Medicaid Subscription-Based Payment Models Show Mixed Results

Using a subscription-based payment model to cover medication costs could have varying impacts on access to medication depending on the state that implemented the model, according to a study published in JAMA Health Forum.

Researchers analyzed the uptake of an antiviral hepatitis C virus drug in two states after each state implemented a form of subscription-based payment model. 

Louisiana received CMS approval for its hepatitis C subscription-based payment model in 2019. The state’s model established a supplemental rebate agreement with Asegua Therapeutics for the drug. Based on the agreement, Louisiana has an unlimited right to use the drug, Epclusa, with a capped cost that the state pays over time.

On top of covering hepatitis C medications for the patient population within the justice system, the model also screened and treated prisoners and covered continued care after release. The goal was to treat 31,000 prisoners with hepatitis C or more by December 2024, specifically the model aimed to treat 10,000 in the first year of its implementation.

CMS approved Washington state’s subscription-based payment model less than a month before greenlighting Louisiana’s model. Like Louisiana’s, Washington’s plan for lowering drug spending for hepatitis C was to enter into a value-based contract that allowed the state to use limitless quantities of the drug at a fixed rate.

Washington’s model aimed to create and cure 4,900 individuals between its implementation date in June 2019 and June 2020.

The JAMA article’s researchers used data pulled from the states’ Medicaid State Drug Utilization Data files. They analyzed data from January 2017 through June 2020, with the post-implementation observation period lasting from July 2019 through June 2020. 

The researchers also used data from the Centers for Disease Control and Prevention’s (CDC’s) National Notifiable Diseases Surveillance System to know the incidence of acute and chronic hepatitis C in the relevant regions.

In Louisiana, the rate of acute hepatitis C viral infections stayed stable but the rate of chronic hepatitis C viral infections grew pre-implementation and then declined in 2019 when the state implemented its subscription-based payment model.

The state saw an increase in prescription fills per after the implementation, with quarterly fills rising from 43.1 prescriptions filled per 100,000 Medicaid enrollees to 206.0 prescriptions filled per 100,000 enrollees.

Meanwhile, in Washington quarterly prescription fills rose only slightly, increasing from 50.1 fills per 100,000 Medicaid enrollees before implementing the subscription-based payment model to 53.9 fills per 100,000 enrollees after implementation.

Why did Louisiana and Washington state have such different outcomes with subscription-based payment models, despite having very similar methods?

One key difference between the two states’ scenarios was that before Louisiana implemented the subscription-based payment model, it had a restriction on who could receive coverage for hepatitis C medications based on liver damage and sobriety. Washington had no such limitations before or after implementing its model.

“The heterogenous response of these 2 states to implementation of a SBPM may be partially attributable to historical access to direct-acting antiviral HCV medications, differences in SBPM implementation, and the onset of the COVID-19 pandemic,” the researchers explained.

However, on the last point, the researchers noted that excluding the second quarter of 2020 to mitigate the potential influence of the coronavirus pandemic did not change the results.

Furthermore, the researchers used a synthetic control model to eliminate those differences and found that Louisiana still had a 180 percent relative increase in prescription fills.

“Nonetheless, the disparate influence of SBPMs in Louisiana and Washington suggests that states with greater pent-up demand for HCV medications may expect to see larger gains in use from a SBPM,” the study added.

Alternative reasons for the different results could include one state having a superior screening and treatment process or simply a process that was less susceptible to the influence of the coronavirus pandemic.

Still, the researchers concluded that subscription-based payment models have potential to expand access to expensive prescription drugs.

As public and private payers combat rising prescription drug prices, they have implemented various innovative payment models to manage this area of healthcare spending. Apart from subscription-based payment models, some Medicaid programs have implemented outcomes-based payment models and population-based payment models.