis, or rheumatoid arthritis.

Impact on Premiums

California, Vermont, and Oregon have reported impacts of retail prescription drug costs on insurance premiums, averaging 13 percent in California (before accounting for manufacturer rebates, which averaged 10.1 percent of insurers’ retail drug costs) in 2017, 15.67 percent of premiums in Vermont in 2018 (before accounting for rebates), and up to 18 percent of premiums in Oregon (after accounting for rebates) in 2018.

Manufacturer and PBM Reporting

Requiring both manufacturers and PBMs to report allows states to track drug pricing along the supply chain. As of August 2019, only Nevada had publicly reported information about manufacturer and PBM costs, focused on essential diabetes drugs. Nevada’s report indicates that:

  • Production costs accounted for 29 percent of manufacturers’ estimated average revenue in 2018 for essential diabetes drugs after rebates. Administrative costs and profit each accounted for 25 percent. On average, manufacturers earned $42 in profits for every $100 spent on production and administrative cost for these drugs.
  • Financial assistance to consumers accounted for 14 percent of the manufacturers’ estimated total revenues after rebates, although most manufacturers reported offering no financial assistance.
  • Most of the rebates that PBMs in Nevada negotiated nationally for essential diabetes drugs were on behalf of private insurers and self-insured employer plans. PBMs retained 6.6 percent of all rebates, whether negotiated on behalf of private third parties or Medicaid.

Early Lessons

The information these states have made public suggests some early lessons:

  • States share concerns about the affordability of many of the same drugs. There may be substantial value in sharing information across states with similar confidentiality protections while reducing the burden of redundant reporting to multiple states.
  • Understanding pricing across the entire supply chain, from the manufacturer to the consumer, is critical. Reporting that uses consistent concepts and measures can foster mutual understanding of facts among policymakers and stakeholders in a complex system.
  • The agency responsible for obtaining data must have the authority and resources to follow up when the data are not complete or credible, if drug transparency laws are to help states develop a fair approach to ensuring that prescription drugs are affordable.

Introduction

This report summarizes what states are learning from reporting required by prescription drug price transparency laws, including data reported by health insurers, manufacturers, and pharmacy benefit managers (PBMs). Since 2017, nine states have enacted drug price transparency legislation that requires such reporting.[1]

Five of these states — California, Nevada, Maine, Oregon, and Vermont — have published reports identifying specific drugs that are high cost (defined by total spending), for which costs are rising fastest (defined as year over year increase), and/or that are most frequently prescribed (so represent high consumer exposure).[2] In Nevada, these drugs include only those related to treatment of diabetes. California, Maine, Oregon, and Vermont included prescription drugs across all therapeutic classes. In Section 1, we present the drugs of interest that these states reported and look, in particular, at the 30 drugs of interest reported by at least three of these states.

In Section 2, we describe the impact of drug prices on health insurance premiums, as reported by three states, California, Oregon, and Vermont. These states have published the dollar amounts and/or the percentage of premiums attributed to retail prescription drugs — in California and Vermont, before manufacturer and other rebates and price discounts to insurers; and in Oregon, after rebates and price discounts.

In Section 3, we describe what Nevada is learning from the reporting required of manufacturers and PBMs. Currently, eight states have enacted laws requiring PBMs to report rebate amounts either for specific drugs or in the aggregate. These laws have taken effect in four states (Connecticut, Nevada, Texas, and Washington) as part of each state’s drug pricing transparency effort, but as of August 2019, only Nevada (for specified essential diabetes drugs) had made summary information public.

Reporting of High-Cost, High Cost-Growth, and Most Prescribed Drugs

California, Maine, Nevada, Oregon, and Vermont have reported drugs that account for high total cost or high cost growth, or because they are frequently prescribed, represent high consumer exposure. Maine derived its lists from analysis of the state’s all-payer claims database (APCD) system; California and Oregon relied on insurer reporting under special statutory authority; and Vermont relied on both insurer and Medicaid reporting. Nevada derived it list of drugs from analysis of a purchased database.

Table 1 lists the number of unique drug names reported in each state. California and Vermont reported the most extensive list of drugs: each reported on more than 120 unique drug names; Nevada, Maine, and Oregon each reported on approximately 50 unique drug names.

Table 1. Number of drugs listed in state public reports, by state

Reporting state Reference period Number of unique drug names reported*
CA CY2017 126
ME FY2018 51
NV CY2018 53
OR CY2018 56
VT CY2018 121

*The number of unique drugs was developed by merging separate lists of drugs, if the state reported separate lists by reason for reporting and/or by insurer.

Source: Mathematica analysis of data reported in these reports: California Department of Managed Health Care (2018); Maine Health Data Organization (2018); Nevada Department of Health and Human Services (2018b); Oregon Department of Consumer and Business Services (2019); and State of Vermont Green Mountain Care Board (2019). See full references at the end of this report.

We matched drugs reported across these states by National Drug Code (NDC) and identified 128 unique NDCs that at least two states selected in common (shown in Appendix 1). The 30 drugs that at least three states selected in common are shown in Table 2.

These 30 drugs span multiple therapeutic classes, but several have similar therapeutic uses. Eight of the drugs are used for treatment of diabetes myelitis — including five drugs, Lantus Solostar, Novolog, Januvia, Metformin, and Victoza, which four of the five states reported in common.

At least three of the four states that did not focus only on essential diabetes drugs — California, Maine, Oregon, and Vermont — selected in common a number of additional drugs that clustered around treatment for asthma (Fluticasone Prop, Ventolin, Proair, and Symbicort); depression (Bupropion Hcl and Sertraline); hepatitis C (Harvoni and Epclusa); multiple sclerosis (Copaxone and Tecfidera); psoriasis, psoriatic arthritis, and/or rheumatoid arthritis (Stelara, Cosentyx, Enbrel, Humira Syringe, and Humira Pen); and a range of cardiovascular concerns (Eliquis, Xarelto, Hydrochlorothiazide, Atorvastatin).

 

Table 2. Drugs reported by three or more states, 2017-2018 (in alphabetic order of primary therapeutic use)

