Medicaid prescription drug spending in the 1990s: a decade of change

Abstract

Medicaid spending increased dramatically during the 1990s, driven in part by spending for prescription drugs. From 1990 to 2000, Medicaid drug spending increased from $4.4 billion to over $20 billion, an average annual increase of 16.3 percent. Disabled persons experienced an even greater 20 percent average annual increase. By drug category in 1997 (for 29 States), the highest spending amount was for central nervous system (CNS) drugs, accounting for 17 percent of total Medicaid drug spending. These findings provide information on drug spending for dually eligible beneficiaries to policymakers as they seek to target cost-effective coverage and drug therapies.

Figure 1. Medicaid Prescription Drug Payments¹, by Eligibility Group² and Year: Federal FYs 1990-2000

¹ Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States by prescription drug manufacturers. Medicaid prescription drug payments include all payments for prescription drugs provided under an FFS setting (i.e., prescription drugs for which Medicaid paid a pharmacy claim). Since Medicaid pays a single premium to a prepaid plan for all covered services, it is not possible to identify prescription drug payment when they are covered by a prepaid plan. To this extent, Medicaid prescription drug payments, presented here, may understate total Medicaid payments for prescription drugs. Data are reported for the 50 States and the District of Columbia and exclude other Medicaid jurisdictions. Although Hawaii did not report for 2000, their 1999 data were used as an estimate for 2000. ² The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless of cash assistance status. The blind/disabled group includes individuals of any age who were determined to be eligible because of disability. The children's group includes foster care children. The all group includes a small number of individuals that are not reported in the other four groups. SOURCE: Centers for Medicare & Medicaid Services: Data from CMS Form-2082 and the Medicaid Statistical Information System, 1990-2000.

Figure 2. Medicaid Prescription Drug Payments¹, Annual Increase, by Federal FYs: 1991-2000

¹ Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States by prescription drug manufacturers. Medicaid prescription drug payments include all payments for prescription drugs provided under an FFS setting (i.e., prescription drugs for which Medicaid paid a pharmacy claim). Since Medicaid pays a single premium to a prepaid plan for all covered services, it is not possible to identify prescription drug payment when they are covered by a prepaid plan. To this extent, Medicaid prescription drug payments, presented here, may understate total Medicaid payments for prescription drugs. Data are reported for the 50 States and the District of Columbia and exclude other Medicaid jurisdictions. Although Hawaii did not report for 2000, their 1999 data were used as an estimate for 2000. SOURCE: Centers for Medicare & Medicaid Services: Data from CMS Form-2082 and the Medicaid Statistical Information System, 1990-2000.

Figure 3. Medicaid Prescription Drug Payments¹ as a Percent of Total Medicaid Payments, by Eligibility Group²: Federal FYs 1990-2000

¹ Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States by prescription drug manufacturers. Medicaid prescription drug payments include all payments for prescription drugs provided under an FFS setting (i.e., prescription drugs for which Medicaid paid a pharmacy claim). Since Medicaid pays a single premium to a prepaid plan for all covered services, it is not possible to identify prescription drug payments when they are covered by a prepaid plan. To this extent, Medicaid prescription drug payments, presented here, may understate total Medicaid payments for prescription drugs. Data are reported for the 50 States and the District of Columbia and exclude other Medicaid jurisdictions. Although Hawaii did not report for 2000, their 1999 data were used as an estimate for 2000. ² The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless of cash assistance status. The blind/disabled group includes individuals of any age who were determined to be eligible because of disability. The children's group includes foster care children. The all group includes a small number of individuals that are not reported in the other four groups. SOURCE: Centers for Medicare & Medicaid Services: Data from CMS Form-2082 and the Medicaid Statistical Information System, 1990-2000.

