Encouraging generic use can yield significant savings

Key findings. (1) Zero copayment for generic drugs is the greatest influencer of generic statin utilization. (2) Both higher copayments for generic drugs and lower copayments for competing brands are associated with a decreased probability of using generic statins. (3) Prior authorization and step therapy requirements for brand-name statins are associated with an increased use of generic drugs. (4) Greater use of generic statins should reduce costs for patients, plans, and Medicare.

How end-stage renal disease patients manage the Medicare Part D coverage gap

Medicare Part D was enacted to help elderly and disabled individuals pay for prescription drugs, but it was structured with a gap providing no coverage in 2010 between $2,830 and $6,440. Patients with end-stage renal disease (ESRD) are especially likely to be affected due to high costs of dialysis-related drugs and the importance of adherence for overall health. Researchers from social work, pharmacy, and dietetics interviewed 12 patients with ESRD to learn about strategies and challenges during the coverage gap. Constant comparison generated the following themes: the experience of hitting the gap, management strategies, physical and emotional consequences, and advice for others. Results suggest that patients could benefit from greater involvement with professionals and peers to prepare for and manage their medications during the coverage gap and for support in dealing with emotional consequences and stress related to financial pressures and living with a serious health condition.

The vast majority of Medicare Part D beneficiaries still don't choose the cheapest plans that meet their medication needs

When the Medicare Part D prescription drug benefit began in 2006, a primary concern for some policy makers was whether seniors would be able to make smart choices from among the dozens of competing plans. Using 2009 Part D data, we found that only 5.2 percent of beneficiaries chose the cheapest plan. Nationwide, beneficiaries on average spent $368 more annually than they would have spent had they purchased the cheapest plan available in their region, given their medication needs. More than a fifth of beneficiaries spent at least $500 a year more than they needed to. Beneficiaries often overprotected themselves by paying higher premiums for plan features that they did not need, such as generic drug coverage in the coverage gap. Our findings suggest that beneficiaries need more targeted assistance from the government to help them choose plans, such as customized communications about the most cost-effective plans that would cover their medication needs.

Understanding insurance coverage in the senior market: reimbursement and emerging trends

Currently, Medicare Part D is the primary payer of pharmaceuticals and driver of formulary selection for most seniors, regardless of their care setting. This primer examines key issues in reimbursement for geriatric care from a historical perspective and how it has affected health care professionals in their clinical and distributive functions. Discussion on how reimbursement trends evolved for older adult patients across care settings such as nursing facilities, assisted living, hospice, and home health are included. Additionally, this primer identifies what is changing across the different care settings, the complexities of medication coverage today, and current trends that may have significant impact on medication cost in the near future if the Affordable Care Act is implemented as currently written. Finally, the primer identifies legislative and regulatory initiatives and reimbursement trends that will continue to pose a challenge in the coming years as Congress and the president address the number of individuals covered by publicly funded programs. This challenge will be amplified in part by a growing biotechnology pharmaceutical pipeline and a rapidly increasing genomics industry.

Regulations regarding income-related monthly adjustment amounts to Medicare beneficiaries' prescription drug coverage premiums. Final rule

This final rule adopts, without change, the interim final rule with request for comments we published in the Federal Register on December 7, 2010, at 75 FR 75884. The interim final rule contained the rules that we apply to determine the income-related monthly adjustment amount for Medicare prescription drug coverage (also known as Medicare Part D) premiums. This new subpart implemented changes made to the Social Security Act (Act) by the Affordable Care Act. The interim final rule allowed us to implement the provisions of the Affordable Care Act related to the income-related monthly adjustment amount for Medicare prescription drug coverage premiums when they went into effect on January 1, 2011.

Independently owned pharmacy closures in rural America

The closure of rural independently owned pharmacies, including pharmacies that are the sole source of access to local pharmacy services, from 2003 through 2011 coincides with the implementation of two major policies related to payment for prescription medications: (1) Medicare prescription drug discount cards were introduced on January 1, 2004; and (2) the Medicare prescription drug benefit (Part D) began on January 1, 2006. In this brief, we focus on rural pharmacy closure because of the potential threat such closures present to access to any local pharmacy services in a community. Services include providing medications from local stock without delay or travel, overseeing administration of medications to nursing homes and hospitals, and patient consultation.

Should Medicare adopt the Veterans Health Administration formulary?