NDC Drug name States Therapeutic class Primary therapeutic use Reasons for reporting
00054327099 Fluticasone Prop CA, ME, VT Respiratory tract agents Treatment of allergic and non-allergic nasal symptoms; long term management of asthma, COPD Most frequently prescribed (CA, ME, VT)
00173068220 Ventolin CA, ME, OR, VT Autonomic drugs; respiratory tract agents Treatment of asthma, acute bronchitis Most costly (CA); highest cost increase (CA); most frequently prescribed (CA, ME, OR, VT)
59310057922 Proair CA, ME, OR, VT Beta-Adrenergic agents Treatment of asthma, acute bronchitis Most frequently prescribed (CA, ME, OR, VT)
00186037020 Symbicort CA, ME, VT Antiasthmatic and bronchodilator agents Treatment of asthma, chronic obstructive pulmonary disease (COPD) Most frequently prescribed (ME); most costly (ME, CA); highest price (VT)
00003089421 Eliquis CA, ME, OR Blood formation, coagulation, and thrombosis agents Prevention of blood clots/stroke in people with atrial fibrillation. Most frequently prescribed (ME); highest price increase (CA, ME); most costly (CA, ME)
50458057930 Xarelto CA, ME, VT Anticoagulants, coumarin type Treatment/prevention of blood clots Most costly (CA, ME); highest cost increase (CA, ME, VT)
50111078751 Azithromycin CA, ME, OR Antibacterials Treatment of bronchitis; pneumonia, sexually transmitted diseases, and infections of the ears, lungs, sinuses, skin, throat, and reproductive organs. Most frequently prescribed (CA, ME, VT)
45963014205 Bupropion Hcl CA, VT, OR Antidepressants Treatment of depression Most frequently prescribed (VT); most costly (CA); highest price increase (CA)
68180035302 Sertraline CA, ME, OR, VT Antidepressants Treatment of depression, obsessive-compulsive disorder (OCD), posttraumatic stress disorder (PTSD), premenstrual dysphoric disorder (PMDD), social anxiety disorder, panic disorder Most frequently prescribed (CA, ME, OR, VT)
00002771559 Basaglar (Kwikpen) ME, NV, OR Hormones and synthetic substitutes Treatment of diabetes myelitis type 1 and 2 Highest price increase (ME, NV)
00002879959 Humalog (Kwikpen) ME, NV, OR Hormones and synthetic substitutes Treatment of diabetes myelitis type 1 Most costly (CA, ME); highest price increase (CA, ME, NV); most frequently prescribed (CA)
00002751001 Humalog CA, ME, NV, OR Hormones and synthetic substitutes Treatment of diabetes myelitis type 1 Most costly (CA, ME, OR); most frequently prescribed (CA); highest price increase (CA, ME, NV)
00088221905 Lantus Solostar CA, ME, NV, VT Hormones and synthetic substitutes Treatment of diabetes myelitis type 1 and 2 Most costly (CA, ME); highest price (VT); Most commonly prescribed (ME, VT); highest cost increase (NV)
00169633910 Novolog NV, ME, OR, VT Hormones and synthetic substitutes Treatment of diabetes myelitis type 1 and 2 Most costly (ME); highest price (OR, VT); highest cost increase (NV); most frequently prescribed (CA)
00006027731 Januvia CA, ME, NV, VT Blood glucose regulators Treatment of diabetes myelitis type 2 Most costly (CA, ME); highest cost increase (CA, ME, VT); most commonly prescribed (CA)
Multiple NDCs Metformin CA, NV, OR, VT Blood glucose regulators Treatment of diabetes myelitis type 2 Most frequently prescribed (CA, OR); highest cost increase (NV, VT); most costly (CA)
00169406013 Victoza CA. ME, NV, VT Hormones and synthetic substitutes Treatment of diabetes myelitis type 2 Most costly (CA, ME); highest cost increase (CA, NV); most frequently prescribed (CA); highest price (VT)
61958180101 Harvoni CA, ME, VT Anti-infective agents Treatment of hepatitis C Most costly (CA, ME); highest cost increase (CA); highest price (VT)
61958220101 Epclusa CA, ME, OR, VT Antivirals Treatment of hepatitis C Most costly (CA, ME); highest price (OR, VT); highest cost increase (CA)
16729018317 Hydrochlorothiazide CA, ME, OR, VT Diuretics Treatment of high blood pressure, edema, kidney stones Most frequently prescribed (CA, ME, OR, VT)
60505258009 Atorvastatin CA, ME, OR, VT Antihyperlipidemics Treatment of high cholesterol and triglyceride levels Most frequently prescribed (CA, ME, OR, VT); most costly (CA); highest cost increase (CA)
61958200201 Descovy CA, ME, VT Antivirals Treatment of HIV-1 Most costly (CA); highest cost increase (CA, ME, VT); most frequently prescribed (CA)
68546032512 Copaxone CA, ME, OR, VT Miscellaneous therapeutic agents Treatment of multiple sclerosis Most costly (CA, ME); highest cost increase (CA); highest price (OR, VT)
64406000602 Tecfidera CA, ME, OR, VT Psychotherapeutic and neurological agents – misc. Treatment of multiple sclerosis Most costly (CA, ME, OR); highest cost increase (CA); highest price (VT)
57894006103 Stelara CA, ME, VT Immunological agents Treatment of plaque psoriasis, psoriatic arthritis Most costly (CA, ME); highest cost increase (CA, ME, VT); highest price (VT); most frequently prescribed (OR)
Multiple NDCs Cosentyx CA, ME, OR, VT Immunological agents Treatment of plaque psoriasis, psoriatic arthritis, ankylosing spondylitis Highest price (VT); most costly (CA); highest cost increase (CA, ME, OR); most frequently prescribed (OR)
58406044504 Enbrel CA, ME, OR, VT Miscellaneous therapeutic agents Treatment of plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, juvenile idiopathic arthritis Most costly (ME, CA); highest cost increase (CA, OR, VT); most frequently prescribed (CA, OR); highest cost (VT)
00074379902 Humira (Syringe) CA, ME, OR, VT Gastrointestinal drugs; miscellaneous therapeutic agents Treatment of rheumatoid arthritis, plaque psoriasis, ankylosing spondylitis, Crohn’s disease, ulcerative colitis Most costly (CA, ME, OR); highest price (VT); highest cost increase (CA, OR, VT); most frequently prescribed (CA)
00074433902 Humira (Pen) CA, ME, OR, VT Gastrointestinal drugs; miscellaneous therapeutic agents Treatment of rheumatoid arthritis, plaque psoriasis, ankylosing spondylitis, Crohn’s disease, ulcerative colitis Most costly (CA, ME, OR); highest price (VT); highest cost increase (CA, OR, VT); most frequently prescribed (CA)
69097081412 Gabapentin CA, ME, OR, VT Anticonvulsants Treatment/prevention of seizures, pain Most frequently prescribed (CA, ME, OR, VT); highest expenditure (CA)

Source: Mathematica analysis of drug website data and data reported in: California Department of Managed Health Care (2018); Maine Health Data Organization (2018); Nevada Department of Health and Human Services (2018b); Oregon Department of Consumer and Business Services (2019); and State of Vermont Green Mountain Care Board (2019).

Impact on Insurance Premiums

Three states — California, Oregon, and Vermont — have reported impacts of rising drug prices on insurance premiums. California[3] reported that insurer payments for retail prescription drugs totaled $8.7 billion in 2017, accounting for 13.1 percent of health plan premiums that year. Specialty drugs accounted for a small minority of prescriptions (1.6 percent), but more than half (51.5 percent) of all insurer spending on retail prescription drugs.

Manufacturer rebates and consumer cost sharing lessened the impact of retail prescription drugs on premiums in California, compared to what it might otherwise have been. Manufacturer rebates to insurers equaled about 10.5 percent ($915 million) of the $8.7 billion insurers spent on retail prescription drugs. Among the 25 most frequently prescribed drugs (representing 42.8 percent of total spending on retail prescription drugs), health plan enrollees paid approximately 3 percent of the cost overall — ranging from 2.9 percent of the cost of specialty drugs to 56.6 percent of the cost of generics. Enrollees paid about 8.8 percent of the cost of the 25 most costly drugs (91.2 percent of total spending on retail prescription drugs) reported by insurers.

Vermont [4] reported that prescription drugs accounted for 15.67 percent of premium rates in 2018 (before accounting for manufacturer rebates and other price concessions). Expressed as a per member per month (PMPM) amount, that averaged $81.65 PMPM in 2018. Vermont also identified the three drugs contributing the most to premiums: Humira Pen, Harvoni, and Enbrel Sureclick. Specialty drugs as a category contributed most to premium increases, compared with generic or brand name drugs.

Oregon[5] reported the impact of prescription drugs on premium rates PMPM in 2018 after accounting for manufacturer rebates or other price concessions to insurers. Insurers reported impacts that ranged from a low of 2.5 percent of premiums ($13 PMPM, or about $154 per member annually, for one insurer’s small-group plans) to 18 percent of premiums (about $85 PMPM, or more than or $1,000 per member annually, for two insurers’ small group plans, respectively. At the median, prescription drugs accounted for 11.9 percent of the premiums — nearly $53 PMPM in 2018, or about $635 annually.

Manufacturer and PBM Reporting

At present, five states — Nevada, Connecticut, Maine, Texas, and Washington — have enacted laws that require both manufacturers and PBMs to report annually. Manufacturers are required to report information on specified drugs. PBMs are required to report information about the rebates they have obtained from manufacturers — either in the aggregate (for all drugs) or for specified drugs. Requiring both manufacturers and PBMs to report offers the potential for states to track pricing along the supply chain for drugs of interest, if the state aligns the level of information that each must report.

The drug cost transparency reporting requirements in these states are shown in Table 3. Washington will require PBMs to report information for each covered drug—a provision that will enable the Washington Health Care Authority to track prices across the supply chain for each drug.[6] Nevada requests PBM reporting on essential diabetes drugs (collectively), as specifically identified by the Nevada Department of Health and Human Services. Connecticut and Texas will require PBMs to report aggregate rebates obtained across all drugs from pharmaceutical manufacturers. In Maine, the Maine Health Data Organization will adopt rules specifying the data elements to be reported.

Table 3. States that require reporting by both manufacturers and PBMs*

State Manufacturers must report:** PBMs must report:
Connecticut ·  Total company level research and development costs for the most recent year ·  The aggregate dollar amount for all rebates concerning drug formularies that PBM collected from pharmaceutical manufacturers, Including those that manufactured outpatient prescription drugs covered by the health carriers and are attributable to patient utilization of such drugs under the health care plan

·  The aggregate dollar amount of all rebates excluding rebates received by health carriers
Nevada ·  Total administrative expenditures (including marketing and advertising costs)

·  Profit earned and percentage of total profit attributable to the drug

·  Total amount of financial assistance provided through patient assistance

·  Cost associated with coupons

·  Wholesale acquisition cost

·  History of any increase over the 5 years including percentage increase, date of increase, and explanation

·  Aggregate amount of all rebates provided to PBM’s

 ·  Total (aggregate) amount of rebates negotiated with manufacturers during the previous year

·  Total amount of rebates retained by the PBM

·  Total amount of rebates negotiated for purchases of drugs for use by Medicare and Medicaid recipients, and persons covered by third parties that are or are not governmental entities
Texas ·  Total company level research and development costs for the previous calendar year ·  Aggregated rebates, fees, price concessions, and other payments from manufacturers

·   Aggregated dollar amount of rebates, fees, price concessions from manufacturers that were (a) passed to insurers, (b) passed to enrollees at point of sale; and (c) retained by the PBM
Washington ·  Annual manufacturing costs

·  Annual marketing and advertising costs

·  Total research and development costs

·  Total costs of clinical trials and regulation

·  Total costs for acquisition of the drug

·  Total financial assistance given by the manufacturer through assistance programs, rebates, and coupons

 ·  All discounts (total dollar amount and percentage discount) and all rebates received from manufacturers for each drug on the PBM’s formularies

·  Total dollar amount of discounts and rebates that are retained by the PBM for each drug

·   Actual total reimbursement amounts for each drug the PBM pays retail pharmacies after all fees

·   Negotiated price health plan pays PBM for each drug

·   Amount, terms, and conditions relating to copayments, reimbursement policies, etc.

·  Disclosure of any ownership interest the PBM has in a pharmacy or health plan with which it conducts business

Sources: Connecticut HB 5384/Public Act 18-41(2018); Nevada Department of Health and Human Services (2018a); Texas HB 2536 (2019); and Washington HB 1224, Chapter 334 (2019).

* Maine also requires reporting from manufacturers and PBMs. The Maine Health Data Organization will adopt rules specifying the data elements to be reported.

