Medicaid Moving Ahead in Uncertain Times: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2017 and 2018

Benefits, Copayments, Pharmacy, and Opioid Strategies

Benefit Changes

The number of states reporting new benefits and benefit enhancements continues to outpace the number of states reporting benefit cuts and restrictions. Twenty-six states reported new or enhanced benefits in FY 2017, and 17 states plan to add or enhance benefits in FY 2018. Fewer states reported benefit cuts or restrictions – six in FY 2017 and five in FY 2018 (Table 15 and Figure 10).

Figure 10: Benefit Changes Reported by States, FYs 2007 – 2018

The most common benefit enhancements reported were for mental health and substance use disorder (SUD) services. Exhibit 12 also highlights states implementing other select benefit enhancements for dental, alternative pain therapies, and telemonitoring/telehealth.

Nearly half of states that reported expanded mental health and/or SUD services made the changes as part of a new, comprehensive package of services versus a more limited benefit change. States using Section 1115 authority for SUD enhancements include states responding to CMS guidance² issued in 2015, which describes a new Section 1115 waiver opportunity that supports states’ ability to provide more effective care to Medicaid beneficiaries with an SUD, including the provision of treatment services not otherwise covered under Medicaid. In addition to the dental and telehealth services benefit enhancements noted in Exhibit 12 and Table 16, many states also reported broader initiatives to increase access to dental care/improve oral health outcomes and to increase access to telehealth. See the “Emerging Delivery System and Payment Reform” section of this report for details on these initiatives.

Other key benefit expansions include:

• Family planning: Oregon is taking many steps to expand access to family planning services. In FY 2017, it added coverage of pharmacist-prescribed oral contraceptives, becoming (according to the state) the first Medicaid program in the country to do so. In FY 2018, it will cover a one-year supply of birth control pills, and is adding coverage of pharmacist-administered contraceptives (e.g., NuvaRing and Depo-Provera). Additional states adding family planning benefits include New Mexico (adding coverage of long-acting reversible contraceptive services as a separately billable service at Federally Qualified Health Centers and Rural Health Centers in FY 2017) and Nevada (adding coverage for a one-year supply of birth control pills in FY 2018).
• Cancer screenings: Four states reported cancer screening-related benefit enhancements. Louisiana and South Dakota added coverage for genetic testing for BRCA³ breast cancer gene mutations in FY 2017, Virginia added coverage for lung cancer screening with low dose computed tomography without prior authorization in FY 2017, and New York added coverage for digital breast tomosynthesis screening services in FY 2018. Louisiana also expanded coverage of breast reconstruction surgery to the contralateral unaffected breast for beneficiaries diagnosed with breast cancer.

Benefit restrictions reflect the elimination of a covered benefit or the application of utilization controls for existing benefits. The most common services restricted were dental services (Connecticut, Nevada, and Wyoming) and non-emergency medical transportation services (Arkansas and Massachusetts); however, most benefit restrictions in FY 2017 or FY 2018 were narrowly targeted. Some states restricting benefits provided exceptions for beneficiaries with mental health conditions or substance use disorders (Massachusetts and Nevada). One additional notable benefit restriction is Utah’s proposal to eliminate Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) coverage for individuals ages 19 to 20 in FY 2018, subject to CMS approval.⁴

Tables 15 and 16 provide state-level information on benefit changes in FY 2017 and FY 2018.

Copayments

Federal law limits cost-sharing for people with income below 100 percent FPL to “nominal” amounts (defined in federal regulations), with higher amounts allowed for beneficiaries at higher income levels. Certain groups are exempt from cost-sharing, including mandatory eligible children, pregnant women, most children and adults with disabilities, people residing in institutions, and people receiving hospice care. In addition, certain services are exempt from cost-sharing: emergency services, preventive services for children, pregnancy-related services, and family planning services. Also, total Medicaid premiums and cost-sharing for a family cannot exceed 5 percent of the family’s income on a quarterly or monthly basis.⁵

Most state Medicaid programs require beneficiary copayments, but to varying degrees. Thirteen states reported changes to copayment requirements in either FY 2017 or FY 2018. Details about state actions related to copayments can be found in Table 17 and key changes are described below.

