Health Plan Spending Research Articles

Commercial health plan spending on oncology drugs approved via the accelerated approval pathway and later withdrawn from the market.

11134 Background: The U.S. Food and Drug Administration (FDA) introduced the Accelerated Approval Program in 1992 to expedite the approval of drugs that can be used to treat certain conditions and fill an unmet medical need. Clinical trials conducted to achieve accelerated approval status often use surrogate outcomes as primary endpoints to reduce the time it takes to get FDA approval. Drug manufacturers must conduct further research to verify and report the projected clinical benefit and safety. The FDA may issue traditional approval to previously accelerated approved drug or may request the manufacturer to withdraw a drug from the market based on the clinical benefit and/or safety demonstrated in the confirmatory trial(s). We report members impacted, total drug claims, and total drug cost incurred by a commercial health plan associated with the coverage of oncology drugs approved by the FDA and later withdrawn from the market between 2020 to 2023. Methods: Fifteen unique indications associated with oncology drugs that received accelerated approval and later withdrawn by the FDA were identified between 2020 to 2023. A cohort of patients enrolled in commercial health plan was further identified using the ICD-10 code related to the drug indication being withdrawn. To calculate total paid amount for drugs, de-identified administrative claims data submitted on behalf of this cohort were sorted and summed in this time period using either J-code for drugs covered under medical benefits or national drug code (NDC) for drugs covered under pharmacy benefits. Results: Between 2020 to 2023, 8 oncology drugs were withdrawn because of later failing to demonstrate clinical benefit in the confirmatory trials, 2 drugs were withdrawn due to safety concerns, and 5 drugs were withdrawn due to drug manufacturer unable to complete a confirmatory trial. In this population, we identified 18,430 unique members with 103,743 administrative claims. The total paid amount was $1,392,553,995 in this time period. The average drug cost per administrative claim was $13,423 and the average drug cost per member was $75,559. Conclusions: Drug costs established by manufacturers are not differentiated based on the approval status - accelerated or regular. While drugs approved via accelerated approval pathway may provide benefit to certain patient population, the cost associated with accelerated approved drugs needs more attention. Indication-specific pricing model may help alleviate the cost burden associated with drugs approved via accelerated approval pathway. [Table: see text]

Drug use and spending under a formulary informed by cost-effectiveness.

BACKGROUND: The National Academy of Medicine has called for value-based drug formularies to address health plan prescription drug spending while maintaining access to high-value medicines. Thirty employer-sponsored plans implemented a "Value-Based Formulary-essentials" (VBF-e) program that uses cost-effectiveness evidence to inform cost-sharing and coverage exclusion. OBJECTIVE: To evaluate if the VBF-e was associated with changes in medication use and patient out-of-pocket spending and health plan spending on prescription drugs and other health care. METHODS: This was a cohort study using a difference-in-differences design from 2015 through 2019 with 1 year of follow-up after VBF-e implementation at Premera Blue Cross, the largest nonprofit health plan in the Pacific Northwest. The VBF-e exposure group was composed of all individuals aged younger than 65 years and enrolled at least 12 months prior to their employer group's VBF-e implementation date. The contemporaneous control group was composed of propensity score-matched individuals with the same inclusion criteria but their employer group that did not implement VBF-e. We prespecified the following outcomes: days of medication on hand overall and by VBF-e tier (high-value generic, brand, and specialty drugs were in tiers 1 to 3, respectively, and low-value drugs were in tier 4 or excluded from coverage); prescription drug spending; and other health care use (emergency department visits, hospital days, and outpatient visits). RESULTS: Comparing 12,111 exposed (mean age = 36.0; 49.8% female sex) participants with 24,222 control participants (mean age = 34.7; 49.6% female sex), VBF-e reduced use of low-value drugs by 0.3 days per member per month (PMPM) (95% CI = -0.5 to -0.1; 17% decrease) for tier 4 drugs and 0.4 days PMPM (95% CI = -0.5 to -0.4; 83% decrease) for excluded drugs. High-value specialty drug use increased by 0.1 days PMPM (95% CI = 0.0-0.1; 123% increase). Health plan spending decreased by $14 PMPM (95% CI = -26 to -4) and member out-of-pocket spending increased by $1 PMPM (95% CI = 1-2). Other health care use did not change significantly. CONCLUSIONS: An exclusion formulary informed by cost-effectiveness evidence reduced low-value drug use, increased high-value specialty drug use, reduced health plan spending, and increased member out-of-pocket spending without increasing acute care use. DISCLOSURES: This research was supported by a grant from the Patrick and Catherine Weldon Donaghue Medical Research Foundation's Greater Value Portfolio Program. Study Registration Number: NCT04904055.