** In addition to the items indicated, each state requires manufacturers to report reasons for price increases, if any.

As of August 2019, Nevada was the only state that had publicly reported information about manufacturer costs and the role of PBMs in the final cost of drugs to consumers that are privately insured or enrolled in Medicare or Medicare.[7] Together with manufacturer reporting, reporting by PBMs offers a reasonably complete (if aggregated) picture of factors that contribute to essential diabetes drug costs in Nevada.

Nevada asks both manufacturers and PBMs to report pricing information for essential diabetes drugs in the aggregate and, in general, at the national level. Manufacturers report only one item specific to Nevada: rebates paid to PBMs for essential diabetes drugs in Nevada.

A summary of the information reported by manufacturers and PBMs, as shown in Nevada’s public report, is shown in Table 4. Because Nevada reported PBM-negotiated rebates for essential diabetes drugs ($1.9 billion) at the aggregate national level and manufacturer rebates only in Nevada and as the average aggregated across manufacturers, they cannot be compared. Such discrepancies make it impossible to track the supply chain for these drugs nationally or in Nevada. Nevertheless, some insights can be drawn within the information reported by manufacturers and PBMs, respectively.

Table 4. Summary of data reported by manufacturers and PBMs in Nevada for essential diabetes drugs

Average amount per manufacturer      (simple averages) Percent of estimated average manufacturer revenue after rebates
Manufacturer-reported data for essential diabetes drugs
Estimated total revenue after rebates (national)* $204,353,658 100.0 percent
Production cost $58,934,388 28.8 percent
Administrative expenses $65,548,748 32.1 percent
Profit $51,979,630 25.4 percent
Cost of consumer financial assistance $27,890,892 13.6 percent
Total provided through any patient prescription assistance program $12,874,326 6.3 percent
Consumer coupons and consumer copayment assistance programs $14,036,828 6.9 percent
Manufacturer cost of redeeming coupons and use of consumer copayment assistance programs $979,738 0.5 percent
Aggregate rebates to PBMs in Nevada $3,039,646 1.5 percent
Total amount              (all PBMs) Percent of PBMs’ total negotiated rebates
PBM-reported data for essential diabetes drugs (Nevada only):
Total rebates negotiated with manufacturers $1,922,857,158 100.0 percent
Total rebates negotiated for persons covered by
Medicaid $31,648,939 1.6 percent
3rd party governmental entities, not Medicare or Medicaid $597,759,023 31.1 percent
3rd parties that are not governmental entities (potentially including self-insured employer plans) $1,293,449,196 67.3 percent
Total rebates retained by the PBM $126,754,864 6.6 percent

Source: S. Jones, et al. (2019), Tables 4, 5 and 6.

*Calculated as the sum of all shown manufacturer-reported amounts excluding aggregate rebates to PBMs in Nevada.

  1. Manufacturer cost, profit, and consumer assistance

In 2018, average manufacturer costs and profits for essential diabetes drugs, reported at the national level, totaled nearly $204.4 million (Figure 1). Drug production costs accounted for just 29 percent of the total ($58.9 million).

Figure 1. Reported profits and production and administrative costs for essential diabetes drugs (Nevada)

Source: S. Jones, et al. (2019), Tables 4 and 5.

Manufacturers’ administrative expenditures, which may include executive compensation, accounting and legal fees, marketing, advertising, and other administrative expenses as each manufacturer deems reasonable, accounted for $65.5 million. This amount exceeded their reported average production costs (although the Nevada report indicates multiple drug manufacturers reported $0 for total administrative expenditures, and likely included all their costs for manufacturing the drug in the drug production costs).

Manufacturers reported average profits (nearly $52.0 million) — equal to 25.4 percent of the sum of production cost, administrative cost, consumer assistance, and profit — or 41.8 percent of total production and administrative cost. That is, aggregated across reporting manufacturers, manufacturers of essential diabetes drugs earned $42 in profits for every $100 they spent on production and administrative cost.[8]

Nationally, financial assistance to consumers accounted for an estimated 13.6 percent ($27.9 million) of manufacturers’ estimated average total revenues after rebates for essential diabetes drugs. This financial assistance included patient prescription programs, coupons, or copayment assistance programs. However, more than half of the reporting manufacturers indicated that they provided no financial assistance through patient prescription assistance programs (58 percent), and also provided no rebates to PBMs or pharmacies (55 percent). By inference, the average dollar amount of financial assistance among manufacturers that provided any financial assistance (presumably the larger manufacturers) was more than twice the average across all manufacturers (including those that provided none).

  1. PBM negotiated and retained rebates

PBMs reported negotiating more than $1.9 billion in rebates for essential diabetes drugs for Nevadans (Table 4). Nearly this entire amount was negotiated on behalf of private third parties—predominantly private insurers and self-insured employer plans ($1.3 billion) or other nongovernmental third parties ($598 million). PBMs reported retaining 6.6 percent of all rebates that they negotiated, whether on behalf of private third parties or Medicaid.

Differences in how Nevada’s public report summarized the data obtained from manufacturers and PBMs make it impossible to develop a picture of the supply chain from the information offered—although it seems likely that Nevada has the information necessary to do this. Nevada’s report demonstrates the crucial importance of requiring manufacturers and PBMs to report information at the same level of aggregation—at the state level or nationally (but not either/or), and for the same individual drugs or narrowly specified groups of drugs—in order to build a coherent picture of the factors that contribute to high consumer cost.

Summary

This report summarizes information that five states—California, Maine, Nevada, Oregon, and Vermont—have obtained from insurers, manufacturers, and/or PBMs to achieve greater drug price transparency. Each of these states is in a relatively early stage of obtaining and understanding their data. Nevertheless, the information they have made public suggests some early lessons for states interested in obtaining meaningful reporting for drug price transparency.

  • States share concerns regarding the affordability of many of the same drugs. We identified 120 drugs that concern at least two of the five states—due to high cost, fast-rising cost, and/or the frequency with which the drug is prescribed. The large number of drugs that are of concern across states indicates that there might be substantial value in sharing information across states. State efforts such as Maryland’s recently enacted Drug Affordability Review Board might initially focus on many of these same drugs.[9] States that are developing statutory authority to require manufacturer reporting for these drugs might consider explicitly authorizing data sharing with other states that have compatible confidentiality protections—or else explore other options available in current law or regulation to reduce manufacturers’ burden of redundant reporting to multiple states.
  • There is substantial value in understanding pricing across the entire supply chain, from the manufacturer to the consumer, for drugs that drive increases in health insurance premiums and consumer costs. States that design reporting templates using consistent and compatible concepts and measures, and report those measures publicly, can foster mutual understanding of facts among policymakers and stakeholders in a complex system. However, if rebates and other information are reported collectively for all drugs, it frustrates the ability of policymakers to understand impacts on costs for specific drugs. PBM reporting by manufacturer/product code (if not by NDC) is critical to understanding the supply chain for the specific drugs of interest to the states. Nevada’s PBM reporting requirement — for a list of specified NDCs—demonstrates that PBMs are able to report on specific drugs, not only on their aggregate business.[10]
  • When requiring manufacturers, PBMs, or other entities to report drug price data, it is critical that the responsible agency be given the authority and resources necessary to follow up when reported data are not complete or credible. Especially in the first years of implementation, the reporting entities may be learning how to report, and they may be reluctant to invest in getting the data right. Accurate reporting is essential for drug transparency laws to help states develop a fair approach to ensuring that prescription drugs are affordable.

References and Appendix

Arkansas

Arkansas SB 520/Act No. 994, 2019. Available at: http://www.arkleg.state.ar.us/assembly/2019/2019R/Acts/Act994.pdf. Accessed August 1, 2019.

California:

California Department of Managed Health Care. “Prescription Drug Cost Transparency Report (SB 17): Measurement Year 2017.” Sacramento, CA: Department of Managed Health Care, December 2018. Available at https://www.dmhc.ca.gov/Portals/0/Docs/DO/sb17.pdf. Accessed July 31, 2019.

California Office of Statewide Health Planning and Development. “Cost Transparency: Prescription Drugs (CTRx),” 2019. Available at https://oshpd.ca.gov/data-and-reports/cost-transparency/rx/. Accessed July 31, 2019.

Connecticut:

State of Connecticut, Substitute House Bill No. 5384/Public Act No. 18-41. Available at https://www.cga.ct.gov/2018/ACT/pa/pdf/2018PA-00041-R00HB-05384-PA.pdf. Accessed July 31, 2019.

Iowa:

Iowa SF 563, 2019. Available at: https://www.legis.iowa.gov/legislation/BillBook?ga= 88&ba=SF percent20563. Accessed August 1, 2019.

Louisiana:

Louisiana SB 283/Act No. 371, 2018. Available at: https://legiscan.com/LA/text/SB283/id/1799999/Louisiana-2018-SB283-Chaptered.pdf. Accessed August 1, 2019.

Maine:

Maine Health Data Organization. “MHDO Prescription Drug Reports,” June 2018. Available at https://mhdo.maine.gov/tableau/prescriptionReports.cshtml. Accessed July 31, 2019.

Minnesota:

Minnesota SF 278, 2019. Available at: https://www.revisor.mn.gov/bills/bill.php?b=senate&f=SF0278&ssn=0&y=2019. Accessed August 1, 2019.