Six states reported new or increased copayment requirements. Key changes include:

• Three states (Michigan, New Hampshire, and New Mexico) reported new or increased copayments for enrollees with income above 100 percent of the FPL. In New Mexico, this change also applies to working individuals with disabilities.
• Three states (Maine, New Mexico, and Utah) reported new or increased copayments for non-emergency use of a hospital emergency department (ED). (These changes are part of pending Section 1115 waiver requests in Maine⁶ and Utah.)
• Colorado, New Mexico, and Utah are adding or increasing pharmacy copayments. Colorado reported increased copayments for hospital outpatient services.

Seven states reported policies that eliminate or reduce a copayment requirement for some or all covered populations. Key changes include:

• Three states (Indiana, North Dakota, and Tennessee) are reducing or eliminating higher copayments for non-emergency use of the ED.
• Oregon eliminated copayments for preventive services, Utah decreased inpatient copayments, and Vermont exempted sexual assault-related services from copayments.

TABLE 15: BENEFIT CHANGES IN ALL 50 STATES AND DC, FY 2017 AND FY 2018

Table 16: States Reporting Benefit Actions Taken in FY 2017 and FY 2018⁷

Table 17: Copayment Actions Taken in the 50 States and DC, FY 2017 and FY 2018⁸

Prescription Drug Utilization and Cost Control Initiatives

Almost all states have implemented aggressive strategies to slow Medicaid spending growth for prescription drugs, including preferred drug lists (PDLs), supplemental rebate programs, and state maximum allowable cost programs. In recent years, however, a disproportionate increase in prescription drug costs relative to overall spending has heightened state attention on pharmacy reimbursement and coverage policies. In this year’s survey, states reported a variety of actions in FY 2017 and FY 2018 to refine and enhance their pharmacy programs, including actions to react to new and emerging specialty and high-cost drug therapies.

Pharmacy Cost Drivers

This year’s survey asked states to identify the biggest cost drivers that affected growth in total pharmacy spending⁹ (federal and state) in FY 2017 and projected for FY 2018. Consistent with the results of the 2015 and 2016 surveys, most states identified specialty and high cost drugs as the most significant cost driver, with many states pointing specifically to hepatitis C antivirals. For these drugs, high costs are attributable to the high per prescription cost as well as increased utilization. Two states (Georgia and Tennessee) noted that they are seeing hepatitis C antiviral costs moderating (although costs remain high compared to other drugs). Other specialty drugs, behavioral health, and/or substance use disorder drugs were cited as cost drivers, and some specific drug classes (such as hemophilia factor, oncology drugs, and diabetes products) were also identified as major cost drivers. For FY 2018, several states also cited a new spinal muscular atrophy drug (Spinraza), priced at $125,000 a dose, or $750,000 for the first year and $375,000 per year thereafter for life (due to fewer doses per year).

Pharmacy Cost Containment Actions in FY 2017 and FY 2018

Almost all states had prescription drug cost containment policies (including prior authorization requirements and PDLs) in place prior to FY 2017, and most are constantly refining and updating these policies. Although states may not have reported every refinement or routine change in this year’s survey, 37 states in FY 2017 and 36 states in FY 2018 reported implementing or making changes to a wide variety of cost containment initiatives in the area of prescription drugs, comparable to the number of states taking such actions in recent years. By far the most frequently cited action was the application of new or expanded utilization controls (e.g., prior authorization requirements, clinical edits, and quantity limits) reported by 32 states in FY 2017 and 29 in FY 2018. Sixteen states in FY 2017 and 17 in FY 2018 also reported new or expanded initiatives to generate greater rebate revenue, including New York which is implementing a new state law in FY 2018 that applies a cap on Medicaid drug expenditures as a separate component of the global state Medicaid spending cap that the state has had in place since 2011. If the state determines that drug spending will exceed the annual growth limit, the Commissioner of the Department of Health may identify and refer drugs to the Drug Utilization Review (DUR) Board for a recommended target supplemental rebate.