Designing a Value-Based Formulary for a Commercial Health Plan: A Simulated Case Study of Diabetes Medications

ObjectivesThe healthcare expenditure for managing diabetes with glucose-lowering medications has been substantial in the United States. We simulated a novel, value-based formulary (VBF) design for a commercial health plan and modeled possible changes in spending and utilization of antidiabetic agents. MethodsWe designed a 4-tier VBF with exclusions in consultation with health plan stakeholders. The formulary information included covered drugs, tiers, thresholds, and cost sharing amounts. The value of 22 diabetes mellitus drugs was determined primarily in terms of incremental cost-effectiveness ratios. Using pharmacy claims database (2019-2020), we identified 40 150 beneficiaries who were on the included diabetes mellitus medicines. We simulated future health plan spending and out-of-pocket costs with 3 VBF designs, using published own price elasticity estimates. ResultsThe average age of the cohort is 55 years (51% female). Compared with the current formulary, the proposed VBF design with exclusions is estimated to reduce total annual health plan spending by 33.2% (current: $33 956 211; VBF: $22 682 576), saving $281 in annual spending per member (current: $846; VBF: $565) and $100 in annual out-of-pocket spending per member (current: $119; VBF: $19). Implementing the full VBF with new cost shares, along with exclusions, has the potential to achieve the greatest savings, compared with the 2 intermediate VBF designs (ie, VBF with prior cost sharing and VBF without exclusions). Sensitivity analyses using various price elasticity values showed declines in all spending outcomes. ConclusionDesigning a VBF with exclusions in a US employer–based health plan has the potential to reduce health plan and patient spending.

The impact of HDHPs on service use and spending for substance use disorders.

Although high-deductible health plans (HDHPs) reduce health care spending, higher deductibles may lead to forgone care. Our goal was to determine the effects of HDHPs on the use of and spending on substance use disorder (SUD) services. We used difference-in-differences models to compare service use and spending for treating SUD among enrollees who were newly offered an HDHP relative to enrollees offered only traditional plan options throughout the study period. We used deidentified commercial claims data from OptumLabs (2007-2017) to identify a sample of 28,717,236 person-years (2.2% with a diagnosed SUD). The main independent measure was an indicator for being offered an HDHP. The main dependent measures were the probability of (and spending associated with) using SUD services and specific treatment types. Enrollees were 6.6% (P < .001) less likely to use SUD services after being offered an HDHP relative to the comparison group. Reductions were concentrated in inpatient, intermediate, and ambulatory care, as well as medication use. Being offered an HDHP was associated with a decrease of 21% (P < .001) on health plan spending and an increase of 14% (P < .01) on out-of-pocket spending. Offering an HDHP was associated with a reduction in SUD service use and a shift in spending from the plan to the enrollee. In the context of the US drug epidemic, these study findings highlight a concern that the movement toward HDHPs may be exacerbating undertreatment of SUD.

Clinical and economic impact of long-acting injectable antipsychotics in patients previously treated with short-acting oral antipsychotics.

BACKGROUND: Available literature supports the use of long-acting injectable (LAI) antipsychotics over short-acting oral (SAO) formulations. The majority of evidence is centered on patients with schizophrenia insured under the Medicaid benefit. OBJECTIVE: To assess real-world clinical and economic outcomes of LAI compared with SAO antipsychotics in patients with psychiatric conditions insured under commercial, health care exchange, or Medicare plans. METHODS: In this exploratory treatmenteffectiveness study, a retrospective, before and after study design was used to evaluate differences in clinical and economic outcomes in patients switching from SAO to LAI antipsychotics. Patients who had at least 1 claim for an LAI antipsychotic and a psychiatric diagnosis were considered eligible for the study if they were continuously enrolled in a commercial, health care exchange, or Medicare plan for 12 months before (preperiod) and 12 months after (postperiod) their first LAI antipsychotic claim. During the preperiod, patients were required to have filled at least a 30-day supply of any SAO antipsychotic medication. Clinical outcomes included health care resource utilization (eg, hospitalizations per member per year [PMPY]), adherence measures, and medication switch trends. Economic outcomes included total per member per month (PMPM) spending across the medical benefit alone, the pharmacy benefit alone, and the combined spending across both benefits. Additionally, we examined patient costs and health plan spending within each of these categories. RESULTS: There was a significant decrease in overall hospitalizations PMPY (1.80 vs 0.88; P < 0.001) and psychiatric hospitalizations PMPY (0.65 vs 0.20; P <0.001) when comparing patients treated with SAO antipsychotics in the preperiod to the same patients treated with LAI antipsychotics in the postperiod, respectively. No differences were observed in the percentage of days covered with SAO and LAI agents (87.4% vs 85.8%; P=0.312). More patients switched between SAO antipsychotics during the preperiod, as compared with the number who switched between LAI antipsychotics during the postperiod (57.4% vs 10.3%; P < 0.001). On average, patients switched medications sooner in the preperiod vs the postperiod (114.50 vs 211.26 days; P < 0.001). No difference was observed between the preperiod and postperiod in total spending PMPM ($3,798.76 vs $3,702.63; P = 0.826) CONCLUSIONS: Patients switching from SAO to LAI antipsychotics experienced fewer hospitalizations, with no change in overall spending. Adherence was similar, though fewer medication switches occurred and there was a longer time before switching medications with LAI compared with SAO antipsychotics DISCLOSURES: Funding for this study was provided by Highmark Inc., but the sponsor had no role in the study outside the final review of the submitted manuscript.

