A glimpse into the future of medical cost management

A glimpse into the future of medical cost managementPayers are starting to get serious about controlling drug costs. As described in yesterday's Wall Street Journal, payers are using the widespread availability of generics to their advantage. Tactics include:

• Forcing patients to switch to a generic drug within a class, e.g., from on-patent statin Lipitor to off-patent simvastatin. Or favoring drugs within a class that are soon to become generic, e.g., Ambien
• Ending coverage for branded drugs that are similar to generic (or better yet, OTC) drugs they replaced, e.g., favoring Prilosec over Nexium as United has done
• Allowing patients to pay the difference between covered and uncovered drugs, but not counting the difference paid toward the plan's deductible, as South Carolina is doing for its state employees
• Offering generics-only plans, as Medco has recently done

I expect these moves to have quite a dramatic impact. I think that in at least some areas of the country we will see some of these same principles echoed on the medical cost side. (The discussions about "efficiency"” already hint at this direction.) We may see:

• Plans that cover only community hospitals and health centers
• Coverage for nurse practitioners and physician assistants for routine care
• Tighter restrictions on what procedures are performed and what medical devices are used
• Requirements to go overseas for surgical procedures where feasible