Other frequently cited newly implemented or expanded pharmacy cost containment actions were:

• Provider education or profiling initiatives (14 states in FY 2017 and 16 in FY 2018)
• Initiatives to reduce pharmacy-related fraud, waste, and abuse (13 states in FY 2017 and 14 in FY 2018)
• Medication therapy management programs (8 states in FY 2017 and 7 in FY 2018)

Managed Care’s Role in Delivering Pharmacy Benefits

Since the passage of the ACA, states have been able to collect rebates on prescriptions purchased by managed care organizations (MCOs) operating under capitated arrangements. As a result, many states have chosen to “carve in” the pharmacy benefit to their managed care benefits. As more states have enrolled additional Medicaid populations into managed care arrangements over time, and as Medicaid enrollment has increased due to ACA coverage expansions, MCOs have played an increasingly large role in administering the Medicaid pharmacy benefit. In this year’s survey, states with MCO contracts were asked whether pharmacy benefits were covered under those contracts as of July 1, 2017.

Of the 39 states contracting with comprehensive risk-based MCOs, 35 states reported that the pharmacy benefit was “generally carved-in (with possible exceptions)” including Nebraska that completed a full pharmacy carve-in during FY 2017 and Indiana that completed a pharmacy carve-in for its Hoosier Healthwise program (for low-income pregnant women and children) in FY 2017. Among the states that carved drugs into MCOs, several reported carve-outs for selected drug classes. The most common drugs carved out were behavioral health drugs and HIV drugs (California, Maryland, and Michigan), hemophilia clotting factor (California, Florida, Michigan, and New Hampshire), and hepatitis C antivirals (Colorado, Massachusetts, Michigan, New Hampshire, South Carolina, and Texas). New York reported, however, that it reversed its carve-out of hemophilia clotting factor in July 2017.

Four states (Missouri, Tennessee, West Virginia, and Wisconsin) reported that the pharmacy benefit was “generally carved-out,” including West Virginia that completed a full carve-out as of July 2017. While Wisconsin noted that pharmacy was carved into its Family Care Partnership program (an integrated health and long-term care program for frail elderly and people with disabilities), the state noted that this program had a very small enrollment (approximately 3,000 as of July 2017¹⁴) and that all other Wisconsin Medicaid enrollees received their pharmacy benefit through the FFS delivery system.

Prior reports show that nearly all states use prior authorization and PDLs in FFS programs. This year’s survey asked whether MCOs were required (in FY 2017) or would be required (in FY 2018) to adhere to uniform clinical protocols (state prescribed medical necessity criteria) for one or more drugs or a uniform PDL (state prescribed requirements for designating a specified drug product as either preferred, meaning covered without the need to obtain prior authorization, or non-preferred). This means that to the extent states impose these policies in FFS, the same policies would apply in managed care. Compared to last year’s survey, there was a notable increase in the number of states with uniform clinical protocols in place and a modest increase in the number of states that reported having a uniform PDL requirement in place. States were also asked whether MCO contracts included risk-sharing provisions for one or more drugs (e.g., risk corridors, risk pools, reinsurance, etc.), a new question not included in last year’s survey (Exhibit 13).

Uniform clinical protocols and PDL requirements reported by states were often limited to one or a few specific drug classes. Hepatitis C antivirals were the most commonly mentioned drug class targeted by uniform clinical protocols (reported by DC, Georgia, Hawaii, Illinois, Maryland, New Jersey, New Mexico, Oregon, Rhode Island, Pennsylvania, and Virginia) and were also reported as a specific focus of uniform PDL requirements in Minnesota and Oregon. Strategies reported by states to mitigate or share financial risk with MCOs for certain high cost drugs included selected drug carve-outs, risk corridors, kick payments,¹⁵ and risk pools, and were most commonly applied to hepatitis C antivirals, but in some cases were applied to drugs above a certain dollar threshold (Hawaii), cystic fibrosis drugs (Pennsylvania), and hemophilia clotting factor (Delaware). Two states also commented that new risk-sharing arrangements were currently under consideration for a new spinal muscular atrophy drug and one state was considering a risk sharing arrangement for a Duchenne muscular dystrophy drug.

