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Board sees steep pharmacy and outpatient cost growth; staff plan deeper APCD dives
Summary
Staff presented a 2017'2024 APCD cost-driver analysis showing large PMPM growth driven by retail pharmacy (price/intensity) and outpatient/other medical categories; board requested further disaggregation, inflation adjustment, and health-status controls.
State staff presented a first-year cost-driver analysis based on the Washington All-Payer Claims Database (APCD), covering 2017 through 2024 and a year-over-year 2023'4 snapshot.
Cathy Temple, senior data analyst, and Marty Ross, data analyst, told the board the APCD covers about 71% of Washington'state residents and is claims-based (it omits some non-claims spending and Medicare FFS data for 2023'4). They said retail pharmacy, outpatient services and an "other medical" category were the largest contributors to cumulative per-member-per-month (PMPM) spending growth and that, across markets, pharmacy growth is driven mainly by changes in price/intensity rather than utilization.
"Pharmacy growth is heavily price-intensity driven," Temple said, describing a strong post-pandemic acceleration in allowed amounts per service. Staff cautioned that the APCD measure of pharmacy "utilization" is counts of fills and that shifts between 30-day and 90-day fills could change measured utilization.
Board members pressed staff on analytic choices. Katarina LaMarche, policy director at the Washington State Hospital Association, urged adjusting for general economic inflation and including comparisons to economy-wide growth. Member Kim Wallace and others pressed for analyses that control for changes in population health, site-of-care shifts, and whether expensive new biologic drugs explain pharmacy trends. Staff said those deeper dives are possible and recommended retail pharmacy, other medical and outpatient as initial priorities for further work.
Staff noted enrollment shifts'a decline in Medicaid and strong growth in Medicare Advantage'that influence statewide PMPM trends. The board directed staff to return with more granular analyses (including regional and out-of-pocket spending explorations) to guide future policy recommendations.
The presentation and discussion were framed as an initial analysis that will inform more targeted follow-up work by advisory committees and staff.