Nevada:

Nevada Department of Health and Human Services, SB539 Reporting Timeline v08.10.2018, August 10, 2018a. Available at: http://dhhs.nv.gov/uploadedFiles/dhhsnvgov/content/HCPWD/SB539 percent20Drug percent20Transparency percent20Reporting percent20Timeline_v08.10.2018_website.pdf. Accessed July 31, 2019.

Nevada Department of Health and Human Services. “Essential Diabetes Drugs Price Increase Report.” Carson City, NV: Division of Public and Behavioral Health, Primary Care Office. September 2018. Available at http://dhhs.nv.gov/uploadedFiles/dhhsnvgov/content/HCPWD/09.11.2018 percent20Nevada percent20Essential percent20Diabetes percent20Drugs percent20Price percent20Increase percent20Report_Final.pdf. Accessed July 31. 2019.

Jones, S., P. Thompson, J. Tucker, H. Mitchell, T. McKnight, H. Wallace, and K. Devine. “Drug Transparency Report 2019 Essential Diabetes Drugs” Carson City, NV: Nevada Department of Health and Human Services, Division of Public and Behavioral Health, May 2019. Available at http://dhhs.nv.gov/uploadedFiles/dhhsnvgov/content/HCPWD/DHHS percent202019 percent20Drug percent20Transparency percent20Report percent205-31-2019(1).pdf. Accessed July 31, 2019.

Oregon:

Oregon Department of Consumer and Business Services. “Insurer Reports on Prescription Drugs Drug Price Transparency Program,” 2019. Available at https://dfr.oregon.gov/drugtransparency/data/Documents/insurer-reports-rx-drugs-2019.pdf. Accessed October 16, 2019.

Texas:

Texas HB 2536, 86th Legislature, 2019-2020. Available at: https://legiscan.com/TX/text/HB2536/id/2027782/Texas-2019-HB2536-Enrolled.html. Accessed July 31, 2019.

Vermont:

Office of the Vermont Attorney General. “Prescription Drug Cost Transparency-Manufacturer and Health Insurer Annual Reporting” (undated). https://ago.vermont.gov/drug-price-transparency-manufacturer-and-health-insurer-annual-reporting/. Accessed July 31, 2019.

State of Vermont Green Mountain Care Board. “Impact of Prescription Drug Costs on Health Insurance Premiums.” Montpelier, VT: State of Vermont Green Mountain Care Board, January 2019. Available at https://legislature.vermont.gov/assets/Legislative-Reports/Act-193-Report-Impact-of-Prescription-Drug-Costs-on-Health-Insurance-Premiums.pdf. Accessed July 31, 2019.

Washington:

Washington HB 1224/Chapter 334, 2019. Available at: http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/House percent20Passed percent20Legislature/1224-S2.PL.pdf

Appendix 1: Drugs reported by two or more states: California, Maine, Nevada, Oregon, and Vermont

NDC Drug States Therapy Class
00173069600 Advair (Diskus) CA, ME Respiratory Tract Agents
Multiple NDCs Amlodipine Besylate CA, OR Antihypertensives
Multiple NDCs Amoxicillin CA, OR Antibacterials
60505258009 Atorvastatin CA, ME, OR, VT, Antihyperlipidemics
60505257909 Atorvastatin CA, OR, VT, Antihyperlipidemics
50111078766 Azithromycin CA, VT Antibacterials
50111078751 Azithromycin CA, ME, OR Antibacterials
00002771559 Basaglar (Kwikpen) ME, NV, OR Hormones and Synthetic Substitutes
00173085910 Breo Ellipta CA, ME Respiratory Tract Agents
45963014205 Bupropion Hcl CA, OR, VT, Antidepressants
10370010150 Bupropion Hcl CA, OR, VT, Antidepressants
00069046903 Chantix CA, VT Antidotes, Deterrents, and Toxicological Agents
00069047103 Chantix CA, VT Antidotes, Deterrents, and Toxicological Agents
68546032512 Copaxone CA, ME, OR, VT, Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)
Cosentyx CA, ME, OR, VT, Immunological Agents
61958200201 Descovy CA, ME, VT Antivirals
00024591401 Dupixent ME, OR Immunological Agents
00003089421 Eliquis CA, ME, OR Blood Formation, Coagulation, and Thrombosis Agents
58406044504 Enbrel CA, ,ME, ,OR, VT Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)
61958220101 Epclusa CA, ME, OR, VT, Antivirals
00173071920 Flovent CA, VT Corticosteroids
Multiple NDCs Fluoxetine CA, OR Antidepressants
00054327099 Fluticasone Prop CA, ME, VT Respiratory Tract Agents
60505082901 Fluticasone Prop CA, VT Respiratory Tract Agents
69097081412 Gabapentin CA, ME, OR, VT, Anticonvulsants
61958190101 Genvoya CA, OR Antivirals
00078060715 Gilenya CA, VT Immunological Agents
68084011201 Glipizide ER CA, NV Blood Glucose Regulators
68084029521 Glipizide ER CA, NV Blood Glucose Regulators
68084011101 Glipizide ER CA, NV Blood Glucose Regulators
61958180101 Harvoni CA, ME, VT Anti-infective Agents
00002879959 Humalog (Kwikpen) ME, NV, OR Hormones and Synthetic Substitutes
00002751001 Humalog CA, ME, OR Hormones and Synthetic Substitutes
00074433902 Humira (Pen) CA, ME, OR, VT, Gastrointestinal Drugs; Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)
00074379902 Humira (Syringe) CA, ME, OR, VT, Gastrointestinal Drugs; Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)
00002880559 Humulin N CA, NV Blood Glucose Regulators
00002831501 Humulin N CA, NV Blood Glucose Regulators
00002831517 Humulin N CA, NV Blood Glucose Regulators
00002821501 Humulin R CA, NV Blood Glucose Regulators
00002821517 Humulin R CA, NV Blood Glucose Regulators
00002882427 Humulin R U-500 KwikPen CA, NV Blood Glucose Regulators
00002850101 Humulin R U-500 CA, NV Blood Glucose Regulators
16729018317 Hydrochlorothiazide CA, ME, OR, VT, Diuretics
00406012301 Hydrocodone/Acetaminophen ME, OR, VT, Analgesics – Opioid
00069018921 Ibrance CA, VT Antineoplastics
50458014030 Invokana CA, NV Blood Glucose Regulators
50458014090 Invokana CA, NV Blood Glucose Regulators
50458014130 Invokana CA, NV Blood Glucose Regulators
50458014190 Invokana CA, NV Blood Glucose Regulators
00006057761 Janumet CA, NV Blood Glucose Regulators
00006057762 Janumet CA, NV Blood Glucose Regulators
00006057782 Janumet CA, NV Blood Glucose Regulators
00006057561 Janumet CA, NV Blood Glucose Regulators
00006057562 Janumet CA, NV Blood Glucose Regulators
00006057582 Janumet CA, NV Blood Glucose Regulators
00006027731 Januvia CA, ME, NV, VT Blood Glucose Regulators
00006011254 Januvia CA, NV Blood Glucose Regulators
00006027733 Januvia CA, NV Blood Glucose Regulators
00006027754 Januvia CA, NV Blood Glucose Regulators
00006027782 Januvia CA, NV Blood Glucose Regulators
00006022128 Januvia CA, NV Blood Glucose Regulators
00006022131 Januvia CA, NV Blood Glucose Regulators
00006022154 Januvia CA, NV Blood Glucose Regulators
00006011228 Januvia CA, NV Blood Glucose Regulators
00006011231 Januvia CA, NV Blood Glucose Regulators
00006027702 Januvia CA, NV Blood Glucose Regulators
00006027728 Januvia CA, NV Blood Glucose Regulators
00597015230 Jardiance CA, NV Blood Glucose Regulators
00597015237 Jardiance CA, NV Blood Glucose Regulators
00597015290 Jardiance CA, NV Blood Glucose Regulators
00597015330 Jardiance CA, NV Blood Glucose Regulators
00597015337 Jardiance CA, NV Blood Glucose Regulators
00597015390 Jardiance CA, NV Blood Glucose Regulators
00088222033 Lantus ME, NV Hormones and Synthetic Substitutes
00088221905 Lantus Solostar CA, ME, NV, VT Hormones and Synthetic Substitutes
00169643810 Levemir ME, NV Hormones and Synthetic Substitutes
00378180310 Levothyroxine Sodium ,CA, OR, VT Hormonal Agents – Thyroid
00185060501 Lisinopril CA, ,OR, VT Antihypertensives
68180098103 Lisinopril CA, ME, OR Antihypertensives
65862020390 Losartan Potassium CA, ,OR, VT Antihypertensives
00071101668 Lyrica CA, VT Neuropathic Pain
60687014301 Metformin HCL CA, NV Blood Glucose Regulators
49483062350 Metformin Hcl Er CA, VT Blood Glucose Regulators
62037083101 Metoprolol Succinate Er CA, ,OR, VT Beta Blockers
Multiple NDCs Montelukast Sodium CA, OR Respiratory Tract Agents, Asthma
55513019001 Neulasta OR, VT Blood products and modifiers (Anti-infective for chemotherapy)
00169633910 Novolog ME, NV, OR, VT, Hormones and Synthetic Substitutes
00052027303 Nuvaring CA, VT Contraceptives, Intravaginal, Systemic
61958210101 Odefsey CA, OR Antivirals (HIV Treatment)
55111015810 Omeprazole ME, ,OR, VT Gastrointestinal Drugs
00378773293 Ondansetron CA, OR Antiemetics
53885024510 Onetouch Ultra Test Strip CA, VT Blood Sugar Diagnostics
Non-matching NDCs Orkambi ME, VT Respiratory Agents – Misc.
59310057922 Proair CA, ME, OR, VT, Beta-Adrenergic Agents
00023530105 Restasis (Multidose) CA, ME Eye, Ear, Nose, and Throat (EENT) Preparations
59572041028 Revlimid CA, ME, OR Antineoplastics
59572041000 Revlimid CA, ME, OR Antineoplastics
68180035302 Sertraline CA, ME, OR, VT, Antidepressants
69097083502 Sertraline CA, VT, OR Antidepressants
65862001305 Sertraline CA, VT, OR Antidepressants
16729000517 Simvastatin CA, VT Antihyperlipidemics
16714068202 Simvastatin CA, VT Antihyperlipidemics
16714068101 Simvastatin CA, VT Antihyperlipidemics
16714068201 Simvastatin CA, VT Antihyperlipidemics
00093715498 Simvastatin CA, VT Antihyperlipidemics
00093715598 Simvastatin CA, VT Antihyperlipidemics
16729000617 Simvastatin CA, VT Antihyperlipidemics
Non-matching NDCs Spiriva (Respimat/Handihaler) ME, VT Autonomic Drugs; Respiratory Tract Agents
12496120803 Suboxone ME, VT Central Nervous System Agents; Miscellaneous Therapeutic Agents; Miscellaneous Therapeutic Agents (Platelet-Aggregation Inhibitors)
52268001201 Suprep Bowel Prep Kit CA, OR Gastrointestinal Agents (Colonoscopy prep)
57894006103 Stelara CA, ME, OR, VT, Immunological Agents
00186037020 Symbicort CA, ME, VT Antiasthmatic And Bronchodilator Agents
64406000602 Tecfidera CA, ME, OR, VT, Psychotherapeutic And Neurological Agents – Misc.
49702022813 Tivicay CA, VT Antivirals, Hiv-Spec, Non-Peptidic Protease Inhib
00597014030 Tradjenta CA, NV Blood Glucose Regulators
00597014061 Tradjenta CA, NV Blood Glucose Regulators
00597014090 Tradjenta CA, NV Blood Glucose Regulators
50111043301 Trazodone ME, OR, VT, Antidepressants
00169255013 Tresiba (Flextouch) ME, NV Hormones and Synthetic Substitutes
49702023113 Triumeq CA, OR, VT, Antivirals
Non-matching NDCs Trulicity ME, NV Hormones and Synthetic Substitutes
61958070101 Truvada CA, OR HIV Treatment
61958070301 Truvada CA, OR HIV Treatment
00173068220 Ventolin CA, ME, OR, VT, Autonomic Drugs; Respiratory Tract Agents
00169406013 Victoza (3-Pak) ME, NV, VT Hormones and Synthetic Substitutes
50458057930 Xarelto CA, ME, VT Anticoagulants,Coumarin Type
54092060601 Xiidra CA, VT Opthalmic Agents
Non-matching NDCs Metformin CA, NV, OR, VT, Blood Glucose Regulators
57894019506 Zytiga ME, OR Antineoplastics