Opioid Harm Reduction Strategies

According to the Centers for Disease Control and Prevention (CDC), drug overdose deaths continue to increase in the United States and the majority of these deaths (six out of ten) involve an opioid (including prescription opioids and heroin).¹⁶ The CDC cites the amount of prescription opioids sold in the United States – which have nearly quadrupled since 1999 – as a driving factor in opioid overdose deaths, which have more than quadrupled since 1999.¹⁷ Medicaid plays an important role in addressing the epidemic, covering 3 in 10 people with opioid addiction in 2015 and facilitating access to a number of addiction treatment services.¹⁸ In a January 2016 Informational Bulletin,¹⁹ CMS highlighted the important role state Medicaid programs can play to help address the opioid epidemic in their states by encouraging safer opioid alternatives for pain relief, working with other state agencies to educate Medicaid providers on best practices for opioid prescribing, employing pharmacy management practices (PDL placement, clinical criteria, prior authorization, quantity limits, etc.) and working to increase access to naloxone, an overdose antidote. In this year’s survey, we asked states about their pharmacy benefit strategies for preventing opioid harm in place in FY 2017 and planned for FY 2018 and their coverage of certain medication-assisted treatment (MAT) medications.

CDC Opioid Prescribing Guidelines

This year’s survey shows a growing number of states choosing to adopt the CDC guidelines for the prescribing of opioid pain medications for adults in primary care settings.²⁰ Both last year and this year, the survey asked states if their Medicaid program has adopted or is planning to adopt these guidelines in their FFS programs or as a requirement for MCOs to adopt. As shown in Exhibit 14 below, 34 states reported adoption or plans for adoption in FY 2018 for their FFS programs (compared to 21 states in last year’s survey). Of the 39 states with MCO contracts, 18 states reported requiring MCOs to adopt the CDC guidelines or plans to do so in FY 2018 (compared to 11 states in last year’s survey). Many other states indicated that these policies were under review for FFS and MCOs.

States were also asked to describe any implementation challenges related to the CDC guidelines. The most commonly reported challenge was the inability of a state’s claims processing system to apply the Morphine Equivalent Dose (MED) limit across multiple products and multiple prescription claims. Other reported challenges included obtaining stakeholder consensus and support (including providers); titrating dosages downward for patients who have been stabilized on higher dosages; and the inability to control or enforce appropriate prescribing behavior. One state also expressed concern that the CDC’s MED limit is too low and could have the unintended consequence of driving up heroin use and overdoses. A few states reported having state guidelines already in place that were aligned with the CDC guidelines.

Medicaid Pharmacy Benefit Management Strategies

The January 2016 CMS Informational Bulletin highlighted Medicaid pharmacy benefit management strategies for preventing opioid-related harms.²¹ The survey asked states to report strategies that were in place in FY 2017 for FFS and changes to these strategies planned for FY 2018. Specifically, the survey asked about the following strategies: opioid quantity limits,²² clinical criteria claim system edits²³ (subject to prior authorization (PA) override), step therapy PA criteria,²⁴ other PA requirements for opioids, and requirements that prescribers check the state’s Prescription Drug Monitoring Program (PDMP) before prescribing opioids.²⁵ All but one state reported having at least one of these opioid-focused pharmacy management policies in FFS in place in FY 2017, and nearly three-quarters of states (37) plan to take at least one action in FY 2018 to newly implement or increase opioid controls through one of these strategies. See Exhibit 15 and Table 18 for details on states implementing or expanding these controls.

For states that use MCOs to deliver pharmacy benefits, the survey asked whether, as of July 1, 2017, the MCOs were required to follow the state’s FFS pharmacy benefit management policies for opioids. Of the 35 states with MCOs that deliver pharmacy benefits, 12 states responded “yes” and 12 states responded “yes, in part.” Of the 12 states answering “yes in part,” a few indicated that their MCOs were in the process of coming into alignment with the state’s FFS policies. One state indicated that MCOs may conduct additional maximum dose and quantity reviews; one state reported that MCOs must adopt the FFS management strategies but have some latitude in preferred drug selection and specific clinical criteria, and one state reported that MCOs may provide additional naloxone coverage without prior authorization and/or naloxone atomizers.

