Skip to main content Back to Top

8/2/2001

DUR Grows As HMOs Cut Practice Guidelines, Prior Authorization

Kate Traynor

Health maintenance organizations (HMOs) rely more heavily on drug-use review than on practice guidelines and prior authorization to influence prescribing habits, according to the recently released edition of the HMO-PPO/Medicare-Medicaid Digest.

Drug-use-review programs were used by 91 percent of HMOs in 1999, making this the most common tool for influencing prescribing habits.

A smaller proportion of HMOs—73 percent—relied on practice guidelines to influence prescribing habits in 1999, compared with 76 percent the year before. During that time, the proportion of HMOs using prior-authorization programs for prescription drugs also fell by about 3 percentage points, to 80 percent.

Ninety percent of HMOs in 1999 contracted with a pharmacy benefit management company (PBM) for at least one service. Of these HMOs, 52 percent had the PBM dispense prescription drugs to plan members, an 8-percentage-point drop from 1998.

About 97 percent of HMOs used drug formularies in 1999, compared with 92 percent the year before. Two thirds of HMOs used their proprietary formularies in 1999, and a quarter of the HMOs relied on formularies controlled by a PBM. Eighty-nine percent of an HMO's prescriptions in 1999 were filled with drugs listed on its formularies.

The HMO industry as a whole offered broader coverage for experimental drugs, "cosmetic aids," anorexiants, smoking-cessation aids, fertility drugs, and oral contraceptives in 1999 than in 1998. About 94 percent of HMOs provided coverage for oral contraceptives in 1999, a 19-percentage-point increase over the previous year. Half of all HMOs covered smoking-cessation aids in 1999, a 25-percent increase from 1998.

Twelve percent of HMOs covered some nonprescription medications in 1999, a near-doubling of the proportion of plans that covered these products in 1998.

Seventy percent of HMOs had step-therapy protocols in 1999. At 58 percent of these HMOs, pharmacists were authorized to carry out step-therapy treatment, down from 65 percent in 1998.

Thirty-seven percent of HMOs offered prescription services through inhouse pharmacies in 1999. These pharmacies employed an average of about 31 pharmacists each. This was a significant increase over 1998, when each inhouse HMO pharmacy employed an average of 28 pharmacists.

The average per member per year drug expense for HMOs in 1999 was $239.45, up 13 percent from 1998. Ingredient costs for prescription drugs rose 4 percent during this time, to an average of $29.35 per prescription dispensed.

The average non-Medicare HMO patient’s monthly premium for pharmacy benefits in 1999 was $17.43 for individual coverage and $43.32 for family coverage. Plan members' copayments averaged $17.50 per prescription for nonformulary, brand-name prescription drugs and $5.98 for generic prescription drugs. These copayments represented 43 percent of the cost of brand-name drugs and 49 percent of the cost of generic products.

About 46 percent of the prescriptions filled for HMO patients in 1999 were for generic products.

The digest was prepared for Aventis Pharmaceuticals Inc. with data collected by Chicago-based SMG Marketing Group Inc. Data for the report were obtained by telephone and mail surveys conducted between February and June 2000 and from censuses of the HMO industry. Richard Frye, editor of the Managed Care Digest series, said all known HMOs in the United States were surveyed for the project and the response rates for the surveys used in the digest series were typically around 90 percent.