Bleeding in patients with hemophilia who have inhibitors: Modeling US medical system utilization and cost avoidance between recombinant factor VIIa products with different clinical dosing requirements.

BACKGROUND: A mainstay of treatment in patients with hemophilia with inhibitors (PWIs) is the use of a recombinant factor VIIa (rFVIIa) bypassing agent. A new rFVIIa product may allow reduced rFVIIa utilization for on-demand treatment of bleeding episodes (BEs). OBJECTIVE: A decision analytic health economic model was developed to compare the utilization and consequent need for bleed-related clinical encounters of 2 rFVIIa products, with the International Nomenclature Name of eptacog alfa (EA) and eptacog beta (EB). METHODS: This study uses recent, peer-reviewed, and published data from clinical trials with similar endpoints for 1 million insured male lives in the United States. rFVIIa product utilization was modeled in hemophilia (A and B) PWI for on-demand treatment of BEs with rFVIIa treatment. Estimated annual BE rates were modeled to include prophylaxis and on-demand management. The clinical encounter avoidance estimates are based on refractory bleeding through 24 hours. RESULTS: In a cohort of 1 million insured, 5-6 patients with hemophilia A or B with inhibitors annually receive on-demand treatment for a total of 59 mild/moderate BEs. The model suggests that EB requires less unit utilization per BE (13,125 μg and 17,850 μg for the 75μg/kg and 225μg/kg dose regimens, respectively) than EA 90 μg/kg dosing (20,178μg), with wholesale acquisition costs expanding the difference. Further, both EB initial dose regimens would permit decreased total nonmedication health plan spending for the acute treatment of BEs by reducing the need for clinical encounters arising from BEs that fail to respond within 24 hours. CONCLUSIONS: With reduced infusion requirements, the model consistently shows that EB could generate lower insured-cohort drug utilization, as well as reduce costly clinical encounters by keeping mild and moderate BEs amenable to home bypassing agent management. DISCLOSURES: The article was funded by HEMA Biologic, LLC. The authors approved all content and results in this article without being subject to sponsor censorship. Mr Jensen, Mr Cyr, and Ms Hathway are employees of PRECISIONheor, which provides consulting services to the pharmaceutical industry, including HEMA Biologics, LLC. Dr Batt is an advisor to PRECISIONheor. Dr Alexander is a former employee of HEMA Biologics, LLC, and provides consulting services to the pharmaceutical industry.

Incentivizing Prescription Drug Switching to Reduce Patient and Health Plan Spending: A Microsimulation Model

ObjectivesMost spending for prescription drugs is on branded drugs that do not have direct generic equivalents but many of these drugs do have therapeutic alternatives within class. We estimate the potential savings from providing patients a financial incentive to switch from a higher cost drug to a lower cost, therapeutic alternative drug. MethodsWe used individual state-transition microsimulations to model medication use and spending with and without financial incentives over a 12-month time horizon with a healthcare sector perspective. Costs and utilization inputs were from individuals on branded insulins or multiple sclerosis drugs enrolled in a regional mixed-model health maintenance organization. Base-case model used a one-time financial incentive of $83 and $250 offered to patients on higher cost insulin and multiple sclerosis treatments, respectively, to switch to lower cost drugs within class. ResultsSavings per individual offered an incentive in the insulin and multiple sclerosis classes were, respectively, $84 (95% CI $46-$122) and $2,127 (95% CI $267-$3,987). Varying the incentive size and switch probability resulted in maximum savings of $712 at elasticity of 0.2 and incentive size $250 for the insulin drug class. For the multiple sclerosis drug class, maximum savings of $5945 was at elasticity of 0.2 and incentive size of $1000. Short time horizon makes our savings estimates conservative. ConclusionsIf programs such as financial incentives could encourage even a small proportion of patients to switch among drugs within therapeutic class, then substantial savings could be generated.

Comparison of Anticancer Medication Use and Spending Under US Oncology Parity Laws With and Without Out-of-Pocket Spending Caps.

