Comparison of Medicaid Formulary Coverage and Utilization with Other Payers
Historically, state Medicaid agencies reported having limited tools to manage drug utilization compared to other payers. To determine whether state Medicaid programs were at a disadvantage in managing utilization compared to other payers, the Medicaid and CHIP Payment and Access Commission contracted with IMPAQ—acquired by AIR in 2021—to compare Medicaid drug coverage and utilization management tools with Medicare Part D and commercial payers.
We assessed variation in formulary coverage and utilization management restrictions—prior authorization, step therapy and quantity limits—of high-cost drugs across Medicaid, Medicare Part D and commercial payers. We further assessed the relationship between formulary coverage and restrictions and drug utilization.
Additionally, the analysis compared how payers differ in covering new high-cost drugs, how this coverage changes over time and how payers vary in terms of the average gross cost (i.e., before rebates) per 30-day prescription fill within selected drug classes. To compare variation in drug coverage and UM restrictions across formularies, we analyzed formulary data from Managed Markets Insight & Technology. To assess the effect of UM restrictions on drug utilization, we linked the formulary data to Symphony Health Integrated Dataverse claims data. We delivered a research report and Tableau dashboards that describe the methodology and rationale, as well as the project results.