Figure 4. Medicaid Prescription Drug Recipients¹, by Eligibility Group² Federal FYs: 1990-2000

¹ A Medicaid prescription drug recipient is a Medicaid enrollee who received at least one covered prescription drug during the FY. If an enrollee was covered under a prepaid plan, providing either partial or comprehensive coverage during the year, and had at least one FFS claim for a prescription drug during the FY, that enrollee is counted both as a recipient and a prescription drug recipient. Otherwise, enrollees covered under prepaid plans are excluded from recipient counts because it is not possible to identify the plan enrollees who received Medicaid covered services. Therefore, these data may understate the number of recipients and prescription drug recipients. Data are reported for the 50 States and the District of Columbia and exclude other Medicaid jurisdictions. Although Hawaii did not report for 2000, their 1999 data were used as an estimate for 2000. ² The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless of cash assistance status. The blind/disabled group includes individuals of any age who were determined to be eligible because of disability. The children's group includes foster care children. The all group includes a small number of individuals that are not reported in the other four groups. SOURCE: Centers for Medicare & Medicaid Services: Data from CMS Form-2082 and the Medicaid Statistical Information System, 1990-2000.

Figure 5. Percent of Total Medicaid Prescription Drug Recipients¹ and Payments² by Eligibility Group³: Federal FY 2000

¹ A Medicaid prescription drug recipient is a Medicaid enrollee who received at least one covered prescription drug during the FY. If an enrollee was covered under a prepaid plan, providing either partial or comprehensive coverage during the year, and had at least one FFS claim for a prescription drug during the FY, that enrollee is counted both as a recipient and a prescription drug recipient. Otherwise, enrollees covered under prepaid plans are excluded from recipient counts because it is not possible to identify the plan enrollees who received Medicaid-covered services. Therefore, these data may understate the number of recipients and prescription drug recipients. Data are reported for the 50 States and the District of Columbia and exclude other Medicaid jurisdictions. Although Hawaii did not report for 2000, their 1999 data were used as an estimate for 2000. ² Medicaid prescription drug payments are gross amounts prior to the receipt of rebates to the States by prescription drug manufacturers. Medicaid prescription drug payments include all payments for prescription drugs provided under an FFS setting (i.e., prescription drugs for which Medicaid paid a pharmacy claim). Since Medicaid pays a single premium to a prepaid plan for all covered services, it is not possible to identify prescription drug payment when they are covered by a prepaid plan. To this extent, Medicaid prescription drug payments presented here may understate total Medicaid payments for prescription drugs. ³ The Medicaid eligibility group identifies the basis on which Medicaid eligibility was determined, regardless of cash assistance status. The blind/disabled group includes individuals of any age who were determined to be eligible because of disability. The children's group includes foster care children. A small number of individuals that are not reported in these four groups have been excluded. SOURCE: Centers for Medicare & Medicaid Services: Data from CMS Form-2082 and the Medicaid Statistical Information System, 2000.

Figure 6. Medicaid Prescription Drug Payment per Dual Recipient¹, by Selected Beneficiary Characteristics²: Federal FY 1998

¹ Medicaid prescription drug payment per recipient is defined to be Medicaid payments for prescription drugs divided by the number of Medicaid enrollees who received at least one covered prescription drug during the FY. A consistent approach has been taken to define the numerator and denominator of this statistic. A Medicaid enrollee is represented in the payment amount (in the numerator) and as a prescription drug recipient (in the denominator) if and only if there was a FFS claim for a prescription drug for that person. Dual recipients are those Medicaid eligibles who were also eligible to receive Medicare benefits. ² These data are reported for Medicaid beneficiaries who were also enrolled in Medicare (otherwise known as dually eligible enrollees). Beneficiaries were identified as residing in a metropolitan or non-metropolitan area based on their county of residence. NOTE: For FY 1998, participation in MSIS was voluntary. Of the 38 States that participated, there were consistent data for 35 States to produce these statistics. SOURCE: Centers for Medicare & Medicaid Services: Data from the Medicaid Statistical Information System, 2003.

Figure 7. Medicaid Prescription Drug Payments, All Beneficiaries, by Drug Category: CY1997