Source: Mathematica analysis of data reported in: California Department of Managed Health Care (2018); Maine Health Data Organization (2018); Nevada Department of Health and Human Services (2018b); Oregon Department of Consumer and Business Services (2019); and State of Vermont Green Mountain Care Board (2019).

Notes

[1] These states are California, Connecticut, Maine, New Hampshire, Nevada, Oregon, Washington, Texas, and Vermont. See: National Academy for State Health Policy Center for State Rx Pricing, Newly Enacted Laws at https://www.oldsite.nashp.org/new-laws/, accessed August 8, 2019.

[2] See:  California Office of Statewide Health Planning and Development (2018), Nevada Department of Health and Human Services (2018b), Maine Health Data Organization (2018), and State of Vermont Green Mountain Care Board (2019).

[3] See: California Department of Managed Health Care (December 2019).

[4] See: Vermont Green Mountain Care Board (January 2019).

[5] See: Oregon Department of Consumer and Business Services (2019).

[6] Washington defines a covered drug as one that  “is currently on the market, is manufactured by a covered manufacturer, and has a wholesale acquisition cost of more than one hundred dollars for a course of treatment lasting less than one month or a thirty-day supply, and … the manufacturer increases the wholesale acquisition cost at least … [20] percent, including the proposed increase and the cumulative increase over one calendar year prior to the date of the proposed increase [or] [50] percent, including the proposed increase and the cumulative increase over three calendar years prior to the date of the proposed increase.” See: Washington HB 1224/Chapter 334 (2019), Section 2.

[7] A number of other states recently passed (but have not yet enacted) legislation that would require PBM reporting. Such states include Arkansas, Iowa, Louisiana, and Minnesota. These states variously would require PBM reporting of total rebates (all states); rebates retained by the PBM (Minnesota—like Nevada, Texas, and Washington); rebates the PBM did (or did not) pass through to insurers (Arkansas, Iowa, Louisiana, and Minnesota—like Connecticut and Texas); rebates passed through to enrollees at point of sale (Arkansas—like Texas); the amount paid for pharmacy services (Arkansas—like Washington); administrative fees received by the PBM (Iowa and Louisiana); and the highest, lowest, and mean aggregate retained rebate percentage (Iowa, Louisiana, and Minnesota). See: Arkansas SB 520/Act No. 994 (2019); Iowa SF 563 (2019), Louisiana SB 283/Act No. 371 (2018); and Minnesota SF 278/Session Law Chapter 39 (2019).

[8] Nevada’s report notes that the variation among manufacturers (and potentially among drugs produced by the same manufacturer) is significant: a simple unweighted average per manufacturer, then calculated across manufacturers, produced an average profit of 152 percent of the sum of production and administrative cost—that is, for every dollar spent on combined production and administrative costs, the manufacturers earned, on average, $1.52 in profit. The report states that larger manufacturers (with lower profit rates) tend to reduce the aggregate profit ratio, as calculated in Figure 1.

[9] Built on the National Academy for State Health Policy’s model legislation, Maryland’s Prescription Drug Affordability Board is an independent body with the authority to review high-cost prescription drugs and identify fair, appropriate rates for Marylanders to pay.

[10] To obtain consistent information from all reporting entities, NASHP’s model legislation and reporting templates call for reporting at the NDC level, and they align national and state-level reporting to support a coherent picture of pricing along the supply chain for each drug. See: https://www.oldsite.nashp.org/policy/prescription-drug-pricing/model-legislation/#toggle-id-1, accessed August 9, 2019.

Acknowledgements: The National Academy for State Healthy Policy’s Center for State Rx Drug Pricing, with support from Arnold Ventures, commissioned this analysis from experts affiliated with Mathematica Policy Research.

New NASHP Tool Helps States Leverage Public Purchasing of Prescription Drugs

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As state officials investigate reducing costs by leveraging their collective buying power to purchase prescription drugs, the National Academy for State Health Policy (NASHP) has developed a Checklist for Coordinating Public Purchasing of Prescription Drugs to help states establish baseline data across public purchasers and identify effective strategies to coordinate purchasing.

The checklist is designed to help states gather data on purchasers’ contract terms with pharmacy benefit managers (PBMs), how much is spent on drugs based on net cost and utilization, and plan benefit design.

Following California’s leading effort to implement bulk purchasing across state agencies, New Mexico, Delaware, and Minnesota have established interagency work groups of public purchasers, including those representing state government, state university, and public school employees and retirees as well as departments of corrections, state hospitals, and Medicaid programs. 

These groups’ early meetings have focused on understanding current drug spending and plan design across purchasers. To help guide this work, NASHP’s checklist captures important information about these plans’ contracts with PBMs, including contract expiration dates and the inclusion of transparency provisions that:

  • Prohibit spread pricing – when a PBM pays a pharmacy a lower rate than the rate the PBM claims for reimbursement from the health plan; or
  •  Require rebates to be passed through to the plan.

Once this data is established, interagency groups can identify cost and contract variations and explore various opportunities, including aligning PBM contracts across payers, which creates the potential to pool prescription drug purchasing to achieve savings.

NASHP’s checklist also asks purchasers to identify the 10 drugs with the highest net cost to health plans and the 10 most frequently prescribed drugs. Understanding the highest cost and highest use drugs across purchasers can guide the work of interagency groups, allowing them to prioritize efforts around specific drugs. 

Interagency purchasing groups in New Mexico and Delaware have identified high-cost specialty drugs, such as Humira, as a major cost driver and a growing area of concern for public purchasers. Armed with this data, states working to leverage their purchasing power may be better positioned to respond to future drug spikes and the high cost of specialty drugs.

NASHP continues to develop model policies to help states address drug costs. See its latest proposal for a state purchasing pool for prescription drugs, which would allow individuals and businesses to join a public drug plan, increase the size of the state purchasing pools, and secure lower costs. Learn more about Delaware and New Mexico’s leveraging efforts in these NASHP blogs.

Using Data, Incentives, and Innovation, Three States Work to Improve Maternal Vaccination Rates

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Despite the health benefits of immunizing pregnant women against influenza and pertussis (whooping cough) and protecting them and their infants from these life-threatening diseases, only half of pregnant women are vaccinated against both diseases and only one-third receive both the influenza and pertussis vaccines during pregnancy. 

