Health Care Costs and Financing

Lowering Medicaid coverage for anti-ulcer drugs reduced their use without increasing hospitalizations

Medicaid payments for prescription drugs increased from $3 billion in 1987 to $6.8 billion in 1992. To decrease these costs, many States have restricted reimbursement for certain classes of drugs they believe may be overprescribed or less cost-effective than alternative therapies. One targeted class of drugs is anti-ulcer medications, which accelerate ulcer healing and reduce ulcer recurrence, but also account for 10 to 13 percent of State Medicaid pharmacy budgets.

When the Florida Medicaid program restricted reimbursement for anti-ulcer medicine in 1992, it resulted in substantially less outpatient use of these drugs, but the rate of Medicaid ulcer-related hospitalizations did not rise, according to a study supported in part by the Agency for Health Care Policy and Research (National Research Service Award fellowship F32 HS00083). Under the revised policy, Florida Medicaid paid for only one anti-ulcer drug prescription at a time; permitted only one refill per written prescription; and limited coverage to 60 days for high-dose prescription treatment for acute disorders, explains David M. Cromwell, M.D., of Johns Hopkins University in Baltimore, MD.

Dr. Cromwell and his colleagues used Medicaid anti-ulcer drug claims data, eligibility data, and hospital discharge abstract data from 1989 to 1993, as well as U.S. census data to compare anti-ulcer drug use and ulcer-related hospitalization rates both before and after policy implementation in Medicaid and non-Medicaid patients. They found that following policy implementation, the rate of Medicaid reimbursement for anti-ulcer drugs decreased 33 percent (from 807,272 to 539,534 doses reimbursed per 100,000 Medicaid beneficiaries). However, there was no associated increase in the rate of Medicaid hospitalizations for complicated peptic ulcer disease (PUD), uncomplicated PUD, or non-ulcer peptic disease. This study was based on data prior to 1994, when a bacterial cause of ulcers and the use of antibiotics for this condition gained widespread acceptance, note the authors.

See "Can restrictions on reimbursement for anti-ulcer drugs decrease Medicaid pharmacy costs without increasing hospitalizations?" by Dr. Cromwell, Eric B. Bass, M.D., M.P.H., Earl P. Steinberg, M.D., M.P.P., and others, in the February 1999 Health Services Research 33(6), pp. 1593-1610.

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