Health Economics

The American Journal of Managed Care, September 2004, Volume 10, Issue 9 Abstract

Clinical and Financial Outcomes of a Medicaid Proton Pump Inhibitor Prior Authorization Program

Delate T, Mager DE, Motheral BR


Thomas Delate, PhD, Express Scripts, Inc., 13900 Riverport Drive, STL12N, Maryland Heights, MO, 63043. E-mail:

Background: Medicaid programs experienced double-digit increases in ambulatory prescription drug expenditures between fiscal years 1998 and 2001. Combined with increasing enrollment and health services costs and state budget shortfalls, Medicaid programs are taking assertive measures to manage drug expenditures.

Objective: To examine the clinical and financial outcomes associated with a proton pump inhibitor prior authorization policy in a Medicaid patient population.

Methods: Separate 6-month retrospective cohort analyses were conducted to estimate the clinical and financial impact of the policy. More than 1.2 million Medicaid enrollees with subgroup analyses of 5965 continuously eligible, potential anti-secretory drug users were included in the analyses. Interrupted time series analyses of anti-secretory prescription drug expenditures were performed. Anti-secretory drug expenditures, proportions of patients with at least 1 gastrointestinal diagnosis and gastrointestinal-related ambulatory and inpatient medical service visit, and subsequent gastrointestinal-related and total medical service expenditures were examined.






Results: There was a 91% decrease in proton pump inhibitor per member per month (PMPM) expenditures ( <.001) and 223% increase in histamine receptor antagonist PMPM expenditures ( <.001) in the month immediately following the implementation of the policy. A greater proportion of prior-authorization eligible enrollees who received a proton pump inhibitor (80.7%) had at least 1 diagnosis for a gastrointestinal condition than enrollees who received either an histamine receptor antagonist (64.1%; <.001) or no antisecretory drugs (48.4%; <.001). Two-part, finite mixture regression analyses indicated that the enrollees who received either an histamine receptor antagonist or no anti-secretory drugs were no more likely to have had at least 1 gastrointestinal-related or any medical service visit or to have incurred greater visit expenditures than enrollees who received a proton pump inhibitor ( >.05).

Conclusions: Prior authorization for proton pump inhibitors had the effect of reducing utilization of high-cost proton pump inhibitors while encouraging utilization of lower-costing histamine receptor antagonists without evidence of adverse medical consequences.

Impact of Office Copayments on Office Visits in a Managed Care Environment

Price M, Brand R, Fireman B, Newhouse J, Selby J, Hsu J


John Hsu, MD, MBA, MSCE, Kaiser Permanente Northern California, 2000 Broadway, Oakland, CA 94612. E-mail:

Background: As healthcare costs continue to rise in the United States, cost sharing is becoming increasingly common even in prepaid integrated delivery systems (IDS). While patients are paying for a greater share of their healthcare costs, there is little data on how the cost-sharing influences behavior in prepaid delivery settings.

Objective: To examine the effect of various levels of an office visit copayment on office visit rates.

Methods: In a retrospective cohort study using automated clinical databases, we examined the effect of office copayment level on office visit rates in 2001. All subjects had commercial insurance and were members of the Kaiser Permanente Northern California (KPNC) health plan. We classified the copayment into 4 categories: no copayment, $1-9, $10-19, and $20-30 per office visit. We compared relative rates of office visits by copayment level using a Poisson mixed-effects model applied to monthly utilization counts, adjusting for age, gender, comorbidity, and month. This cohort is part of a larger study on cost sharing.

Results: There were 1 755 519 subjects with commercial insurance in 2001. Of these subjects, 19.0% had no copayment, 39.7% had a $1-9 copayment, 40.5% had a $10-19 copayment, and 0.8% had a $20-30 copayment per office visit; the unadjusted rates of office visits per person-year were 4.69, 4.30, 4.00, and 3.79 in these copayment groups, respectively. After adjustment, the relative rate of office visits decreased 7.3% with the $1-9 copayment (RR = 0.927; 95% CI, 0.923-0.931), 11.0% with the $10-19 copayment (RR = 0.890; 95% CI, 0.886-0.894), and 15.8% with the $20-30 copayment (RR = 0.0.842; 95% CI 0.827-0.857).

Conclusions: These data suggest that moderate office copayment levels are associated with lower office visit rates. Less clear is whether the reduction stems primarily from decreases in necessary or unnecessary care. Further research is needed to assess the potential effects (ie, are copayments safe or do they lead to delayed care and unfavorable clinical outcomes?).

Income, Out-of-Pocket Drug Costs, and Medication Adherence among Medicare Enrollees

Fung V


Vicki Fung, BA, Kaiser Permanente — Division of Research, 2000 Broadway, 3rd Floor, Oakland, CA 94612. E-mail:

Background: Many proposals for Medicare drug coverage involve cost sharing and other forms of managed care. There is limited data on the out-of-pocket drug costs of Medicare members facing such arrangements or on the impact of these costs on patient behavior.

