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In a bid to wring savings from the state's $1.4 billion Medicaid budget, Utah Gov. Jon Huntsman Jr. has given the state Health Department the go-ahead on two policy changes to end overpayment for prescription drugs.
Utah is exploring joining a multistate bulk prescription purchasing bloc being organized by Maine, which would open the door to negotiating deeper discounts than are possible now. Also, in consultation with area doctors, the department is drafting a preferred-drug list to encourage the use of lower-cost generic medications.
"It won't be a fixed list, like a formulary. So if an individual needs a certain medication, we can grant an exception. But we believe a lot of expensive drugs are prescribed unnecessarily," said state Health Department Director David Sundwall.
Sundwall couldn't say when the changes, which apply to all of Utah's approximately 250,000 Medicaid recipients, will go into effect. But he estimates they could save the state as much as $12 million to $14 million annually.
Michael Diely, the state's Medicaid director, said partnering with Maine is just one option, but it is preferred as more cost-effective than setting up a purchasing pool through a private vendor.
The cost-cutting measures mirror recommendations put forth by U.S. Health and Human Services Secretary Mike Leavitt, Utah's former governor, who has proposed cutting $60 billion - about 2 percent - from the projected federal Medicaid spending over the next decade.
Sundwall says he joins the nation's governors in opposing shifting the Medicaid financial burden to the states, but adds, "it would be irresponsible for Leavitt not to try to wrestle this tiger to the ground."
Sundwall says Leavitt's call to close "loopholes" that allow middle-class seniors to give away personal assets in order to qualify for Medicaid doesn't apply to Utah. Nor does his plan to crack down on "creative" accounting tricks that states use to get more federal matching funds.
"We're not in as bad a shape as other states that have expanded eligibility requirements to the middle-class," he said of Utah's fiscally conservative approach to Medicaid.
And while the state already saves $9 million a quarter negotiating with drug companies for rebates and discounts, Sundwall says bulk purchasing of generic brands will save more.
The changes are being welcomed by the same low-income advocates who blasted the Bush administration's spending plan.
"Anything that brings cost-containment to the state so we can spend more of our dollars on services is a good idea," said Sheila Walsh-McDonald, a lobbyist for Salt Lake City's Community Action League. "As much as we want more services for the poor, we also want cost-effective use of taxpayer dollars."
Pharmaceuticals comprise Utah's fastest growing Medicaid expenditure, having more than doubled in five years to a projected $210 million in fiscal year 2005.
The health department has proposed a preferred drug list before. But the idea was shot down by Utah lawmakers who feared it would create delays for people who needed "off-list" drugs that must be pre-approved by a doctor.
But Walsh-McDonald says, "That's no different than any other insurance program."