Fiscal Fitness: How States Cope

Prescription drugs for low-income uninsured and the elderly can be hard to find in some states

While health policy-makers have been working on extending prescription drug coverage for Medicare beneficiaries through the new Part D benefit, some researchers are reminding us that fulfilling the prescription drug needs of nonelderly, low-income uninsured people is a growing problem.

Center for Studying Health System Change (HSC) researcher Laurie Felland tells State Health Watch that while safety net providers have made acquiring free or reduced-fee prescriptions an integral part of their daily operations, access to affordable prescription drugs remains a challenge. Ms. Felland wrote an issue brief, The Community Safety Net and Prescription Drug Access for Low-Income, Uninsured People, with Mathematica Policy Research consulting researcher Erin Taylor and HSC research assistant Annaliese Gerland. The issue brief is based on HSC's 2005 site visits to 12 nationally representative communities — Boston; Cleveland; Greenville, SC; Indianapolis; Lansing, MI; Little Rock, AR; Miami; northern New Jersey; Orange County, CA; Phoenix; Seattle; and Syracuse, NY.

Not surprisingly, the authors say, low-income, uninsured people report more problems obtaining prescription drugs because of costs than do people with insurance.

Communities play a key role in providing prescription drugs for low-income, uninsured people, who often seek medications from the same safety net providers who offer medical services and prescribe the medications, according to the site visits.

"Safety net hospitals and community health centers typically have on-site pharmacies or contract with outside pharmacies to offer a full range of medications, usually charging patients a copayment," the report says. "Free clinics and other small providers often can dispense only limited quantities or types of medication…. As the number of uninsured Americans rises, community safety net providers are treating more uninsured patients without proportionate funding increases."

Old and new strategies

Ms. Felland says that to help subsidize and reduce the cost of prescription drugs for low-income uninsured people, safety-net providers, sometimes in collaboration with community-level programs, have built on existing strategies and developed new ones. Many safety net hospitals and community health centers have access to a federal prescription drug discount program. And while all types of safety net providers have long dispensed manufacturer drug samples to patients, they have developed more structured ways of obtaining ongoing supplies of the most commonly prescribed medications. These strategies include, in general order of prominence, increased use of federal discounts, obtaining donated prescription drugs from manufacturers, use of public and private funding to subsidize drugs, and establishing discounts for uninsured people at local retail pharmacies.

Since 1992, federally qualified community health centers and safety net hospitals receiving federal disproportionate share payments have been eligible for brand name and generic prescription drug discounts through the federal 340B drug pricing program. That program requires drug manufacturers to give eligible providers discounts equal to or greater than those received by Medicaid. Providers distribute the drugs obtained that way to patients through their own pharmacies or through contracted retail pharmacies, charging patients a sliding-scale fee based on income.

Ms. Felland says the 340B program has grown in recent years. All 12 visited sites have at least one safety net provider participating in the program but some communities, including Boston, Cleveland, Indianapolis, Miami, and Seattle, have a broad network of participating hospitals and health centers.

Many safety net providers, including those participating in 340B, rely on drug company assistance programs to obtain free or reduced cost prescription drugs for patients. According to the report, manufacturers as a group have significantly increased the amount of drugs donated through the assistance programs, with the number of free prescription medicines distributed growing from some 3 million in 1998 to 22 million in 2004, according to Pharmaceutical Research and Manufacturers of America, an industry advocacy organization.

The authors say manufacturer assistance programs vary but are typically available to uninsured people, generally with household incomes below 200% of the federal poverty level. Applicants also must demonstrate citizenship or legal immigrant status.

Getting more donated drugs

Many providers, the report says, have hired staff and devoted other resources to bringing in more donated drugs. Thus, a Lansing, MI, health center found that dedicating one full-time staff member to this effort generated more than $300,000 in free medications in one year. And in Cleveland, the county hospital assists physicians in obtaining donated drugs for their patients through automated prompts in the hospital's electronic medical record system.

In addition, some safety net hospitals and community health centers have arranged for what is known as bulk replacement, a process by which drug manufacturers stock providers' pharmacies with medications that providers dispense to patients determined to be eligible for the manufacturers' assistance programs but who have not applied individually. The process allows pharmacies to offer medications immediately to patients, rather than having to pursue each individual application.

Another way communities fund prescription drugs for low-income uninsured people is through programs providing primary and preventive care through safety net providers, coordinating access to specialty care, and encouraging appropriate use of other services such as emergency care. Ms. Felland and her colleagues say prescription drugs are included as a vital part of managing patients' conditions. In addition to accessing available 340B discounts through participating hospitals and health centers, the programs use a portion of state and federal disproportionate share payments, state charity care pools, or local property taxes to offer medications to enrollees, usually for a small copayment.

