Patients Paying Price for Medicaid Savings Scheme

Disturbing reports about the impact of Michigan’s newly instituted drug formulary for Medicaid patients are beginning to surface.

Last year a committee of physicians and pharmacists chose so-called best-in-class drugs in 40 categories covering a range of illnesses across all of medicine. The formulary policy stipulated that if a physician wanted to prescribe a drug not on the list, he or she must “call a state technician and get approval,” which would be granted only if the drug was considered “medically necessary.”

The effort was budgeted to generate $42 million annually in savings, which were projected to result from supplementary rebates extracted from pharmaceutical companies in return for a place for their medications on the preferred drug list (Psychiatric News, June 21, April 19).

On April 22 the Mental Health Association of Michigan (MHA of Michigan) and the Michigan Association for Children with Emotional Disorders (MACED) established a toll-free hotline to receive patient and provider complaints about the program. During its eight weeks of operation, the hotline received 455 calls.

The hotline, which was funded by Pfizer Inc., was also supported by the Michigan Partners for Patient Advocacy. The Michigan Psychiatric Society (MPS) is one of the members of that coalition.

Mark Reinstein, president and CEO of the MHA of Michigan, told PsychiatricNews, “Many patients have experienced dangerous medication delays and/or been switched off drugs on which they were stable. Physicians and other medical professionals are incurring tremendous expense to deal with the new layers of bureaucracy and problems that have been created.”

He also pointed out that funds were available to publicize the hotline only in a limited geographic area, so the number of reports of problems likely were skewed downward. The hotline was not publicized in Detroit because of cost constraints.

Three hundred and sixty calls came from patients or family members of patients. Of these calls, 66 percent reported medication delay, denial, or switching with negative consequences.

Examples of problems cited in an MHA report summarizing data from the hotline include subsequent hospitalization, forced switching to a product causing allergic or other negative reaction, period of time without medication, and lack of continuity in medication after release from a hospital. Callers could identify the health problem of the patient. The category with the problem most often identified was mental health/neurological, with 62 mentions.

Ninety-five medical personnel called the hotline. More than half of them cited as a primary complaint problems related to the time required to seek authorization and confusing administrative procedures.

One health care professional said, “Most of our patients are on psychotropic drugs. We now have to get approval for these from Medicaid HMOs. It’s like a circus with this stuff, going around and around in circles, trying to find out who is supposed to be responsible for preauthorizations.”

Geralyn Lasher, spokesperson for Michigan’s Department of Community Health, told Psychiatric News that the program is working well and that there is no evidence of physicians refusing to treat Medicaid patients because of the new procedures.

She said that the program is generating about $800,000 in savings each week and that the number of prescriptions written has not declined.

Reinstein replied that many physicians do not understand the process by which a prescription can be judged medically necessary. “The state,” he said, “has done a terrible job in making known to consumers and providers what their options are in terms of appeals.”

Two MPS members, Oliver Cameron, M.D., Ph.D., and Jonathan Henry, M.D., commented on the formulary program to Psychiatric News.

Cameron, a professor of psychiatry at the University of Michigan and a member of the state’s pharmacy and therapeutics committee, said, “My sense is that the preferred drug list has expanded and improved somewhat as a result of negotiations and might be ‘workable.’ However, serious problems persist with the administrative aspects of the program.”

Henry, medical director of the Clinton-Eaton-Ingham Community Mental Health Board, said that the cost savings claimed by the state do not reflect the real costs of the program.

“The medical directors of the community mental health board uniformly report that their nursing staffs are bogged down with the paperwork required for prior authorization,” he said. That stress on staff could be exacerbated by projected layoffs in the Medicaid program.

Efforts to rescind or modify the drug formulary program are taking place at several levels, according to Reinstein.

The MHA in Michigan has issued a series of reports on problems identified by the hotline, including excerpts of comments from patients. According to the July 2 Wall Street Journal, as a result of those reports, one “powerful early backer of the drug list,” Sen. Alma Wheeler Smith (D), said that she plans to support a bill to gut the program.

Reinstein commented that although such a bill had not yet been introduced, another bill (S 1193), which codifies procedures for drug utilization, offers opportunities for advocates to add language that would improve administration of the drug formulary.

The MHA of Michigan, MACED, Alliance for the Mentally Ill of Michigan, and Michigan Protection and Advocacy Service Inc. filed suit in December 2001 in Ingham County Circuit Court to prevent implementation of the program.

The organizations charge that the method by which the program was passed by the legislature violates the state’s constitution and that the state has no authority to insist upon rebates in addition to those mandated by the federal Medicaid law.

In his January 9 ruling, Judge Lawrence Glazer supported a third argument by the plaintiffs. He wrote, “The system of telephone appeals to a technician and then to a pharmacist and then to a physician, only during business hours, will undoubtedly result in delays in the dispensing of the medications [that] physicians judge to be medically necessary. . . .To me this constitutes irreparable harm to those patients who would be so affected.”

On January 18 the Court of Appeals lifted the injunction issued by Judge Glazer. The decision is being appealed. Henry said, “If there is one macro-message I would like to get to your readers, it is that psychiatric societies must involve themselves as early as possible in the process of developing and implementing drug formularies.” ▪