Objective: To examine self-reported prescription drug costs and medication adherence of Medicare enrollees in a large, managed-care integrated delivery system (IDS).

Methods: We conducted telephone interviews with a random sample of IDS members. The survey collected information on patients' out-of-pocket prescription drug costs and adherence behaviors during the last 12 months.




Results: In this sample of 648 subjects, 61.1% of subjects were female; 70.2% did not graduate from college; 53.4% reported an annual income less than $35,000 in 2002 ("low income"); and 40.3% reported their health to be "very good" or "excellent." All subjects had some form of prescription drug coverage: 98.2% of subjects had any copayment; 80.9% had a tiered copayment; and 44.8% had an annual drug benefit cap. In the multivariate analyses, higher levels of cost sharing were associated with larger out-of-pocket costs during the past year ( <.01). Furthermore, 32.9% of subjects who reported spending more than $500 in the past 12 months on drugs also reported being nonadherent because of the amount they had to pay for drugs. After controlling for demographic, socioeconomic, and clinical factors, higher out-of-pocket drug costs were significantly associated with higher rates of nonadherence ( <.05). In patients with low income, out-of-pocket costs as low as $50 were significantly associated with nonadherence. Among high income subjects, out-of-pocket costs of $500 or more were significantly associated with nonadherence ( <.01).

Conclusions: These findings suggest that Medicare patients with high out-of-pocket costs may not be adherent to their drug treatment regimens. In particular, low-income patients appeared to be very sensitive to out-of-pocket costs as low as $50 per year. Future analysis will investigate the impact of nonadherence on clinical outcomes.

Willingness to Pay for Hereditary Breast Cancer Testing: Variation by Exposure to Direct-to-Consumer Advertising and Perceived Breast Cancer Risk

Ritzwoller DP, Meenan R, Mouchawar J, et al.


Debra P. Ritzwoller, PhD, Clinical Research Unit, Kaiser Permanente Colorado, 580 Mohawk Drive, Boulder, CO 80302. E-mail:

Background: In September, 2002, Myriad Genetics, Inc. (Myriad) initiated an intensive 5-month direct-to-consumer advertising (DTC-ad) campaign associated with its proprietary BRCA 1/2 genetic test in Denver and Atlanta. This selected marketing provided a natural experiment between populations exposed and unexposed to the DTC-ad. Genetic testing is currently a covered benefit in many managed care organizations (MCOs); however, uncertainty exists about the value to members of the testing services. Also, little is known about the influence of the exposure to DTC-ads, perceived risk of breast cancer, and socio-economic factors on member valuations.

Objective: To employ "willingness-to-pay" (WTP) methodology to assess the value of genetic testing services for breast cancer risk assessment among female MCO members, and compare such values across markets exposed and not exposed to the Myriad DTC-ad. The primary hypothesis is that women exposed to the ad and those with a higher perceived breast cancer risk are likely to be willing to pay a positive amount for genetic testing.

Methods: Written surveys were mailed to a random sample of women aged 25-54 at Kaiser Permanente Colorado (KPCO) in Denver, where the DTC-ad took place, and at Henry Ford Health System (HFHS) in Detroit, where there was no DTC-ad. The survey included WTP questions that were varied both with respect to underlying 15-year breast cancer risk (60% vs. 10%) as well as bidding algorithms (to test for starting point bias). Recipients were asked for their WTP directly for a genetic test for breast cancer risk, as well as for their willingness to increase their monthly insurance premium to cover the test. In addition to questions associated with knowledge, attitudes, and behavior towards genetic testing, several questions were included to measure the variation of socioeconomic status and ethnicity/race.

Results: The overall response rate was 47%. Sixty-three percent of respondents reported exposure to information regarding BRCA 1/2 genetic test; of those 45% report exposure to DTC campaign, 72% were KPCO members. No significant level of correlation was found across socioeconomic status variables including race/ethnicity, education levels, income levels, and marital and employment status. Controlling for SES and risk scenario, respondents exposed to information regarding BRCA 1/2 genetic test were 66% more likely than those not exposed to be willing to pay a positive amount out of pocket for the test, and those with high perceived level of risk were more than twice as likely. Although univariate models show those with higher perceived risk willing to pay for a higher insurance premium, the results did not hold for multivariate models. Of those willing to pay a positive amount, 60% were willing to pay $200, and 24% were willing to pay $500. Of those willing to pay an increased monthly insurance premium, 27% would pay $15 more per month and 21% would pay $5 more. Using chi-square tests of proportions and T-tests, no significant start point bias was found.

Conclusion: Preliminary analyses suggest that exposure to information regarding genetic testing along with a woman's perceived underlying cancer risk may positively influence her WTP for genetic testing services. Given that testing may only provide value for small percentage of the general population (estimated at 5%-10%), these results could support variation in copay and co-insurance by risk status.