State Pharmacy Programs:

Assistance Designed to Target Coverage and Stretch Budgets

HEHS-00-162: Published: Sep 6, 2000. Publicly Released: Sep 13, 2000.

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William J. Scanlon
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Pursuant to a congressional request, GAO provided information on state-administered pharmaceutical assistance programs, focusing on: (1) characteristics of state programs designed to provide prescription drug access to eligible populations; and (2) the administrative and policy issues that states have encountered in operating drug assistance programs.

GAO noted that: (1) in 1999, 14 states were operating independent, state-funded and administered programs that provided more than 760,000 elderly and other low-income persons with access to prescription drugs; (2) most programs are funded with the state's general revenues, but some receive earmarked funds; (3) all state pharmacy programs provide benefits for low-income elderly state residents, but specific eligibility rules differ; (4) the programs vary in the number of people enrolled and their size relative to the number of Medicare beneficiaries in the state; (5) states attempt to provide access to drugs and manage program costs through coverage restrictions such as dollar caps on benefits, deductibles, copayments, and limits on the types of drugs covered; (6) among state programs, copayments and coinsurance are more common than benefit caps and deductibles, but the amount of cost sharing varies widely across programs; (7) all state programs obtain rebates from drug manufacturers to offset part of their expenditures--most state programs receive manufacturers' rebates that are calculated on terms similar to rebates under the Medicaid program; (8) to provide a pharmacy assistance benefit to a low-income and largely elderly population, while remaining within the program budget, states have taken a variety of approaches to administering their programs; (9) these include developing adequate systems to administer benefits and coordinating payment with and recovering payment from other insurers; (10) states have also attempted to encourage enrollment by mitigating the perceived stigma attached to assistance programs, which could inhibit enrollment, and by providing information to eligible persons so that they are aware of the program and know how to apply; (11) three program administrators said that drug assistance programs were intentionally administered apart from Medicaid programs to avoid the perceived stigma attached to Medicaid; (12) however, several states administer aspects of their programs through and employ the policies of the agency administering Medicaid; (13) administering programs using Medicaid systems allows states to avoid duplicating program functions, such as eligibility determination and claims processing and adjudication; and (14) nevertheless, some states have encountered administrative challenges in developing adequate eligibility determination and claims processing systems and in recovering payments from insurers when program enrollees have other drug coverage.

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