States spawn a patchwork of reform rules

This article is Trend No. 5 of 5 in Drug Store News' overview of the current state of the healthcare market.

In the era of health reform, geography means plenty. The kind of health coverage available to millions of Americans depends, in large part, on where they live.

Variations in how states have implemented the insurance eligibility provisions of the Affordable Care Act have “led to highly diverse, geographically dependent health reform experiences,” noted PwC’s Health Research Institute, and made the states “key players in health reform.”

“From the design of exchanges to the decision over whether to expand Medicaid, states have notable discretion in implementing the law,” the institute reported.

Indeed, the latitude that Congress granted the states in how they adopt some key elements of the health reform bill have made them “reform’s pivotal stage,” according to HRI. “While the ACA broadens the federal government’s role and financial responsibility in health care, it also confers considerable authority to states for its implementation. As such, states … have gotten to decide if and how they expand their Medicaid programs and to what extent they would have a hand in the administration of health insurance exchanges,” HRI stated.

Conservative-leaning governors and lawmakers in many states have refused to embrace the federal expansion plan for Medicaid envisioned by the ACA. This has led to a “piecemeal” expansion of Medicaid benefits across the country, according to the HRI report, “with about half of states choosing to participate; half not. States have taken advantage of the latitude the law and U.S. Supreme Court provided, reflecting differences in philosophy about the best way to expand coverage, or whether to participate [at all],” HRI reported.

There’s also variation in how even the states that have embraced reform have chosen to expand coverage under the new Medicaid provisions. “Some states, such as California, simply expanded their existing Medicaid programs. Others, such as Arkansas and Indiana, pursued alternative models that include client cost-sharing through co-pays and deductibles,” the report noted.

The result has been a sometimes-confusing patchwork of differing coverage rules and eligibility requirements for millions of uninsured or underinsured Americans who are either seeking initial coverage or shopping for alternatives to their current plan. And retail pharmacists, the most accessible front-line health resource in most communities, often have borne the brunt of their frustration or have been called on to help patients navigate the complexities of insurance eligibility and the health exchanges.

Overall, retail pharmacy has benefited from several provisions of the ACA, including its advocacy of expanded — and, at least theoretically, reimbursed — clinical services like medication therapy management, and the addition of millions of newly insured Americans to the prescription market. But hospital-based health networks also have benefitted as federal and state payers have taken on a larger share of the financial responsibility for health care for uninsured or underinsured Americans.

“In those states that have opted to pursue it, Medicaid expansion has been a boon for health systems, which have seen a dramatic reduction in uncompensated care,” HRI declared in its report. An analysis by the institute concluded that, “an increase in Medicaid admissions in expansion states was complemented by a decline in uninsured and self-pay admissions for the country’s three largest health systems in the first half of 2014.”

Pharmaceutical companies also could see an increasing impact as the states gain more leverage in how they manage their Medicaid costs through the ACA, according to HRI’s research. As their influence grows, “states are positioned to lead a proactive movement in drug pricing as Medicaid directors and state health plans seek to address high drug costs,” the report noted. “This will challenge the pharmaceutical industry’s old model of doing business. In response, drug companies will need to champion the notion of innovative drug value, highlighting cost offsets and the return on investment from drug treatments that actually cure or slow disease. Purchasers, including states, must also broaden the lens on the concept of value.”