Three states are trying a number of innovative approaches to increase vaccination rates among pregnant women by providing incentives to health plans, increasing access to vaccinations through pharmacies, and using data to identify and target populations, regions, and providers with substandard influenza and Tdap (which protects against pertussis) vaccination rates.

Evidence shows pregnant women are at increased risk of developing complications from certain preventable diseases and can also risk passing those diseases on to their children. Following immunization, data shows that both mothers and infants are less likely to be hospitalized from complications. When a woman is vaccinated during pregnancy, she develops antibodies that are transmitted to her child before birth, which can then protect the infant during the first few months after birth. The US Centers for Disease Control and Prevention (CDC) recommends that women who are pregnant or planning to become pregnant get the flu vaccine and the Tdap vaccine during each pregnancy.

Low Immunization Rates Persist

Despite the CDC’s guidelines, many women do not receive the influenza and pertussis vaccines during pregnancy. According to the CDC’s recent report, Vital Signs: Burden and Prevention of Influenza and Pertussis Among Pregnant Women and Infants — United States, published in Morbidity and Mortality Weekly Report (MMWR), current rates of maternal immunization for influenza and Tdap are 53.7 percent and 54.9 percent, respectively. Only one-third of pregnant women received both the influenza and Tdap vaccines, and the rates are even lower for African-American pregnant women. The report noted that provider recommendations to patients can improve maternal immunization rates – when providers offered vaccinations or provided a referral to pregnant women, 65.7 and 70.5 percent received the flu and Tdap vaccine, respectively. Based on this data, the CDC recommends that providers begin discussing vaccinations with pregnant patients early and continue the conversation during each visit. 

Overall, women enrolled in public insurance programs were less likely to be vaccinated during pregnancy than women with private insurance, due in part to access barriers. State Medicaid agencies, which cover 43 percent of all births across the United States and up to 60 percent of births in some states, can use innovative approaches to identify pregnant women in need of vaccinations, gather data to identify strategies and targeted approaches, and encourage providers to increase vaccination rates to improve health and save on costs. 

The 2019 MMWR data are especially notable in light of the Healthy People 2020 goal to increase the number of pregnant women vaccinated against influenza to 80 percent. While most states remain far from that goal, California, Colorado, and Wisconsin are working to improve maternal vaccination rates for both their Medicaid populations and privately insured women.

California’s Medi-Cal Strategies

In California, pregnant women covered by Medi-Cal, the state’s Medicaid plan, see providers who are less likely to stock or recommend the Tdap vaccine. Women on Medi-Cal receive prenatal Tdap immunizations at much lower rates than privately insured women, and infants born to mothers with Medi-Cal coverage are twice as likely to contract pertussis compared to privately insured infants. California is using a number of strategies to improve maternal immunization rates for women on Medi-Cal, including setting expectations for contracted health plans, monitoring and providing incentives, and addressing barriers at the clinician and patient level:

  • Medi-Cal managed care contracts require health plans to ensure the timely provision of all Advisory Committee on Immunization Practices (ACIP)-recommended immunizations for members, and report data to the California Immunization Registry (CAIR). Medi-Cal managed care contracts also require that contracted health plans monitor their primary care provider sites for the provision of preventive services, including all ACIP-recommended immunizations for adults and children. 
  • California’s 2019-2020 budget includes funding for incentive payments in the managed care delivery system for timely prenatal care as well as for prenatal providers who administer the Tdap vaccine to pregnant members. Some of California’s Medi-Cal managed care health plans are also trying to lower the financial barriers to providing vaccines by allowing providers to directly bill the health plan outside of capitation rates, providing free Tdap starter doses to clinics, and encouraging group purchasing of vaccines. 
  • Medi-Cal encourages its health plans to follow up on potential quality of care issues when cases of pertussis in infants born to unvaccinated mother​s are identified through public health department notification. 
  • California pharmacists are authorized to provide immunizations without a physician’s order. Most major chain pharmacies in California offer Tdap immunizations as part of their vaccine portfolio. All routinely recommended adult vaccines are covered by Medicaid without prior authorization (in both fee-for-service and managed care plans) when given in a provider’s office or in a pharmacy. Recent state regulations require pharmacists to notify providers of immunizations administered and to enter all doses into the California Immunization Registry, making it possible for providers to know whether vaccine referrals to pharmacies are successful.

Colorado and Wisconsin’s Use of Data

One of the challenges to improving maternal immunization rates is obtaining and monitoring data, especially as many states do not require providers to report immunizations to their Immunization Information Systems (IIS). Quality data, though, is needed by states working to tailor their strategies for improving immunization uptake to the areas of highest need and to monitor trends. Specifically, the Centers for Medicare & Medicaid Services identifies data linking of Medicaid eligibity and claims data with vital statistics data as a critical mechanism for surveillance, programmatic monitoring, and evaluation of maternal immunization. 

  • Colorado is using data matching to determine the rates of maternal immunization in each county. Colorado has successfully matched 96 percent of patient medical record numbers with Colorado Immunization Information System (CIIS) records. The CIIS data matching has allowed the state to map immunization rates by provider and region and identify gaps in maternal immunization uptake. Colorado is now using this data to determine the areas of highest need in the state to inform and guide outreach programs. Currently, Colorado is also piloting text and email reminders to encourage patients to get vaccinated.
  • Wisconsin is also using data matching to obtain baseline immunization rates. Wisconsin matched 96 percent of women who gave birth in 2018, as recorded by the Vital Records Office, with data from the Wisconsin Immunization Registry. Like Colorado, Wisconsin used this data to create data maps to identify influenza and Tdap vaccination levels in each region of the state. Wisconsin was also able to track vaccination rates by age, race, type of insurance, and quality of prenatal care. Next steps for the state include monitoring these trends, identifying areas of highest need, and using the data to improve maternal immunization rates.

In addition to partnering with state public health departments and their immunization programs, state Medicaid agencies can partner with providers to ensure vaccines are stocked and to promote vaccine recommendations for pregnant women so they become routine. For example, the American College of Obstetricians and Gynecologists has released a number of resources designed to support health care providers in increasing maternal vaccination rates, including the Maternal Immunization Tool Kit, strategies for immunization implementation, and a guide to starting an office-based immunization program. The American Academy of Pediatrics also offers recommendations on cost-saving measures for the purchase and administration of immunizations. Finally, the CDC has compiled a toolkit for prenatal care providers that includes resources for provider and patient vaccination education.

In addition to these resources, other states can learn from the work California, Colorado, and Wisconsin have done to identify gaps and improve vaccination rates among pregnant women covered by state Medicaid programs.

Acknowledgements:
The National Academy for State Health Policy (NASHP) would like to thank Abby Klemp at the Wisconsin Department of Health Services, Sarah Royce at the California Department of Public Health, and Karen Mark at the California Department of Health Care Services for their time and insight. NASHP would also like to thank the US Centers for Disease Control and Prevention for their assistance with this blog and for funding this project. 

California Enacts First State Law to Combat Pay-for-Delay Rx Deals

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Last week, California enacted the first-in-the-nation state law to combat pay-for-delay deals between brand-name and generic pharmaceutical drug manufacturers. In a pay-for-delay deal, a brand manufacturer pays a generic competitor to settle patent litigation and keep the lower-cost version of the drug off the market. Delaying market entry of generic drugs limits competition and can keep prices for brand-name drugs high. 

The Federal Trade Commission estimates these deals cost consumers $3.5 billion in higher drug costs each year.

Under California’s new law, pay-for-delay agreements are presumed to have anticompetitive effects – unless a company can prove otherwise – if a generic manufacturer receives anything of value from a brand-name drug manufacturer that has sued for patent infringement. The law opens these agreements to civil litigation from California’s Attorney General, who can recover up to $20 million or three-times the value given to parties in the agreement, whichever is greater.

This isn’t the first action California has taken to push back against anticompetitive practices by pharmaceutical manufacturers. Earlier this year, the state reached a $70 million settlement with two manufacturers that allegedly entered into pay-for-delay agreements to delay market entry of cheaper generic drugs. Although a 2013 US Supreme Court case found that pay-for-delay settlements could violate antitrust laws, California’s presumption that these types of deals are anticompetitive gives the Attorney General a stronger platform to investigate and prosecute drug makers who enter into these agreements.

To explore all state legislation across the country to curb prescription drug costs, explore the National Academy for State Health Policy’s Legislative Tracker.

State Insurance Reforms Tackle Price Transparency, Rising Costs, and the Uninsured

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September was a busy time for state insurance regulators as they worked to finalize rate filings and prepare for the upcoming health insurance open enrollment season. While initial filings indicate nominal increases to individual market premiums for the 2020 plan year, insurance costs are escalating for individuals and families who receive coverage through their employers.  

Beyond monitoring rates, state regulators continue to take action to ensure that all consumers across their markets have access to affordable, high-value coverage. Below are a few notable updates from states:

California enacts bills to address cost transparency. During the last month of its legislative session, California enacted two new laws that require insurers to provide enhanced reporting on health costs and quality.

  • AB 731 (Health Care Coverage: Rate Review) requires insurers, including large group health plans, to submit data to the state on medical use trends by geographic region and enhances requirements for plans to report data on spending compared to Medicare rates. The law will go into effect by July of 2021.
  • AB 929 (California Health Benefit Exchange: Data Collection) mandates that insurers provide data to the health insurance marketplace so that it can evaluate progress toward lowering costs, improving quality, and reducing disparities in the state. The law also requires that the marketplace make data on costs, quality, and health disparities public.

