States struggle with ways to meet medication needs for high-cost hepatitis C drugs.
The insurer Health Partners Plans had 32 percent of the Medicaid market in Southeastern Pennsylvania last year, but accounted for 70 percent of regional spending on hepatitis C drugs.
That meant the Philadelphia company spent $32 million on expensive new drugs to treat the disease that damages the liver – and had to absorb 60 percent of that outlay as a loss because its contract did not include enough money to cover a surge in hepatitis C treatments.
But this year, Pennsylvania regulators launched a risk-sharing plan to help its Medicaid contractors withstand the crippling costs of hepatitis C drugs, which cure the disease but are so expensive that states and Medicaid plans have struggled with how to pay for them.
Officials at Health Partners, a tax-exempt organization owned by a group of Philadelphia hospitals, said Thursday that if the plan had been in place last year, its loss on hepatitis C drugs could have been cut in half, to $10 million – a big help in an industry that has very narrow profit margins.
“We are grateful to the state for creating a risk pool that goes a long way to balancing out the varying experiences levels of the Medicaid plans,” Health Partners Plans chief executive William S. George said.
One popular drug has a list price of $84,000 for a 12-week treatment.
Pennsylvania’s program, which also covers drugs for cystic fibrosis, has two components, said Leesa M. Allen, a deputy secretary in the Pennsylvania Department of Human Services.
Under the first part of the program, the state has agreed to assume a larger percentage of the drugs’ cost than it did previously.
The second component rewards plans based on quality – determined by the success of treatments, which typically take three months and are complicated by the fact that many hepatitis C patients have other conditions that made it difficult for them to stay on course.
“If we are going to accept some of the risk for payment, we want the plans to be managing these folks in a way that gets them to the cure,” Allen said.
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