By 2020, nearly all states had adopted oncology parity laws in the US, ensuring that patients in fully insured private health plans pay no more for orally administered anticancer medications (OAMs) than infused therapies. Between 2013 and mid-2017, 11 states implemented parity with out-of-pocket spending caps, which may further reduce patient out-of-pocket spending. To compare OAM uptake and out-of-pocket and health plan spending on OAMs in states with parity with and without spending caps, as well as to assess out-of-pocket spending for caps that apply predeductible vs postdeductible. This cohort study analyzed OAM users enrolled in commercial health plans offered by Aetna, Humana, and United Healthcare in the US from 2011 to 2017, aggregated by the Health Care Cost Institute, using difference-in-difference-in-differences (DDD) analysis. Data analysis was conducted between June and August 2020. Time (before vs after parity), whether the state parity law included an out-of-pocket spending cap, and whether the plan was fully insured (subject to parity) or self-funded (not subject to parity). Among states with caps, out-of-pocket spending was also compared by whether the cap was applied predeductible and postdeductible vs only postdeductible. Monthly OAM prescription fills per 100 000 enrollees, per-OAM prescription-fill out-of-pocket spending, and annual per-user health plan spending on OAMs. In this study of 23 states (11 with caps and 12 without) and 207 579 OAM prescription fills, caps were associated with a modest increase in OAM use (DDD, 7.40 [95% CI, 3.41-11.39] per 100 000 enrollees). There was no difference in mean out-of-pocket spending comparing fully insured and self-funded enrollees in states with vs without caps (DDD, -$17 [95% CI, -$57 to $24), but caps were associated with lower spending among OAM users in the 95th percentile of out-of-pocket spending by $831 (95% CI, -$871 to -$791) per OAM prescription fill. Caps applied predeductible were associated with greater out-of-pocket savings relative to caps applied only postdeductible. This included per-OAM prescription-fill savings at the 75th, 90th, and 95th percentiles. Postparity, mean annual spending on OAMs among users was $113 589 in states without caps and $102 252 in states with caps, with no differences between groups (DDD, $9799 [95% CI, -$4230 to $23 829). In this cohort study, among states adopting oncology parity laws between 2013 and 2017, mean out-of-pocket spending per OAM prescription fill and mean health plan spending among OAM users was similar in states with and without caps. However, enrollees in states with parity plus out-of-pocket caps had greater reductions in out-of-pocket spending among the highest spenders. Caps may offer improved financial protection for the highest spenders without increasing mean health plan spending on OAMs.

Effect of new Medicare enrollment on health, healthcare utilization, and cost: A scoping review

More than three million Americans turn 65 each year and newly enroll in Medicare, making this one of the most common insurance transitions. Non-Medicare insurance transitions are associated with changes in health, healthcare utilization and costs. In addition, older Americans have higher morbidity, mortality, healthcare utilization, and healthcare costs than the general population. However, the effect of new Medicare enrollment on these outcomes is unclear. We conducted a scoping review to rigorously identify the scope of evidence on the association between new Medicare enrollment and health, healthcare utilization and costs. We included English-language, peer-reviewed, studies cataloged in Medline (PubMed) and EconLit from 1998 to 2018. Individuals newly enrolling in Medicare. We measured health (e.g., self-reported health), healthcare utilization (e.g., provider visits, preventive care, and hospitalizations) and costs (e.g., patient out-of-pocket and health plan spending). We screened 5265 articles and included 20 articles. New Medicare enrollment was found to increase self-reported health and healthcare utilization overall, as well as reduce disparities across racial and socioeconomic strata. Provider visits, preventive care and hospitalizations all increased. However, patient out-of-pocket spending decreased, and health plan spending also decreased, when Medicare's lower prices were accounted for. Few studies compared outcomes among new Medicare Advantage enrollees with new Medicare fee-for-service enrollees. None of the studies specifically evaluated the effect of new Medicare enrollment on adults with multiple chronic conditions. New Medicare enrollment improves access overall and reduces access disparities. However, the impact of new Medicare enrollment among subgroups defined by insurance coverage type and number of chronic conditions is less clear. Future work should also evaluate the mechanism for increases in hospitalizations.