Since January 2006 all Medicare beneficiaries have been eligible to obtain outpatient prescription drug coverage through private stand-alone drug plans (PDPs). We estimate a model of beneficiary demand for PDPs and use it to compute the loss of consumer surplus due to tightening PDP formularies to the level found in the Veterans Health Administration (VA). Under a generous assumption of cost savings attributed to increased bargaining leverage associated with exclusion of more drugs from formularies, we find the loss in consumer surplus to be smaller than the financial savings that could be shared between Medicare and beneficiaries. According to our estimates, Medicare beneficiaries could be compensated for the loss in consumer surplus associated with tighter PDP formularies with the savings generated by such formularies.

Beneficiaries with cardiovascular disease and thePart D coverage gap

BACKGROUND

Medicare Part D improved access to cardiovascular medications. Increased cardiovascular drug use and resulting health improvements could be derailed when beneficiaries enter the coverage gap and must pay 100% of drug costs. The coverage gap remains the subject of Congressional debate; evidence regarding its impact on cardiovascular drug use and health outcomes is needed.

METHODS AND RESULTS

We followed 122 255 Medicare beneficiaries with cardiovascular conditions with linked prescription and medical claims who reached the coverage gap spending threshold in 2006 or 2007. Beneficiaries entered the study on reaching the threshold and were followed until an event, the catastrophic coverage spending threshold, or year's end. We matched 3980 beneficiaries who reached the threshold and received no financial assistance (exposed) to 3980 with financial assistance during the gap period (unexposed), using propensity score and high-dimensional propensity score approaches. We compared rates of cardiovascular drug discontinuation, drug switching, and death or hospitalization for acute coronary syndrome (ACS) plus revascularization, congestive heart failure, or atrial fibrillation. In propensity score-matched analyses, exposed beneficiaries were more likely to discontinue (hazard ratio, 1.57; 95% confidence interval, 1.39 to 1.79; risk difference,13.76; 95% confidence interval, 10.99 to 16.54 drugs/100 person-years) but no more or less likely to switch cardiovascular drugs. There were no significant differences in rates of death (propensity score-matched hazard ratio,1.23; 95% confidence interval, 0.89 to 1.71) or other outcomes.

CONCLUSIONS

Part D beneficiaries with cardiovascular conditions with no financial assistance during the coverage gap were at increased risk for cardiovascular drug discontinuation; however, the impact of this difference on health outcomes is not clear.

Medicare program; changes to the Medicare Advantage and the Medicare prescription drug benefit programs for contract year 2013 and other changes. Final rule with comment period

This final rule with comment period revises the Medicare Advantage (MA) program (Part C) regulations and prescription drug benefit program (Part D) regulations to implement new statutory requirements; strengthen beneficiary protections; exclude plan participants that perform poorly; improve program efficiencies; and clarify program requirements. It also responds to public comments regarding the long-term care facility conditions of participation pertaining to pharmacy services.

Sources of regional variation in Medicare Part D drug spending

BACKGROUND

Sources of regional variation in spending for prescription drugs under Medicare Part D are poorly understood, and such variation may reflect differences in health status, use of effective treatments, or selection of branded drugs over lower-cost generics.

METHODS

We analyzed 2008 Medicare data for 4.7 million beneficiaries for prescription-drug use and expenditures overall and in three drug categories: angiotensin-converting-enzyme (ACE) inhibitors and angiotensin-receptor blockers (ARBs), 3-hydroxy-3-methylglutaryl coenzyme A (HMG-CoA) reductase inhibitors (statins), and selective serotonin-reuptake inhibitors (SSRIs) and serotonin-norepinephrine reuptake inhibitors (SNRIs). Differences in per capita expenditures across hospital-referral regions (HRRs) were decomposed into annual prescription volume and cost per prescription. The ratio of prescriptions filled as branded drugs to all prescriptions filled was calculated. We adjusted all measures for demographic, socioeconomic, and health-status differences.

RESULTS

Mean adjusted per capita pharmaceutical spending ranged from $2,413 in the lowest to $3,008 in the highest quintile of HRRs. Most (75.9%) of that difference was attributable to the cost per prescription ($53 vs. $63). Regional differences in cost per prescription explained 87.5% of expenditure variation for ACE inhibitors and ARBs and 56.3% for statins but only 36.1% for SSRIs and SNRIs. The ratio of branded-drug to total prescriptions, which correlated highly with cost per prescription, ranged across HRRs from 0.24 to 0.45 overall and from 0.24 to 0.55 for ACE inhibitors and ARBs, 0.29 to 0.60 for statins, and 0.15 to 0.51 for SSRIs and SNRIs.

