Printer Friendly

Drug utilization: what is to be done?

5 Medications are now a prime suspect in the rapidly rising costs of managed care plans. Up to now, all the attention has been focused on costs generated by physicians, but drug costs have already surpassed primary care costs in most plans. The author says that drug costs ought to be the next target of cost concerns.

Early in the managed care era, both the staff model and the independent practitioner model HMO attracted members by promising health care without the work or worry of insurance claims, free coverage for office visits and preventive medical care, and drug payment with a "Drug Card," usually offered with a copayment of $2 to $5 per prescription for a 30-day supply of medications. Managed care plans often offered these benefits to compete with the indemnity insurance plans, which had been offering drug cards with $2 copayments in unionized heavy industry contracts.

Other new benefits, preventive health care and primary care services, were expected to represent the bulk of managed care plan costs. Both in sales and marketing appeal, however, the drug card was the clear winner. The enrollment of patients in managed care plans, for the first time, allowed smaller employers and individuals to obtain the drug card coverage. Suddenly the financial fear of going to a physician was removed. With a $3 copayment for the office visit and a $3 copayment for the prescription, the cost of professional advice and prescriptions was often cheaper than over-the-counter remedies. Practicing physicians suddenly have experienced patients' demands for newer, more expensive medications, and in larger quantities, as the copayment was constant for up to a 30-day supply. The patient perceives the brand name prescriptions to be stronger, quicker, or more convenient. Historically, it has been shown that only about 50 percent of prescriptions are actually filled. Many others are probably purchased in part to "see if it will work." Seldom would the patient continue to refill expensive medications without seeking permanent solutions or changes in life-style. With full coverage, the patient feels free to fill and refill prescriptions with little question.

Drug costs that were historically priced at 6-$8 per member per month (PNFM) in the early 1980s have risen to $13 PUFM in some locations and insured groups. This represents 15 percent of premiums in some markets and easily outstrips the cost of total primary care in almost all plans. Physician managers and payers' management have been slow to understand the explosion in pharmacy costs. We have, instead, developed elaborate plans to control physicians' practice patterns in a vacuum and management reporting mechanisms to "control costs." Analysis of prescribed drugs would be extremely helpful to the physician manager in underwriting decisions. The study of drug utilization can easily establish inappropriate drug usage, although it seldom leads to a permanent change in prescribing habits.

Practicing physicians have come under increasingly sophisticated and financially or professionally rewarding marketing efforts from the pharmaceutical manufacturers. Chronic illnesses of the elderly often result in the use of six or more appropriately prescribed "new technology" drugs to treat multiple conditions. Even hypertension is now controlled by the use of expensive cardioselective medications in lieu of "step therapy" starting with diuretics. There is an explosion of demand in antidepressant and other psychotropic medications. Most successful formularies require significant discounts from the pharmaceutical manufacturers before a drug is listed. Fonnularies usually bring financial rewards to managed care plans, but they often aggravate the practicing physician, as they slow and change his practice patterns and produce no financial rewards. Physicians' unhappiness with the formulary approach leads patient to believe that they are not getting the best" medications. It is expensive to keep the formularies current and to deal with requests for additional names or with the prescription written in error."

Generic medications, inexpensive solutions, are commonly demanded by the private pay patient or by the patient with normal major medical" medication insurance coverage. Pharyngitis and "colds" respond well for these patients to $3 worth of Penicillin, while Ceclor and Seldane, at 20 times the cost, are the preference of patients with drug cards. Additional pressures for the use of new and expensive antibiotics and other medications for "chest colds" and "peptic ulcer symptoms" erupted when early attempts to capitate care did not include pharmaceuticals. It was to the financial advantage of the primary care physician to prescribe "powerful" medicine in lieu of diagnostic testing, x-rays, or referrals to specialists. To this date, few, if any, payment mechanisms encourage the physician to hold down drug costs. It is plain that the changes required to slow growing drug costs will have to include benefit plans that force the patient to make decisions on the basis of the opportunity costs at the point of service for afl except the most expensive medication. PNDM drug costs for deductible and partial coverage, even without pharmacy discounts, are one-third to one-half of those for drug card patients.

Medication costs must be included in the physician reimbursement mechanism. Why does the local pharmacy carry all those brand names and other drugs with infrequent utilization? Why don't we just let the physician stock the most common antibiotics and antihistamines, packaged by pharmacists or packaging firms to ensure quality? Patients and physicians would benefit from the use of an alternative whose cost would be near dispensing cost alone. Physician managers must not be frightened by the shear volume of the reports that would be required by this alternative. Hiring pharmacists to analyze the data omits the mindset of the practicing physician. Reports that at least give the drug name, even with dosages lumped together, and physician and patient specific information should be insisted upon. I have found that the only effective report must be available in a format that gives each physician his or her list monthly with patient and drug names, drug amounts, and costs. Presentation of information in a nonthreatening way changes prescribing patterns when the physician realizes the cost. Relating the fact that the medication costs more than the office visit is very effective in changing behaviors.

Physicians must understand that in this very sensitive health insurance market, the increased premium forced by drug costs will limit the plan's or insurer's market share and the availability of money for fee schedules and salaries. Health insurers and managed care programs have to get past the discount mentality and involve physician managers in the decision process for benefit design, analysis of data, and marketing to the professional and patient if they are going to maintain their market shares. 13
COPYRIGHT 1990 American College of Physician Executives
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:third-party payer
Author:Saalwaechter, John J.
Publication:Physician Executive
Date:Nov 1, 1990
Previous Article:Health care outcomes assessment.
Next Article:Status quo won't work.

Related Articles
The evolving role of the medical director.
Hospitals monitor resource consumption.
New challenges for medical directors.
Payment for drug therapy.
Outpatient care from the payer's perspective.
Credentialing, the most important function for success.
Managing provider networks through expert systems: use of patterns of treatment to address overutilization.
Physicians reestablishing clinical autonomy. (Part 1: Value-Based Health Care).
Controlling budget variance: administrators should identify the budget items they can control versus those they can't, and have the wisdom to know...
'Silent PPOs' and 'repricing' companies.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters