Budget Impact Analysis of a Pharmacist-Provided Transition of Care Program

BACKGROUND: Postdischarge medication management services have been shown to reduce the incidence of medication-related problems during the transition from inpatient to outpatient care. A pharmacist-run transition of care (TOC) program has been developed to reduce the unplanned readmissions of a high-risk managed Medicaid population after hospitalization. OBJECTIVE: To estimate the budget impact of adding an outpatient pharmacy-based TOC program to a medical benefit from the payer perspective. METHODS: A budget impact analysis was conducted using a decision-tree model developed in Microsoft Excel. The effect on inpatient and total health care costs from the payer perspective was estimated for the 2-year period following initial hospital discharge. Inputs were based on a total plan population of 240,000 lives, with a high-risk population of 7.5%, of whom 37% were hospitalized and potentially qualified for TOC services, resulting in an eligible population of 6,660 patients. The TOC program was assumed to initially cover 30% of the eligible population, with expansion to 60% over the 2 years. We previously reported that this program reduced the risk of readmission by 32% within 6 months and saved the health plan $2,139 per patient referred to the program, inclusive of program cost, compared with patients receiving usual discharge care. Sensitivity analyses were performed to test the impact of uncertainty of model inputs on the results, with the cost of TOC services ranging from $99 to $2,000 per patient referred. RESULTS: The model showed that the TOC program was cost saving at over $3 per member per month in the first 6 months, which translates to over $25 million in total health care cost savings over 2 years. These results were primarily driven by the estimated reduction in inpatient costs associated with the program, which were estimated at $20 million over the 2 years. Sensitivity analyses illustrated that within all the reasonable ranges of model input parameters, including the upper limit of TOC services set to $2,000 per patient referred, the TOC program resulted in cost savings to the health plan. CONCLUSIONS: The TOC program resulted in potential cost savings of over $25 million to the managed Medicaid plan over a period of 2 years, corresponding to over $4 per member per month.