Patient cost sharing during poly(adenosine diphosphate-ribose) polymerase inhibitor treatment in ovarian cancer

More patients with ovarian cancer are being treated with poly(adenosine diphosphate-ribose) polymerase inhibitors because regulatory agencies have granted these drugs new approvals for a variety of treatment indications. However, poly(adenosine diphosphate-ribose) polymerase inhibitors are expensive. When administered as a maintenance therapy, these drugs may be administered for months or years. How much of this cost patients experience as out-of-pocket spending is unknown. This study aimed to estimate the out-of-pocket spending that patients experience during poly(adenosine diphosphate-ribose) polymerase inhibitor treatment and to characterize which healthcare services account for that spending. A retrospective cohort study was performed with a sample of patients with ovarian cancer treated between 2014 and 2017 with olaparib, niraparib, or rucaparib. Patients were identified using MarketScan, a health insurance claims database. All insurance claims during poly(adenosine diphosphate-ribose) polymerase inhibitor treatment were collected. The primary outcome variable was the patients' out-of-pocket spending (copayment, coinsurance, and deductibles) during poly(adenosine diphosphate-ribose) polymerase inhibitor treatment for the medication itself. Other outcomes of interest included out-of-pocket spending for other healthcare services, the types and frequency of other healthcare services used, health plan spending, the estimated proportion of patients' household income used each month for healthcare, and patients' out-of-pocket spending immediately before poly(adenosine diphosphate-ribose) polymerase inhibitor treatment. We identified 503 patients with ovarian cancer with a median age of 55 years (interquartile range, 50-62 years); 83% of those had out-of-pocket spendings during poly(adenosine diphosphate-ribose) polymerase inhibitor treatment. The median treatment duration was 124 days (interquartile range, 66-240 days). The mean out-of-pocket spending for poly(adenosine diphosphate-ribose) polymerase inhibitors was $305 (standard deviation, $2275) per month. On average, this accounted for 44.8% (standard deviation, 34.8%) of the patients' overall monthly out-of-pocket spending. The mean out-of-pocket spending for other healthcare services was $165 (standard deviation, $769) per month. Health plans spent, on average, $12,661 (standard deviation, $15,668) per month for poly(adenosine diphosphate-ribose) polymerase inhibitors and $7108 (standard deviation, $15,254) per month for all other healthcare services. The cost sharing for office visits, laboratory tests, and imaging studies represented the majority of non-poly(adenosine diphosphate-ribose) polymerase inhibitor treatment out-of-pocket spending. The average amount patients paid for all healthcare services per month during poly(adenosine diphosphate-ribose) polymerase inhibitor treatment was $470 (standard deviation, $2407), which was estimated to be 8.7% of the patients' monthly household income. The mean out-of-pocket spending in the 12 months before poly(adenosine diphosphate-ribose) polymerase inhibitor treatment was $3110 (standard deviation, $6987). Patients can face high out-of-pocket costs for poly(adenosine diphosphate-ribose) polymerase inhibitors, although the sum of cost sharing for other healthcare services used during poly(adenosine diphosphate-ribose) polymerase inhibitor treatment is often higher. The spending on healthcare costs consumes a large proportion of these patients' household income. Patients with ovarian cancer experience high out-of-pocket costs for healthcare, both before and during poly(adenosine diphosphate-ribose) polymerase inhibitor treatment.

Policies to address surprise billing can affect health insurance premiums.

To quantify the proportion of health plan spending on services for which surprise billing is common-provided by radiologists, anesthesiologists, pathologists, emergency physicians, emergency ground ambulances, and emergency outpatient facilities-and estimate the potential impact of proposed policies to address surprise billing on health insurance premiums. Analysis of 2017 commercial claims data from the Health Care Cost Institute, comprising 568.5 million claims from 44.8 million covered lives in 3 large US insurers: UnitedHealthcare, Aetna, and Humana. We calculate the share of total health plan claims spending attributable to ancillary and emergency services. Next, we estimate the premium impact of proposed federal policies to address surprise billing, which, by removing provider leverage stemming from the ability to surprise-bill, could reduce in- and out-of-network payments for these services, in turn affecting premiums. Specifically, we model the premium impact of reducing payment for these services (1) by 15% and (2) to 150% of traditional Medicare payment rates. More than 10% of health plan spending is attributable to ancillary and emergency services that commonly surprise-bill. Reducing payment for these services by 15% would reduce premiums by 1.6% ($67 per member per year), and reducing average payment to 150% of traditional Medicare rates-the high end of payments to other specialists-would reduce premiums by 5.1% ($212 per member per year). These savings would reduce aggregate premiums for the nation's commercially insured population by approximately $12 billion and $38 billion, respectively. Addressing surprise billing could substantially affect commercial insurance premiums.

