Medication misuse hinders Medicaid expansion


Like many organizations, we have been tracking the expansion of Medicaid ( and

The Affordable Care Act will make this huge piece of the health care system even bigger, says a study by the IMS Institute for Healthcare Informatics. Medicaid already accounts for 16 cents of every dollar spent on health care and that will swell to 20 cents by 2021. “The shared-cost model between states and the federal government, combined with the continuing weak economic climate and the impending expansion, had prompted many states to shift from historically fee-for-service payment models to managed care models, and several states with large Medicaid populations made such changes during 2011,” according to the study.

Brad Ryan, MD, general manager of IMS Health Payer and Provider Solutions, says that “Medicaid expansion and the sizeable cost increase are only part of the challenge. Drug cost is rising disproportionately, accounting for up to one third of total medical spend in some cases.” He adds that the entry of new plans and changes in other plans’ offerings are increasing the complexity of Medicaid.

IMS estimates that as much as $200 billion is wasted in the health care system each year thanks to suboptimal medication use.

“Generic substitution represents only a fraction of the opportunity, but nonadherence, antibiotic misuse/overuse, medication errors, and mismanaged polypharmacy are areas that must be addressed by plans more directly with patients and physicians,” says Ryan.

Medicaid spending growth has outpaced overall health spending

U.S. health and Medicaid growth, real and projected, 1997–2021

Medicaid spending as percentage of overall health spending

Prescription medications for beneficiaries under managed Medicaid have more than doubled since September 2011

National Medicaid prescription volume and share of Medicaid

Source: “Shift from Fee-for-Service to Managed Medicaid: What Is the Impact on Patient Care?” IMS Institute for Healthcare Informatics (, April 2013


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