Young adults qualifying for Medicaid benefits in Texas and Arkansas because of disability are exceptionally vulnerable: their disability must be long-term and severe and their income typically below the federal poverty level. Most of these individuals have a mental health condition1; multimorbidity is common. For those enrolled in Medicaid with disability both before and after the age of 21 years, aging to 21 brings tough new restrictions on Medicaid benefits, including a limit of 3 covered prescription fills per month. Comprehensive new analyses by Geiger et al1 show that use of prescription medications, including drugs that treat mental illness, decreased suddenly after the 21st birthday in these populations, but medication use in 16 comparison states without drug caps appeared stable over the transition to age 21. The authors estimate a nearly 20% reduction in prescription fills for Medicaid recipients who became subject to the Texas and Arkansas drug caps for the first time. Their novel approach, tightly focused on changes that occurred at an arbitrary, age-defined benefit cliff, provides clarity about the potential for broader harms.
The Geiger et al1 study adds necessary new insights to 3 decades of quasi-experimental research on drug caps. Soumerai et al,2 in a series of landmark studies published between 1987 and 1994, noted that initial implementation of a 3-drug cap in New Hampshire was associated with sharply curtailed medication use among Medicaid recipients who had previously used multiple drugs. Following New Hampshire’s drug cap, use of both essential and nonessential medications decreased. Subpopulation analyses revealed coincident increases in mental health center visits, acute services use, and nursing home admissions. Although New Hampshire Medicaid saved substantially on prescription spending, those savings were likely erased by increased spending on services.
More recently, Lieberman et al3 examined state-by-state implementation of various drug cap policies from 2001 to 2010 and reported that, when suddenly forced to choose which prescriptions to fill, patients enrolled in Medicaid favored symptomatic essential medications and reduced the use of preventive essential medications. Caps targeting branded medications produced substantial savings for Medicaid if generic versions were available. A 2015 time-series analysis4 explored a drug cap removal event in 2006: dual Medicare-Medicaid enrollees across the US were shifted en masse from Medicaid drug coverage to the new Medicare Part D drug benefit. After their switch to Part D, enrollees in states with especially strict Medicaid drug caps increased their use of medications and were less likely to go without treatment for serious mental illness. Post-Part D levels of use and treatment resembled levels seen in no-cap states, which remained stable across the shift from Medicaid to Part D coverage. Related analyses examined changes in guideline concordance of care for bipolar disorder as well as racial disparities in medication use among patients with diabetes and cancer after the lifting of drug caps. The findings of Geiger et al1 are consistent with the prior studies, while illuminating the particular benefit disruption faced by young adults with disabilities in a setting of stable Medicaid policies and no Medicare coverage.
A flat cap at 3 drug fills is a too-blunt instrument that creates obvious inequities. Individuals who require few medications will be unaffected, but many people with complex or multiple conditions will lack coverage for needed medications. Apart from coverage concerns, younger adults with mental illness are at especially high risk for undertreatment owing to a potent mix of challenges, including possible new independence from their family, new high-risk behaviors, withdrawal of educational supports, difficulties understanding their health issues, lack of trust in health professionals, and a health care system seemingly built to bewilder.5,6 To impose new financial barriers on so many younger Medicaid recipients, a population by definition poor and unable to work, on top of their nonfinancial barriers is an unwise, cruel policy. These caps undermine the oft-cited policy goal of addressing unmet mental health care needs in the US. Although Geiger et al1 observed their study cohorts only up to age 22 years, many thousands of Medicaid recipients with disability at subsequent ages are subject to the same Texas and Arkansas drug caps and developing additional conditions and medication needs as they grow older. Furthermore, a 2019 Kaiser Family Foundation policy scan identified 11 states in addition to Texas and Arkansas with Medicaid drug caps in place.7 The other 11 states’ caps are set higher, apply to fewer drug classes, or allow more exemptions. Nevertheless, it is plausible that many more Medicaid recipients outside of Texas and Arkansas lack adequate medication access due to drug caps. Notably, drug caps are not permitted in federally regulated private plans, eg, under Medicare Part D and the Affordable Care Act.
Another important contribution from Geiger et al1 is their cost analysis. Consistent with the findings of Soumerai et al2 and armed with stronger data on nondrug costs, Geiger et al found evidence of increased hospitalizations and associated costs, with no net savings to the Texas and Arkansas Medicaid programs from the drug caps. A distinctive finding was that pharmacy costs alone also did not change appreciably as recipients aged to 21 years, relative to the comparison group. Careful sensitivity analyses by the study team suggest that patients, health care professionals, and pharmacies worked to minimize the caps’ impact by increasing the days supplied per prescription fill and applying the limited Medicaid coverage patients had to their most expensive medications. The data were not detailed enough to determine whether pill unit counts per day or unit strength may also have increased. Although these potential workarounds may partly explain the lack of savings for Medicaid, we should not presume that workarounds averted patient harms due to reduced access. Soumerai et al2 also observed compensatory patterns in prescription fills, but concluded that those behaviors came nowhere near offsetting the reductions in use. In the Geiger et al1 study, it is encouraging that the medications dropped from Medicaid reimbursement after age 21 years were more likely to be lower-cost medications. However, abundant research suggests that many patients still will not have the ability or willingness to pay for those medications 100% out-of-pocket. A caveat to all the drug cap studies involves their reliance on fee-for-service claims data. Patients’ costs and prescriptions filled via self-pay are invisible and require separate investigation. In any case, drug cap workarounds, even if they occur, represent burdensome, wasteful effort for patients and health professionals. By complicating pathways to treatment, drug caps are also likely to aggravate existing inequities whereby sicker, lower functioning patients have greater barriers to access.
Understandably, state Medicaid programs are constantly seeking ways to contain Medicaid costs for health services, including pharmacy; much current policy maker attention is on Medicaid managed care contracting, manufacturer discounts, specialty drug pricing, and transparency regarding the role of pharmaceutical benefit managers. Yet, there is a persistent minority of states that strictly cap the number of reimbursable prescriptions a Medicaid recipient can fill in a month. These caps persist despite the stream of evidence that drug caps, uniquely among all drug cost-containment policies, lack clinical nuance, undermine health goals, and penalize sicker patients while failing to contain costs. It is past time to eliminate drug caps.
Published: June 17, 2021. doi:10.1001/jamahealthforum.2021.1249
Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2021 Madden JM. JAMA Health Forum.
Corresponding Author: Jeanne M. Madden, PhD, Department of Pharmacy and Health Systems Sciences, School of Pharmacy and Pharmaceutical Sciences, Bouvé College of Health Sciences, Northeastern University, 360 Huntington Ave R218X TF, Boston, MA02115 (email@example.com).
Conflict of Interest Disclosures: None reported.
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Madden JM. Three Decades of Drug Cap Studies Are Enough. JAMA Health Forum. 2021;2(6):e211249. doi:10.1001/jamahealthforum.2021.1249