Connecticut seeks to “redefine the health care dynamic” through state employee plans. The state comptroller recently issued a request for proposals for insurers to administer state health benefits. The request for proposal carves out a role for the state to act as an active participant in negotiations between insurers and providers on reimbursement rates, including access to full details about negotiated payments. 

Nevada releases detailed report on its uninsured. Reports estimate that nearly 400,000 Nevadans are currently uninsured. Among the uninsured, nearly 22 percent are young adults, 60 percent are Latino, and 63 percent are employed. Nevada’s recently implemented state-based marketplace will use this detailed data to target outreach efforts for the upcoming open enrollment period. 

The National Academy for State Health Policy will continue to track and report on these and other insurance initiatives as they unfold in the coming months.  

State Medicaid Levers to Promote Immunization: California’s Experience

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Vaccines are a powerful and cost-effective tool to prevent diseases and save lives. Once common, deadly diseases such as polio, measles, and mumps are preventable and smallpox no longer exists outside of a laboratory. According to research estimates, of 4.3 million infants born in the United States in 2009, vaccines will prevent 40,000 deaths and 20 million illnesses over their lifetimes. Vaccinating children is also cost effective, saving $10.20 for every $1 spent on immunizations.

Despite these successes, states are working to improve their immunization rates, which hovered at 68.4 percent nationwide in children ages 19 to 35 months in 2012. California is using an assortment of strategies and inducements to boost its immunization rates.

How Can States Increase Immunization Rates through Medicaid?

Medicaid plays a key role in the delivery of vaccines, especially among vulnerable populations including children and pregnant women. Because Medicaid covers a large percentage of US children (39 percent), increasing childhood immunization rates among Medicaid beneficiaries can generate significant long-term savings. US Centers for Disease Control and Prevention (CDC) officials estimate that vaccinating children born between 1994 and 2018 has saved the United States about $300 billion in direct medical costs and $1.38 trillion in total costs, and protected millions from serious diseases.

State Medicaid programs can employ a variety of levers to increase immunization rates among their beneficiaries, from ensuring access and coverage for vaccines to tracking targeted metrics that inform provider incentive payments and reimbursement. These levers include:

  • Providing comprehensive coverage: Early and Periodic Screening, Diagnostic and Treatment (EPSDT) is Medicaid’s benefit for children and adolescents younger than 21, as described in Sec. 1905(r) of the Social Security Act. The EPSDT benefit requires that states provide all vaccines recommended by the Advisory Committee on Immunization Practice (ACIP) to all children eligible for EPSDT benefits.
  • Making vaccine available: Through the Vaccines for Children (VFC) program, the CDC purchases vaccines at a discount and distributes them to state health departments and other local and territorial public health agencies. These entities distribute the vaccines to private and public health providers who are registered as VFC Children are eligible for VFC-funded vaccines if they are younger than 19 and Medicaid-eligible, uninsured, American Indian or Alaska Native, or underinsured and vaccinated in certain settings. VFC-eligible children receive recommended vaccines at no cost when administered by a registered VFC provider.
  • Using metrics: The US Department of Health and Human Services sets annual Medicaid and Children’s Health Insurance Program (CHIP) health care quality measures to ensure providers deliver appropriate care to their patients. The 2019 Medicaid and CHIP Core Set of Children’s Health Care Quality Measures includes the Healthcare Effectiveness Data and Information Set (HEDIS) Childhood Immunization Status measure.* Monitoring and measuring changes in vaccine delivery through this metric is a critical step to improving targeted immunization rates.
  • Using incentive measures: State Medicaid programs can use incentive payments to increase immunization uptake. For example, evidence shows that incentive payments to providers through Medicaid pay for performance programs increases childhood immunization rates.
  • Performance improvement projects (PIPs): State Medicaid programs can encourage managed care organizations (MCOs) to focus on improving immunization rates by including it as one of their PIPs. Medicaid MCOs participate annually in PIPs.
  • Form partnerships to strengthen immunization efforts: Multiple state agencies play an important role in increasing immunization rates. Medicaid and public health agencies can partner with other stakeholders to address mutual goals.
  • Data sharing: States have various data sources from different agencies that may include information on vaccination status. This includes immunization information systems (IIS), which are confidential, population-based computerized registries that record vaccination doses and are usually maintained by public health departments, and Medicaid Management Information Systems (MMIS), which contain Medicaid claims data. Data exchanges between IIS and MMIS can help identify missed opportunities for vaccination, monitor gaps in immunization coverage, and improve vaccination rates.

California’s Strategies

A Healthy People 2020 immunization target is to increase the percentage of children ages 19 to 35 months who receive the recommended doses of diphtheria, tetanus, and pertussis (DTaP), polio, mumps-measles-rubella (MMR), Hib (meningitis), hepatitis B, varicella and pneumococcal conjugate vaccine (PCV) to 80 percent, from the 2012 average of 68.4 percent. As of 2017, California’s combined seven-vaccine series coverage rate among children ages 19 to 35 months was 68.6 percent. California’s health-related agencies have been working over the last several years to increase the state’s childhood immunization rates. Medi-Cal, California’s Medicaid Program, covers 43 percent of children in the state, so Medi-Cal has strong incentives to work to improve vaccination rates among its beneficiaries. Medi-Cal uses the following levers to reach this goal.

  • Comprehensive coverage: The California Department of Health Care Services (DHCS) administers the EPSDT benefits to all low-income youth enrolled in Medi-Cal consistent with the federally mandated benefit. Pregnant women (of any age) and all children younger than 21 are eligible for Medi-Cal if they meet income limits.
  • Vaccine availability: Medi-Cal participates in the VFC program to ensure that vaccines are eligible at no charge to public and private providers for eligible children. DHCS reimburses enrolled providers the administrative fee per dose of vaccine. In 2018, the California Department of Public Health (CDPH) distributed approximately $665 million worth of ACIP-recommended pediatric vaccines through the VFC program. Immunizations are also a medical and pharmacy benefit for all adult Medi-Cal members, including pregnant women.
  • Metrics: California’s Medi-Cal program collects the HEDIS measure “Childhood Immunization Status” from all of its MCOs, which requires the administration of the 10 ACIP-recommended vaccines by age two. MCOs are required to meet a minimum performance benchmark on the childhood immunization measure – 50 percent of all Medicaid health plans nationally, as determined by the National Committee for Quality Assurance). When MCOs do not meet the benchmark, quality improvement work is required, sanctions are imposed, and corrective action may be imposed. MCOs are contractually required to document each member’s need for ACIP-recommended immunizations as part of all regular health visits, and to ensure that all children receive ACIP-recommended immunizations at any health care visit.
  • Incentive measures: California’s Medi-Cal program operates a directed payment Quality Incentive Program (QIP) that directs MCOs to make QIP payments to designated public hospital systems tied to performance on specific performance metrics, including the Childhood Immunization Status and Immunization for Adolescents measures. As part of California’s 1115 Waiver, Medi-Cal provides incentive payments to designated public hospital and district and municipal hospital systems tied to performance on specific performance metrics, including the Influenza Immunization measure for members ages six months and older [California’s Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program]. In addition, California’s Medi-Cal Value-Based Payment Program provides an incentive payment to providers for administration of several vaccinations, including the pertussis vaccine to women who are pregnant (supporting the HEDIS Prenatal Immunization Status Measure), the influenza vaccine to adults 19 years and older, and the last dose of any of the multiple-dose vaccine series given on or before a child’s second birthday (DTaP, polio, hepatitis B, Hib, pneumoconccal conjugate, rotavirus, and influenza), supporting the Childhood Immunization Status measure.
  • Performance improvement projects (PIPs): In 2016, DHCS identified improving childhood immunization rates as one focus topic for its PIP because less than three-quarters of young children enrolled in Medi-Cal were fully immunized, and immunization is an area with quantified health disparities, especially within the Medicaid program. Between 2015 and 2017, five health plans participated in PIPs to improve immunizations of two-year-olds. In 2018, health plans with low or declining performance on the HEDIS childhood immunization indicator were required to participate in a childhood immunization-focused PIP. Between 2017 and 2019, 15 health plans participated in PIPs to improve childhood immunization rates. Beginning in the fall of 2019, health plans will embark on their third round of PIPs, one of which will focus on childhood and adolescent health. To date, seven health plans have submitted PIP-focused proposals to improve childhood immunization rates. Separate from the PIPs, as noted above, when health plans do not meet the required performance benchmark for the childhood immunization measure, DHCS requires those plans to conduct a rapid cycle quality improvement project to improve their immunization rates. DHCS is striving to increase its overall managed care childhood immunization rate to at least 80 percent coverage.
  • Partnerships that strengthen immunization efforts: Medi-Cal partners with multiple stakeholders, including CDPH and other state agencies, health care providers, and other private entities. CDPH provides technical assistance to public and nonprofit health clinics, participates in the multi-sector California Immunization Coalition, and assists schools and childcare centers in complying with state immunization requirements.

CDPH continues to develop and support efforts to address disparities in immunizations of minority and uninsured children, including a focus on increasing prenatal immunization with the TDaP vaccine among pregnant Latina women. In 2015, CDPH undertook several initiatives, including the DHCS National Governor’s Association Learning Collaborative, to increase prenatal immunization rates.