The site visits found that some providers have pursued funding from private, usually local, charities to subsidize drug costs. While free clinics are particularly reliant on private funding, some community health centers and hospitals also have turned to foundations for help when existing programs and funding could not meet the need.

Impact on providers and patients

The report lists a number of impacts the various strategies have had on safety net providers and their patients:

Provider Costs. Although the 340B program allows many safety-net providers to purchase discounted Rx drugs, the providers still must subsidize patient drug costs. And while many safety net providers and communities have streamlined how they participate in manufacturer assistance programs, the time and resources required to tap into them is prohibitive for small providers and free clinics with more limited budgets. Also, many safety-net providers are experiencing financial problems as they try to cope with a rising number of uninsured patients and they find it harder to keep pace with the rising cost of drugs, even with significant discounts.

Patient Costs. Although generally a small percentage of the total medication cost, copayments, or other cost sharing required by safety net providers and prescription programs can pose barriers for low-income people. Some providers have increased their pharmacy copayments over the last few years. Also, recent discount card initiatives typically require significant out-of-pocket spending.

Although many providers offer a short-term supply of medication to patients unable to contribute to the cost, such patients may struggle to comply with a longer-term drug regimen.

Eligibility Restrictions. Many people in the 12-site visit communities noted that individuals with incomes just above the thresholds of manufacturer assistance and other programs face particular barriers in accessing prescription drugs. Also, most manufacturer program requirements limit their impact in communities with many undocumented immigrants who do not qualify.

Ms. Felland tells State Health Watch most providers use a combination of the cited strategies to stretch their resources as much as possible. "The 340B program is important for those that qualify," she says. "They are layering on other strategies because of the lack of resources."

She says she doesn't see much relief on the horizon, and that's why providers are struggling to keep up. "They're doing the best they can without a broader solution," she says.

In Indianapolis, the Health Advantage program is operated by the Health and Hospital Corporation of Marion County, which has the Marion County Health Department, Wishard Hospital, and Wishard Community Health Centers. In 1997, the corporation established Health Advantage as a managed care program for the indigent modeled after the Indiana Medicaid program.

The county has found that while Medicaid still plays a critical role in addressing the needs of the uninsured, stringent eligibility criteria often exclude needy individuals. Many children are entitled to health benefits through Medicaid expansion, but the needs of their family members remain unmet.

Individuals without insurance face significant difficulty in accessing care and thus avoid or delay care, which results in unnecessary hospitalization for preventable illness, increased cost, and adverse communitywide health outcomes.

Health Advantage beneficiaries are its more than 30,000 active members. Potential beneficiaries include the remaining low-income, uninsured residents of Marion County. The program directly benefits the group described as the "working poor," people who fall within the gap that exists between government-assisted health coverage such as Medicaid and employer-sponsored insurance. It is open to county residents who fall at or below 200% of the federal poverty level and don't qualify for any other assistance program. Advantage provides health care coverage for the parents of Medicaid and CHIP recipients, as well as other low-income and uninsured populations.

The program contracts with a primary care physician group, the Indiana University Medical Group, and pays them a capitated rate. Officials believe having the primary care physicians at risk for all primary care needs provides an incentive for the physicians to build relationships with their patients, encourage appropriate use of the delivery system, and improve provision of primary and preventive services.

Wishard Health Services manager of inventory control Petra Fippen tells State Health Watch Health Advantage members pay a $5 per prescription copay. She says each of the primary care clinics in the county that see Health Advantage members has a pharmacy that is operated as a closed pharmacy system. The Health and Hospitals Corp. hospitals and clinics share the same closed formulary.

"By managing the formulary and patients' health, we're working to save the county and the program money," she says. Strategies Ms. Fippen employs include trying to enroll those who are eligible in Medicare Part D or the state's Hoosier Rx, using generic drugs as much as possible, drug ceiling pricing, and enrolling members in drug company patient assistance programs. She says these activities produced an estimated $4 million last year to help offset the county's costs.

The program dispenses some 1 million prescriptions a year. Ms. Fippen candidly says she's not sure if patients are healthier as a result of the program's efforts or if they often see sicker patients. "We're doing a lot of work," she says, "and I'd like to think we're doing something to help people."

The HSC issue brief is available at www.hschange.org. Contact Ms. Felland at (202) 484-4833 and Ms. Fippen at (317) 630-8939.