This edition looks at state-level and national Medicaid spending trends, first overall and then by the share of Medicaid spending that is paid via capitation.
This edition looks at the progression of capitation contracting in the Medicaid program at the national and state levels. As s a percentage of total Medicaid spending, capitation contracting has grown 31.1% in FFY2013 to 55.9% in FFY2021. National Medicaid spending via capitation was 47% larger than fee-for-service payments during FFY2021. In two states, Iowa and Hawaii, capitation payments represented more than 90% of overall Medicaid expenditures during FFY2021.
This edition presents our tabulations of Medicaid pharmacy cost and price trends. Some of our key findings:
Nationwide Medicaid pre-rebate costs per prescription increased at an annual average rate of 5.6% from 2012-2021, led by an 11.9% annual rate of increase for brand drugs. Average costs per brand drugs rose particularly sharply during recent years, rising 56 % (16% per year) from 2018-2021.
Keeping the mix of drugs constant so that price changes could be assessed, we found that drug prices rose 64% across all drugs that were on the market throughout the 2012-2021 timeframe.
During 2021, 52.1% of Medicaid’s pre-rebate prescription drug spending were attributable to medications with an average cost above $1,000 per prescription. This proportion was “only” 21.5% during 2012.
We were enlisted by the Anthem Public Policy Institute to assess the cost-effectiveness of different states’ approaches to managing Medicaid prescription drug benefit. States were grouped into five cohorts depending on the degree to which their Medicaid prescriptions are paid for by MCOs or via the fee-for-service (FFS) setting – and by the degree of latitude MCOs have to manage the mix of drugs. We assessed 100% of Medicaid prescriptions across federal fiscal years 2018, 2019, and 2020.
States that employ Medicaid managed care organizations (MCOs) to pay for prescription drugs outperform states that rely on the fee-for-service (FFS) setting to control drug costs. Despite larger rebates in FFS, MCOs’ effective strategies to encourage…
This edition of our 5 Slide Series examines state Medicaid spending during Federal Fiscal Year 2020. Using expenditure reports from CMS, we calculated the share of each state’s Medicaid spending that occurred via capitation. Capitation represented the majority (52.6%) of nationwide Medicaid expenditures during 2020, followed by fee-for-service claims payments (40.1%) and special financing programs (7.3%). Use of a comprehensive care coordination model centered around capitation contracting has grown sharply throughout the past decade, increasing from 27% of national Medicaid spending during 2010 to 53% in 2020. In 22 states capitation represented a majority of Medicaid spending during 2020.
Virginia began implementing a Common Core Formulary within its Medicaid managed care program in 2017 for CCC Plus members and in 2018 for Medallion 4.0 members. The Virginia Association of Health Plans (VAHP) engaged The Menges Group to analyze the fiscal and programmatic impacts of this policy change. Our tabulations indicate that the change to the Common Core Formulary led to increased net (post-rebate) Medicaid costs of $13.2 million during calendar year 2019, including $5.5 million in additional state funds.
The June 2019 Edition was produced by Manisha Gupta and Mohammed Hamdan. It focuses on the level of marketing spending in the MCO industry, comparing the Medicaid, Medicare, and commercial sectors. On average, we found that Medicaid MCOs used 0.19% of their revenues on marketing, advertising, and commissions. These percentages were much higher among Medicare-dominant MCOs (2.26%) and commercial MCOs (3.43%).
This month’s edition analyzes and compares prescription volume and drug costs in the Medicaid and Medicare Part D programs. We tabulated pre-rebate cost per prescription for each program from 2013-2017. We also analyzed trends in specialty drug volume and expenditures during the same time period for each program.
This edition presents our tabulations on an “average family’s” federal, state and local taxes for CY2018 and how their tax contributions are spent.