Patient and Plan Spending after State Specialty-Drug Out-of-Pocket Spending Caps

BackgroundSpecialty drugs are used to treat complex or life-threatening conditions, often at high financial costs to both patients and health plans. Three states — Delaware, Louisiana, and Maryland — passed legislation to cap out-of-pocket payments for specialty drugs at $150 per prescription. A concern is that these caps could shift costs to health plans, increasing insurance premiums. Estimates of the effect of the caps on patient and health-plan spending could inform future policies.MethodsWe analyzed a sample that included 27,161 persons under 65 years of age who had rheumatoid arthritis, multiple sclerosis, hepatitis C, psoriasis, psoriatic arthritis, Crohn’s disease, or ulcerative colitis and who were in commercial health plans from 2011 through 2016 that were administered by three large nationwide insurers. The primary outcome was the change in out-of-pocket spending among specialty-drug users who were in the 95th percentile for spending on specialty drugs. Other outcomes were changes in mean out-of-pocket and health-plan spending for specialty drugs, nonspecialty drugs, and nondrug health care and utilization of specialty drugs. We compared outcomes in the three states that enacted caps with neighboring control states that did not, 3 years before and up to 3 years after enactment of the spending cap.ResultsCaps were associated with an adjusted change in out-of-pocket costs of −$351 (95% confidence interval, −554 to −148) per specialty-drug user per month, representing a 32% reduction in spending, among users in the 95th percentile of spending on specialty drugs. This finding was supported by multiple sensitivity analyses. Caps were not associated with changes in other outcomes.ConclusionsCaps for spending on specialty drugs were associated with substantial reductions in spending on specialty drugs among patients with the highest out-of-pocket costs, without detectable increases in health-plan spending, a proxy for future insurance premiums. (Funded by the Robert Wood Johnson Foundation Health Data for Action Program.)

1157-P: Out-of-Pocket and Health Plan Spending on Diabetes Drugs, 2006-2018

The rising cost of managing diabetes is of major concern. To examine trends in expenditures on diabetes drugs, we used OptumLabs Data Warehouse to identify commercially insured and Medicare Advantage enrollees with type 2 diabetes who filled ≥1 diabetes drug between 2006 and 2018. In each year, we examined mean health plan and patient out of pocket (OOP) spending, stratified by health plan (commercial vs. Medicare Advantage), for generic vs. brand, and for insulin vs. non-insulin drugs. We assessed trends using logistic regression. All costs were adjusted to 2018 U.S. dollars. 1,592,663 unique type 2 diabetes patients were included (commercially-insured: 698,725, Medicare Advantage: 893,938). Total mean diabetes drug expenditures increased among all patients (Figure). Among commercially insured patients, OOP spending increased for brand drugs and insulin but decreased for generics (p for trends &amp;lt;0.001). Health plan spending also increased for brand drugs and insulin (p&amp;lt;0.001) but did not change for generics (p=0.32). Among Medicare Advantage enrollees, OOP spending for brand drugs and insulin did not change (p=0.69 and 0.41, respectively), but decreased for generics (p&amp;lt;0.001). Health plan spending increased for brand drugs and insulin (p&amp;lt;0.001) but decreased for generics (p=0.02). Health plan and OOP spending on diabetes drugs increased 2006-2018, particularly among commercially insured patients, those using brand drugs and insulin. Disclosure K.J. Lipska: None. R.G. McCoy: None. H. Van Houten: None. X. Yao: None. J. Ross: Research Support; Self; Centers for Medicare and Medicaid Services, Janssen Pharmaceuticals, Inc., U.S. Food and Drug Administration. A.E. Altan: None. N. Shah: None.

Peering Behind the Veil: Trends in Types of Contracts Between Private Health Plans and Hospitals

Contracting between private health plans and hospitals has been described as “chaos behind a veil of secrecy.” Contract types — e.g. discounted charges versus per diems — profoundly influence providers’ incentives and health plan spending, but remain largely hidden. We develop a novel algorithm that classifies inpatient claims as one of three contract types — discounted charges, fixed rates, or per diems — and apply it to the 2009-2014 Colorado All Payer Claims Database. Of $1.9 billion in payments by private health plans for inpatient care in Colorado, $1.1 billion could be classified, and, of classifiable payments, 42% were fixed rates, 41% were discounted charges, and 16% were per diems. From 2009 to 2014, the share of private payments classified as fixed rates increased sharply in Colorado, from 11% to 43%, while discounted charges declined from 69% to 29%. We also describe the distribution of contract types across types of hospitals and clinical conditions, and payers. To test the validity of our algorithm, we apply it to Colorado Medicare fee-for-service (FFS) claims (2014 only), and Colorado Medicaid FFS claims (2009-2014)–both — both of those programs are known primarily to pay for hospital inpatient care using fixed rates. Reassuringly, our algorithm classifies more than three quarters of both Medicare and Medicaid FFS payments as fixed rates, and exceptions to the fixed-rate classification align with known special payment provisions.