  • Data sharing: California’s IIS – the California Immunization Registry (CAIR) – supports immunization by:
    • Providing a comprehensive immunization record that can adapt to changes in the medical home or health insurance;
    • Calculating which shots children need and minimizing under- or over-immunization;
    • Issuing reminders of upcoming visits; and
    • Identifying individuals and populations with low immunization rates.

The Medi-Cal program requires its MCOs to ensure that immunizations are reported to the registry. California physicians’ offices, clinics, families, and schools are estimated to have saved several millions of dollars annually as a result of the registry.**

California uses strategic levers to increase immunization rates in its Medicaid population, including identifying the target populations’ EPSDT benefits, identifying metrics for quality improvement programs, and developing strategies to incentivize providers to improve their immunization rates. These levers enable the Medicaid agency to contribute as a critical partner to a strong state partnership supporting a comprehensive strategy for improving immunization rates.

* Percentage of children age two who received four diphtheria, tetanus and acellular pertussis (DTaP); three polio; one measles, mumps and rubella (MMR); three haemophilus influenzae type B; three hepatitis B, one chicken pox; four pneumococcal conjugate; one hepatitis A; two or three rotavirus; and two influenza vaccines by their second birthday. This measure calculates a rate for each vaccine and nine separate combination rates.

** California Immunization Registry (CAIR) users include health care providers, public health departments, schools, childcare facilities, family child care homes, WIC service providers, foster care agencies, welfare departments, juvenile justice facilities, and other programs that provide, track, or promote immunization.

Acknowledgements: The National Academy for State Health Policy (NASHP) would like to thank Mary Beth Hance at the Center for Medicare and Medicaid Services, Megan Lindley and Aaron Borrelli at the Centers for Disease Control and Prevention (CDC), Sarah Royce at the California Department of Public Health and Linette Scott at the California Department of Health Care Services for their time and insights, which made this blog possible. The author also wishes to thank Trish Riley and Jill Rosenthal for their contributions to this case study. Any errors or omissions are the author’s. This project is supported by the CDC. This information or content and conclusions are those of the authors. 

How California Is Moving the Needle on Coverage and Costs: An Interview with Covered California Leaders

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California Gov. Gavin Newsom’s new budget has infused significant funds to make health care coverage sold through its health insurance marketplace (Covered California) more affordable and has made new subsidies available to middle-income individuals earning between 400 to 600 percent of the federal poverty level (FPL).

• California’s new subsidy program assists those earning up to 600% FPL (e.g., $72,840 per year for individuals or $150,600 for a family of four in 2019).

• California estimates 922,000 individuals would be eligible for new or enhanced subsidies in 2020, and 187,000 new individuals could enroll in its marketplace.

• California is also reinstating a penalty for those who do not have health insurance.

The budget allots $429 million in 2020 to provide new subsidies and builds on current federal premium subsidies that help fund individuals earning 100 to 400 percent of FPL.

To learn more about California’s new initiative, NASHP spoke with Covered California Executive Director Peter Lee and Director of Policy Katie Ravel. They also discussed their implementation plans for the 2020 coverage year.

What prompted development of this coverage initiative?

PL: Many people have been left out of accessing coverage — especially the middle class and those who are undocumented — and our governor and legislature wanted to take concrete steps to get the state toward universal coverage. On Governor Newsom’s first day in office, he laid out his agenda, calling for the federal government to reinstate the individual mandate and expand subsidies available through the marketplaces. Meanwhile, our legislature has also been committed to building on what the Affordable Care Act (ACA) did to expand coverage.

KR: Last year, the legislature required Covered California to develop options to improve coverage affordability for low- and middle-income consumers in the state.

What was California’s approach in developing this initiative?

PL: We had four goals driving our work; decrease the number of uninsured; address affordability concerns of those who are insured; make sure what we did would be affordable for the state; and deliver options that could be implemented in the short term.

KR: To start, we wanted to build on the main levers of the ACA and ultimately move the needle on coverage and cost. We formed a workgroup inclusive of consumer advocates, insurers, providers, and legislative staff members. We provided them with education about the basics of how our programs currently work and how Covered California is structured in addition to reviewing data about current affordability challenges. We worked with economists Wesley Yin from the University of California at Los Angeles and Nicholas Tilipman from the University of Illinois at Chicago to model the impacts on coverage and cost of various affordability policies including enhanced premium and cost-sharing subsidies, reinsurance, and reinstatement of a coverage mandate.

NASHP’s 32nd Annual Health Policy Conference, Aug. 21-23, 2019 in Chicago, features several sessions that highlight recent state innovations to increase health insurance access, lower costs, and stabilize markets. Learn more and register to attend these and other sessions.

PL: We were able to prepare a good product that laid out the options and informed legislators and advocates about the pros and cons of each. From this work, they could clearly understand what an investment of additional funds would get you in terms of increased coverage and affordability. The information we gathered helped steer us away from other options like reinsurance or reducing cost sharing for marketplace plans.

KR: When it was clear that the intention was to launch a program in 2020, the most turnkey option was to increase subsidies. Ultimately, the best way to drive enrollment is to make premiums more affordable.

Why is it important to include a coverage mandate?

PL: Policymakers almost universally recognize the sensibility of the individual mandate. There is empirical evidence that a mandate has an impact on driving people to get insured. Massachusetts is one example, they have a long-standing state mandate and was the only state to see an increase in new enrollment after the federal mandate went away.

Once legislators were able to come together and recognize that lack of a mandate [and associated drops in enrollment and increases in premiums] was most hurting the middle class who do not qualify for federal subsidies, it made sense to marry those policies together; reinstitution of a mandate, with penalty funds supporting those who were at the “subsidy cliff” [400 percent of FPL, the point at which individuals no longer qualify for federal subsidies]. Sixty percent of the new enrollment we project due to these policies in 2020 will actually be motivated by the penalty. Approximately 80 percent of overall funding allotted for subsidies will go to those [earning] between 400 to 600 percent of FPL.

What other work was required to bring policymakers on board with this subsidy plan?

KR: What was most important was that we were able to produce concrete estimates of how each policy choice would impact enrollment and affordability. Data made the choices real. Legislators understood the impact they could have if these initiatives were passed. We spent a lot of time diving into the data to better understand the health care costs for Californians whose incomes are over 400 percent of FPL. It was eye opening! Some, especially those nearing Medicare eligibility, would have to pay nearly 35 percent of their premium to purchase a benchmark health insurance plan.

PL: That people have to pay tens of thousands of dollars a year in health plan premiums is unfair. People are really hurt by the federal subsidy cliff.  However, for this to work, we were talking about a lot of money, and had lot of politics to get through. These policies are complicated, and it took years of Covered California becoming a trusted part of health policy discussions to get here. It was important for us to bring awareness about what was actually doable, especially in quick-turnaround. There is no way we would be implementing as soon as 2020 if it were not for the workgroup.

Through our reports and data, we told the story of the local impact of these policies. In our workgroup report, we provided examples of hypothetical families, but presented them in a way that most policymakers could relate to — policymakers had heard from “people like them” in their communities for whom our insurance system was not working. Having that data to make things local is an important role for the state-based exchanges.

Plan year 2020 is quickly approaching.  How will Covered California be able to implement this law so quickly?

PL: A critical part of our planning was early engagement with our carriers. We engaged them to work through importation questions like: Could our systems even work with theirs to add a state subsidy? What were their deadlines to price products anticipating changes might come as soon as plan year 2020? The plans have confidence we will aggressively market these changes, and anticipate this will lead to lower rates for plan year 2020.

Also helpful is that we modeled everything off what already existed under the ACA and leveraging as many existing processes as we can. We are using the same rules for the mandate as exist under federal law and subsidies will be distributed using the same mechanics in place for advanced premium tax credits.

KR: On the technical side, there are three main buckets we’re focused on for implementation: we’ll have to make changes to our eligibility rules engine, then figure out the money flow for the subsidies, then how to reconcile the subsidies at the end of the year based on income changes. We have been coordinating regularly with our design team and carriers to develop and test new systems and processes. We’re also working closely with our state tax agency on the subsidy reconciliation piece.

PL: The partnership with the tax agency is new for us. We recognize that it is part of our collective job as agencies of the state to make sure that people are insured, so we are working hard on how we inform consumers that they have better options than to pay the penalty. Our intent is not to penalize individuals, but rather to make sure that people are insured.

How will Covered California raise awareness about these changes?

PL: We are currently doing market research on what messages will resonate best with consumers. We recognize that passage of a mandate does not necessarily mean consumers will automatically be aware of and comply with the law, so we are planning a marketing strategy to increase awareness. Rather than focus on the penalty, our ads will focus on the fact that the mandate is now the law in California and that we are making coverage even more affordable. We want to drive people to come in and shop for coverage.

What else should we know about California’s new initiative?

PL: Importantly, these proposals are just stopgaps for what California believes should be federal responsibilities [e.g., to enforce a mandate and to provide subsidies that make coverage more affordable for all]. The penalty is written so that it is in effect until the federal one is reinstated. As for the subsidies, the program is only set to run for three years. We believe this will greatly benefit Californians in the short-term, but don’t want it to be the long-term solution. In the absence of leadership from the federal government, states can step up, but ultimately the federal government needs to step in.

More details about California’s new subsidy program are available at Covered California’s board meeting presentation available here.

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