Other Pharmacy Management Strategies

A few states mentioned other pharmacy management strategies in use or planned including the following:

• Day limits were applied by Arizona and Utah (no more than seven days for the initial fill of any prescription opioid), Colorado (seven-day supply limit for opioid naïve patients), and Vermont (seven-day limit applied for adults and a three-day limit applied for children).
• MED limits were applied or lowered in Colorado, Maryland, and Vermont, and Connecticut implemented an “MME calculator” to provide prescribers with a MME (morphine milligram equivalent) calculation at the point of service.
• Maryland reported a new requirement for prescriber attestations (checked PDMP, drug urine test, offered naloxone, pain management contract).
• Nevada and DC reported pharmacy lock-in programs.²⁶
• Oregon reported expanding access to medication-assisted treatment drug by ending its lock-in program for Suboxone.

Access to Naloxone

Naloxone is a prescription opioid overdose antidote that prevents or reverses the life-threatening effects of opioids including respiratory depression, sedation, and hypotension. There are three FDA-approved formulations of naloxone: an injectable formulation offered as a generic; a brand, prefilled auto-injection formulation (approved in 2014) designed for use by persons without medical training (Evzio); and a brand prepackaged nasal spray (approved in 2015) (Narcan).²⁷ All formulations have experienced significant price increases in recent years; most notably, the list price for the auto-injection formulation increased from $690 in 2014 to $4,500 in 2016.²⁸ In this year’s survey, states were asked whether the various naloxone formulations were available without a prior authorization (PA) in their Medicaid programs in FY 2017 and whether any changes were planned for FY 2018. States were also asked if naloxone coverage was provided for family members and friends obtaining prescriptions on an enrollee’s behalf. See Exhibit 16 and Table 19 for details on state naloxone pharmacy benefit management strategies.

A number of states commented that the auto-injector manufacturer (Evzio) had ended its participation in the federal drug rebate program for this product which allows states to eliminate all Medicaid coverage of this product (with or without PA). Of the 10 states reporting coverage of Evzio without PA in FY 2017, one state reported plans to move the Evzio to non-preferred status in FY 2018 (subject to PA) and three states indicated all coverage would be eliminated.

Medication-Assisted Treatment

The ACA requires state Medicaid programs to provide coverage for treating substance use disorders (SUDs) for their ACA expansion populations, but does not specify which SUD services must be included. This requirement has bolstered states’ work to respond to the opioid epidemic. The standard of care for opioid use disorder is medication-assisted treatment (MAT), which combines psychosocial treatment with medication.²⁹ Compared to psychosocial treatment alone, MAT is associated with greater adherence to treatment, decreased opioid use, and reduced likelihood of overdose fatalities.³⁰ The FDA has approved the following medications that can be used as part of MAT for opioid use disorder: methadone, buprenorphine, and both oral and extended-release injectable naltrexone.³¹ In this year’s survey, states were asked whether they covered each of these drugs (when used to treat opioid use disorders) or planned to add coverage in FY 2018. All 49 states that responded reported coverage of buprenorphine and both oral and injectable naltrexone, but a somewhat smaller number (36 states) reported coverage of methadone in FY 2017.³² However, one state reported plans to add coverage for methadone in FY 2018 (Indiana) and five states reported that methadone coverage was under consideration (Kentucky, Louisiana, North Dakota, South Carolina, and West Virginia). Seven states (Alabama, Idaho, Iowa, Nebraska, Tennessee, Texas, and Wyoming) reported no coverage or plans to add coverage for Methadone.

TABLE 19: MEDICAID FFS PHARMACY BENEFIT MANAGEMENT STRATEGIES FOR NALOXONE IN ALL 50 STATES AND DC, IN PLACE IN FY 2017 AND ACTIONS TAKEN IN FY 2018