Care Quality and Spending Among Commercially Insured Children With Disabilities

ObjectiveTo identify opportunities to improve care value for children with disabilities (CWD), we examined CWD prevalence within a commercially insured population and compared outpatient care quality and annual health plan spending levels for CWD relative to children with complex medical conditions without disabilities; children with chronic conditions that are not complex; and children without disabling, complex, or chronic conditions. MethodsThis cross-sectional study comprised 1,118,081 person-years of Blue Cross Blue Shield Massachusetts data for beneficiaries aged 1 to 19years old during 2008 to 2012. We combined the newly developed and validated Children with Disabilities Algorithm with the Pediatric Medical Complexity Algorithm to identify CWD and non-CWD subgroups. We used 14 validated or National Quality Forum–endorsed measures to assess outpatient care quality and paid claims to examine annual plan spending levels and components. ResultsCWD constituted 4.5% of all enrollees. Care quality for CWD was between 11% and 59% for 8 of 14 quality measures and >80% for the 6 remaining measures and was generally comparable to that for non-CWD subgroups. Annual plan spending among CWD was a median and mean 23% and 53% higher than that for children with complex medical conditions without disabilities, respectively; CWD mean and median values were higher than for all other groups as well. ConclusionsCWD were prevalent in our commercially insured population. CWD experienced suboptimal levels of care, but those levels were comparable to non-CWD groups. Improving the care value for CWD involves a deeper understanding of what higher spending delivers and additional aspects of care quality.

Socioeconomic Background and Commercial Health Plan Spending.

Risk-adjustment algorithms typically incorporate demographic and clinical variables to equalize compensation to insurers for enrollees who vary in expected cost, but including information about enrollees' socioeconomic background is controversial. We studied 1 182 847 continuously insured 0 to 19-year-olds using 2008-2012 Blue Cross Blue Shield of Massachusetts and American Community Survey data. We characterized enrollees' socioeconomic background using the validated area-based socioeconomic measure and calculated annual plan payments using paid claims. We evaluated the relationship between annual plan payments and geocoded socioeconomic background using generalized estimating equations (γ distribution and log link). We expressed outcomes as the percentage difference in spending and utilization between enrollees with high and low socioeconomic backgrounds. Geocoded socioeconomic background had a significant, positive association with annual plan payments after applying standard adjusters. Every 1 SD increase in socioeconomic background was associated with a 7.8% (95% confidence interval, 7.2% to 8.3%; P < .001) increase in spending. High socioeconomic background enrollees used higher-priced outpatient and pharmacy services more frequently than their counterparts from low socioeconomic backgrounds (eg, 25% more outpatient encounters annually; 8% higher price per encounter; P < .001), which outweighed greater emergency department spending among low socioeconomic background enrollees. Higher socioeconomic background is associated with greater levels of pediatric health care spending in commercially insured children. Including socioeconomic information in risk-adjustment algorithms may address concerns about adverse selection from an economic perspective, but it would direct funds away from those caring for children and adolescents from lower socioeconomic backgrounds who are at greater risk of poor health.

Accuracy of pharmacy benefit manager medication formularies in an electronic health record system and the Epocrates mobile application.

Physicians commonly use formulary medication coverage information generated by electronic heath records (EHRs) and the Epocrates mobile drug database application when making medication selection decisions. Nonformulary selections may lead to higher out-of-pocket patient costs and nonadherence with prescribed regimens. Nonformulary selections also contribute to higher overall health plan spending. However, the accuracy of these systems compared with actual insurance coverage is not known. To assess the accuracy of formulary status icons generated by an EHR system and the Epocrates mobile application for patients with Alabama Medicaid and Blue Cross Blue Shield of Alabama (BCBS), the primary insurance providers in the state of Alabama. Patients of all ages who had a chart review performed at the outpatient family medicine or pediatric clinics at the University of Alabama at Birmingham Huntsville Medical Regional Campus from May to October 2013 were included in this retrospective analysis. Patients who were not insured by either Alabama Medicaid or BCBS were excluded. Patients who did not have new medications added at the time of the visit were also excluded. For each medication prescribed, the formulary status provided in the EHR system and Epocrates was compared with the actual Medicaid and BCBS formularies published online, and the accuracy of the 2 databases was determined. A total of 1,529 medication records were analyzed. The EHR and Epocrates provided accurate formulary information for 93.1% and 89.4% of medications, respectively. Formulary information generated by the EHR was 96.3% accurate for Medicaid patients and 80.1% accurate for BCBS patients. Epocrates was 88.2% accurate for Medicaid patients and 94.4% accurate for BCBS patients. A total of 936 medication records from the pediatric clinic were analyzed, and the majority of these patients (88.4%) had Medicaid insurance. In this population, the EHR was more accurate (96.9%) than Epocrates (86.6%). Of the small number of pediatric medication records (n = 109) associated with patients who had BCBS, Epocrates was more accurate (92.7%) than the EHR (83.5%). In family medicine, 593 medication records were analyzed. Again, for Medicaid patients, the EHR was more accurate (95.3%) than Epocrates (91.5%). For those with BCBS, Epocrates was more accurate (95.3%) than the EHR (78.2%). When over-the-counter (OTC) medications (n = 232) were analyzed separately from prescription medications, it was found that overall the EHR was 90.5% accurate, and Epocrates was 41.4% accurate. It is important to note that when only prescription medications were analyzed, the accuracy rates were high (93.6% for the EHR and 98.0% for Epocrates). Formulary information generated by the EHR system and the Epocrates mobile application is a useful tool for physicians when prescribing medications, but neither source is completely accurate. Prescribers should be particularly cautious when making OTC formulary decisions using the Epocrates mobile application, since the formulary information provided for these medications was found to be the least accurate.

