Developing Performance Measures for Prescription Drug Management

By Chawla, Anita J.; Hatzmann, Marjorie R. et al. | Health Care Financing Review, Spring 2001 | Go to article overview

Developing Performance Measures for Prescription Drug Management


Chawla, Anita J., Hatzmann, Marjorie R., Long, Stacey R., Health Care Financing Review


INTRODUCTION

Prescription drug management plans are outpatient drug benefit programs that strive to manage the cost effective and clinically appropriate delivery of prescription drugs to beneficiaries through a range of services. These services are provided on behalf of managed care organizations (MCOs), employers, third-party payers and may encompass a variety of activities. They may be delivered by a distinct organization such as a pharmacy benefit management company (PBM), a unit within an MCO or an integrated delivery system.

The demand for accountability and a means to evaluate performance of drug benefit management programs is growing. Nevertheless, a set of valid, standardized indicators for evaluating prescription drug management does not currently exist (Lipton et al., 1999). In its assessment of health maintenance organization (HMO) relationships and experiences with PBMs, the Office of the Inspector General (OIG) concluded that more oversight of PBM performance is warranted. It recommended that HCFA and State Medicaid agencies pursue actions to ensure that their HMOs are accountable for the quality of PBM services delivered to beneficiaries (U.S. Office of the Inspector General, 1997). OIG also recommended that Federal agencies, with other public and private organizations, pursue efforts to support the development of standards and measures for evaluating the quality of care for pharmacy services in the context of managed care. Suggestions about strategies for making PBMs more accountable to employers have also been put forth (Schulman et al., 1996).

This article reviews the functions of prescription drug management programs and discusses currently available performance measures that may be used to assess drug management activities. Issues related to reporting requirement implementation are also raised. We also note recent efforts to develop valid, standardized indicators for evaluating drug management programs. We conclude by asking three key questions that must be addressed before a comprehensive set of performance measures for prescription drug management programs is fully implemented.

WHY MEASURE PERFORMANCE?

Over the last decade, prescription drug spending has generally received considerable scrutiny due to its growth rate and share of national health expenditures (Levit et al., 2000). Growth rates increased from 8.7 percent in 1993 to 15.4 percent in 1998. Spending for prescription drugs increased from 6 percent of health spending in 1994 to 8 percent in 1998. Moreover, prescription drug spending represented a 20-percent share of the increase in health spending in 1998. The desire to understand the impact of prescription drug management on prescribing behavior, drug utilization, and spending has grown commensurately.

PBMs and entities that provide drug management services have become key organizations in the provision of prescription drugs. A recent survey of HMOs revealed that 600 of 604 HMOs had a drug benefit; only 57 HMOs of the 600 with a drug benefit did not provide prescription drug coverage through a PBM (Pharmacy Benefit Management Institute, Inc., 2000). Based on these figures, the Pharmacy Benefit Management Institute has estimated PBM coverage to be approximately 160-190 million individuals in the U.S. (Pharmacy Benefit Management Institute Inc., 2000).

The large percentage of HMOs delegating the management of their prescription drug services to outside entities has increased interest in holding those organizations accountable. To date, most HMOs have focused efforts on measuring the net financial benefit of delegating this activity. However, interest in measuring the quality of the services provided has increased. Concern about pharmaceutical company ownership of prescription drug management companies and strategic alliances and partnerships with them has also contributed to interest in PBM activities (U.S. General Accounting Office, 1995). …

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