Billions of dollars in venture capital is being poured into new innovations to improve health care. Devices remotely monitor patient health; smart phone apps help patients manage their exercise and schedule appointments with their doctors; and ‘Big data’ applications identify patients with elevated risks of hospital re-admissions, or other potentially preventable outcomes.

Yet, despite these advances, a vexing problem that has persisted since the days of Hippocrates remains to be cracked: how to get patients to take their medications as directed.

New evidence suggests that helping patients take their medications more consistently as directed may be instrumental in lowering health care costs, while simultaneously improving patient outcomes.

Recent studies (Roebuck et al., 2011, Stuart et al., 2011, and Choudhry et al., 2011, among others) have identified direct associations between appropriate medication use and health care spending. Using data from large employers, Roebuck and colleagues determined that increases in spending on medications with corresponding decreases in hospitalizations and emergency department visits, yielded benefit-cost ratios ranging from 3:1 for dyslipidemia to more than 10:1 for hypertension. The savings from those studies is fairly large, even after discounting these estimates for underlying differences between adherent and non-adherent patients.

Those studies have prompted the Congressional Budget Office, which serves as the independent, official scorekeeper of the fiscal impact of federal policy and proposed legislation, to recently change its stance on medication adherence from a budgetary perspective. CBO did not previously believe that the evidence of a direct connection between medication use and health care spending was sufficient to “score” a medical cost offset in its budgetary forecasts. CBO’s budget forecasting now assumes that medication adherence can lead to reductions in doctor visits and hospitalizations, and impact the rise of health care costs.

Specifically, CBO now estimates that a 1% increase in the number of prescriptions filled would cause Medicare spending on medical services to fall by roughly one-fifth of 1%. A 0.20% reduction in medical costs may seem trivial, but this is a big deal. Consider that CBO projects that Medicare will spend more than $2 trillion on hospitalizations over the next ten years. Seemingly miniscule reductions in that figure amount to major savings, and dwarf projected savings from the highly publicized new health care provider payment models that are being tested under the Affordable Care Act.

Second, consider that CBO’s new methodology applies to the use of all pharmaceuticals for all beneficiaries enrolled in the Medicare program. As the CBO report points out, future programs or policies that achieve more targeted improvements in adherence for certain beneficiaries with particular diseases or on particular medications could lead to larger savings. For example, the “Million Hearts Campaign,” sponsored by the Department of Health and Human Services with support from industry stakeholders, aims to reduce morbidity and mortality specifically for patients at elevated risk of cardiovascular disease. The per-patient savings from better adherence to relevant medications within this patient cohort is likely to be larger than more general savings estimates announced by CBO.

Third, the fact that CBO now recognizes cost offsets from medication adherence could encourage members of Congress to consider additional policies to realize these cost savings, such as expanding the use of financial incentives to increase accountability for so-called “Part D plans” that provide most Medicare beneficiaries’ drug benefits to help patients take their medications more consistently.

Even more recently, the Medicare Payment Advisory Commission (MedPAC), an independent Congressional agency that advises Congress on policies affecting Medicare, announced that it, too, is analyzing the fiscal impact of adherence on Medicare, with the goal of achieving a better understanding of the relationship between medication adherence and Medicare spending, based on clinical condition, medication regimen, and income status. MedPAC’s work will have an influence on how Congress thinks about future policies to promote adherence in the Medicare program. Private payers are also seriously thinking how lack of adherence affects medical spending.

Already, the Centers for Medicare and Medicaid Services (CMS) has taken important steps to promote more consistent medication use for certain chronic conditions. Based on industry statistics released by CMS, those efforts appear to be working. As part of the “Star Ratings” program , CMS now makes financial bonuses available to health plans when they help eligible Medicare beneficiaries increase adherence to blood pressure, cholesterol, and diabetes medications. Those three medication adherence measures account for over 27% of the total “Part D” component of the Star Ratings.

The payoff for health plans is huge. In addition to the potential medical savings they can realize when their members take chronic disease medications more consistently, health plans earning 4 or 5 out of 5 available “Stars” can earn an additional 4% to 5% in premium bonuses each year. These bonus payments can be used to enhance benefits or lower future plan premiums to attract additional members.

Early signs suggest that these policy changes are having a broader market impact beyond the health plans that qualify to receive bonuses from CMS. For example, pharmacy chains and pharmacy benefit managers contracting with health plans are competing with each other to help health plans influence adherence and related quality measures via their own care management programs and other clinical resources.

We still need to better understand the specific disease areas and patient populations for which proper use of medications most directly lowers health care spending. We still need to identify the most effective ways to improve adherence for individual patients incorporating their values and preferences, and better understand why patients don’t follow their drug regimen. But, the concerted push to realize the medication adherence opportunity  — accelerated by new incentives and new investments in health IT and data applications — could strengthen one of the few ‘killer apps’ in health care, with the potential to improve patient health and lower costs.


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