Capitation Payment for Medicaid Pharmacy Services: Impact on Non-Medicaid Prescriptions

Although pharmacy organizations have been instrumental in the movement to repeal antisubstitution laws, there is evidence that under the current fee-for-service system pharmacists have not exercised their newly obtained prerogatives freely. A previous study has demonstrated that paying pharmacists on a capitation basis for their Medicaid patients effects a highly significant increase in the rate of generic substitution. The present study was conducted to determine whether the pharmacists' newly acquired generic substitution habits "spill over" from Medicaid prescriptions as a result of capitation reimbursement. The results indicate that pharmacists who participated in the capitation experiment for the Medicaid drug program significantly increased their rate of generic substitution on non-Medicaid prescriptions. It was concluded that the same pharmacies that increased their substitution rate in the Medicaid program under capitation also increased their substitution rate on non-Medicaid prescriptions. Finally, generic substitutions in both the Medicaid and non-Medicaid studies generally involved the same labelers as well as drugs in the same therapeutic categories and with the same generic classifications.