Impact of Minimally Invasive Surgery on Medical Spending and Employee Absenteeism

As many surgical procedures have undergone a transition from a standard, open surgical approach to a minimally invasive one in the past 2 decades, the diffusion of minimally invasive surgery may have had sizeable but overlooked effects on medical expenditures and worker productivity. To examine the impact of standard vs minimally invasive surgery on health plan spending and workplace absenteeism for 6 types of surgery. Cross-sectional regression analysis. National health insurance claims data and matched workplace absenteeism data from January 1, 2000, to December 31, 2009. A convenience sample of adults with employer-sponsored health insurance who underwent either standard or minimally invasive surgery for coronary revascularization, uterine fibroid resection, prostatectomy, peripheral revascularization, carotid revascularization, or aortic aneurysm repair. Health plan spending and workplace absenteeism from 14 days before through 352 days after the index surgery. There were 321,956 patients who underwent surgery; 23,814 were employees with workplace absenteeism data. After multivariable adjustment, mean health plan spending was lower for minimally invasive surgery for coronary revascularization (-$30,850; 95% CI, -$31,629 to -$30,091), uterine fibroid resection (-$1509; 95% CI, -$1754 to -$1280), and peripheral revascularization (-$12,031; 95% CI, -$15,552 to -$8717) and higher for prostatectomy ($1350; 95% CI, $611 to $2212) and carotid revascularization ($4900; 95% CI, $1772 to $8370). Undergoing minimally invasive surgery was associated with missing significantly fewer days of work for coronary revascularization (mean difference, -37.7 days; 95% CI, -41.1 to -34.3), uterine fibroid resection (mean difference, -11.7 days; 95% CI, -14.0 to -9.4), prostatectomy (mean difference, -9.0 days; 95% CI, -14.2 to -3.7), and peripheral revascularization (mean difference, -16.6 days; 95% CI, -28.0 to -5.2). For 3 of 6 types of surgery studied, minimally invasive procedures were associated with significantly lower health plan spending than standard surgery. For 4 types of surgery, minimally invasive procedures were consistently associated with significantly fewer days of absence from work.

HMO Coverage Reduces Variations In The Use Of Health Care Among Patients Under Age Sixty-Five

Variation in the use of hospital and physician services among Medicare beneficiaries is well documented. However, less is known about the younger, commercially insured population. Using data from the Community Tracking Study to investigate this issue, we found significant variation in the use of both inpatient and outpatient services across twelve metropolitan areas. HMO insurance reduces, but does not eliminate, the extent of this variation. Our results suggest that health plan spending to better organize delivery systems and manage care may be efficient, and regulations that arbitrarily cap plans' spending on administration, such as minimum medical loss ratios, could undermine efforts to achieve better value in health care.

Effects of Prescription Coinsurance and Income-Based Deductibles on Net Health Plan Spending for Older Users of Inhaled Medications

Health plans that increase prescription cost-sharing for their patients may increase overall plan costs. We analyzed the impact on health plan spending of a switch in public drug insurance from full coverage to a prescription copayment (copay), and then to income-based deductibles plus coinsurance (IBD). We studied British Columbia residents 65 years of age or older who were dispensed inhaled steroids, beta2 agonists or anticholinergics on or after January 1996. Multivariable linear regression was used to estimate health plan costs for the population using inhalers by the Ministry of Health (MOH) during the copay and IBD policies. We estimated costs for excess physician visits and emergency hospitalizations based on data from a previously published cohort study and cost data from the MOH. We estimated the net change in MOH spending as the sum of changes in spending for inhalers, physician visits, hospitalizations, and policy administration costs. Net health plan spending increased by C$1.98 million per year during the copay policy [95% confidence interval (CI): 0.10-4.34], and C$5.76 million per year during the first 10 months of the IBD policy (95% CI: 1.75-10.58). Out-of-pocket spending by older patients increased 30% during the copay policy (95% CI: 24-36) and 59% during the IBD policy (95% CI: 56-63). British Columbia's experience indicates that cost containment focused on cost-shifting to patients may increase net expenditures for the treatment of some diseases. Health plans should consult experts to anticipate the potential cross-program impacts of policy changes.