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PENNSYLVANIA PACE REAUTHORIZATION ACT INCLUDES COMPUTER CLAIMS AUDIT BY VIRGINIA-BASED COMPANY TO MONITOR INTERACTIONS OF DRUGS USED BY MEMBERS

Executive Summary

The Pennsylvania Pharmaceutical Contract Assistance for the Elderly reauthorization act calls for a computer claims audit to generate utilization data on the types of drugs prescribed and drug interactions among PACE cardholders. Health Information Design Systems, based in Rosslyn, Va., will develop software to analyze claims data for the likely outcomes of mixing certain drugs. The analysis will be forwarded to the Richmond, Va.-based Computer Company, which in turn will provide a second evaluation and disseminate the analysis to the appropriate utilization review committee. The Computer Company now handles the daily claims and application processing for PACE. The therapeutic utilization review program is part of a six-point plan to cut program costs. It will be overseen by the Pennsylvania Department of Aging. PACE is funded through the state Lottery Fund. The PACE bill, which reauthorizes the program indefinitely, was passed and signed into law June 30. With the bill's cost containment measures, expenditures are expected to run $651 mil. for the next three years. Expenditures for the program's first three years totaled $345 mil. Without the cost cutting measures, the program would have cost $99 mil. more, or a total of $750 mil. As it now stands, PACE will cost the state of Pennsylvania $179 mil. in 1987-88, $216 mil. in 1988-89 and $256 mil. in 1989-90. The program's fiscal year begins July 1 and ends June 30. In prepared testimony before a June 18 Senate hearing on Medicare outpatient drug benefits, PACE Director Thomas Snedden reported that an increase in utilization, as well as an increase in the number of beneficiaries and rising drug prices, were all contributing to increased program costs ("The Pink Sheet" June 22, p. 7). A second cost containment measure in the reauthorization act encourages standardized purchasing by quantity. The bill originally provided for a minimum quantity of 500, but the Department of Aging has since decided to establish its own list of commonly used package sizes in order to identify the most economical purchase sizes. Secretary of Aging Linda Rhodes outlined the six-part plan at a June 25 press conference in Harrisburg, Pa. "With the greying of Pennsylvania, we can't afford to have a couple of programs without any limits that consume all of the Lottery dollars," she said. "The geriatric agenda is far too broad." The third cost containment provision sets up an incentive program to get pharmacists to solicit generic drug substitutions from physicians. Each time a generic substitution is successfully made, PACE will pay the pharmacist $1. The reimbursement will be offered on the original prescription only. Pharmacists will be required to document the transactions, by keeping a copy of the original prescription and a record of the phone call made to the physician. Fourthly, the bill calls for mandatory dispensing of generic drugs. "We will reimburse PACE pharmacies only for dispensing the therapeutically equivalent generic brand drug when the physician permits substitution and when the generic brand appears on the Department of Health formulary," Rhodes said. The program also incorporates a ban on "less-than-effective" drugs. Any drug determined to be less than effective by FDA will be excluded from program reimbursement, unless the physician maintains that a DESI drug is "medically necessary." Finally, the Department of Aging will increase its efforts to detect provider fraud by expanding the number of audits it performs annually.
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