CONCLUSIONS

Regional variation in Medicare Part D spending results largely from differences in the cost of drugs selected rather than prescription volume. A reduction in branded-drug use in some regions through modification of Part D plan benefits might lower costs without reducing quality of care. (Funded by the National Institute on Aging and others.).

Amendments to regulations regarding eligibility for a Medicare prescription drug subsidy. Final rule

This final rule adopts, without change, the interim final rule with request for comments we published in the Federal Register on December 29, 2010. The interim final rule incorporated changes to the Medicare prescription drug coverage low-income subsidy (Extra Help) program made by the Patient Protection and Affordable Care Act (Affordable Care Act) enacted in March 2010. Under our interpretation of section 3304 of the Affordable Care Act, if the death of a beneficiary's spouse would decrease or eliminate the subsidy provided by the Extra Help program, we will extend the effective period of eligibility for the most recent determination or redetermination until one year after the month following the month we are notified of the death of the spouse. The effective date of this provision was January 1, 2011. We also revised our regulations to incorporate changes made by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) which affect the way we account for income and resources when determining eligibility for the Extra Help program. The statute provides that we no longer count the value of any life insurance policy as a resource for Extra Help effective on and after January 1, 2010. As of that date, we also no longer count as income the help a beneficiary receives when someone else provides food and shelter, or pays household bills for food, mortgage, rent, electricity, water, property taxes, or heating fuel or gas. These revisions updated our rules to reflect these statutory changes.

Medicare program; Medicare Advantage and prescription drug benefit programs: negotiated pricing and remaining revisions; prescription drug benefit program: payments to sponsors of retiree prescription drug plans. Final rule

This final rule implements and finalizes provisions regarding the reporting of gross covered retiree plan-related prescription drug costs (gross retiree costs) and retained rebates by Retiree Drug Subsidy (RDS) sponsors; and the scope of our waiver authority under the Social Security Act (the Act).

Policy implications of Medicare Part D for adults with mental illness: a qualitative exploration

The Medicare prescription drug benefit, introduced in January 2006, has had a substantial impact on the lives of adults disabled by mental illness. However, few studies have undertaken an exploration of the difference that this benefit has made to beneficiaries' access to medication. This study uses a qualitative approach to examine beneficiaries' experiences with the Medicare Part D benefit, and whether having Medicare prescription drug coverage is perceived as helpful. Twenty-six Medicare beneficiaries with mental illness were interviewed regarding their opinions of the Part D benefit, and the investigator found that most beneficiaries were highly satisfied with their prescription drug coverage. However, they would appreciate more information from the Medicare program about their benefits. In addition, beneficiaries were concerned about the possibility of increased future costs. Overall, however, these participants in the Medicare Part D program who had mental illness felt that their needs for psychotropic and other medications were met.

Comparison friction: experimental evidence from medicare drug plans

Consumers need information to compare alternatives for markets to function efficiently. Recognizing this, public policies often pair competition with easy access to comparative information. The implicit assumption is that comparison friction—the wedge between the availability of comparative information and consumers' use of it—is inconsequential because when information is readily available, consumers will access this information and make effective choices. We examine the extent of comparison friction in the market for Medicare Part D prescription drug plans in the United States. In a randomized field experiment, an intervention group received a letter with personalized cost information. That information was readily available for free and widely advertised. However, this additional step—providing the information rather than having consumers actively access it—had an impact. Plan switching was 28% in the intervention group, versus 17% in the comparison group, and the intervention caused an average decline in predicted consumer cost of about $100 a year among letter recipients—roughly 5% of the cost in the comparison group. Our results suggest that comparison friction can be large even when the cost of acquiring information is small and may be relevant for a wide range of public policies that incorporate consumer choice.

Cost trends among commercially insured and Medicare Advantage-insured patients with chronic obstructive pulmonary disease: 2006 through 2009

BACKGROUND

Few estimates of health care costs related to chronic obstructive pulmonary disease (COPD) are available regarding commercially insured patients in the United States. The aims of this retrospective observational analysis of administrative data were to describe and compare health care resource use and costs related to COPD in the United States for patients with commercial insurance or Medicare Advantage with Part D benefits, and to assess cost trends over time.

METHODS

Patient-level and visit-level health care costs in the calendar years 2006, 2007, 2008, and 2009 were assessed for patients with evidence of COPD. Generalized linear models adjusting for sex, age category, and geographic region were used to investigate cost trends over time for patients with Medicare or commercial insurance.

RESULTS

Medical costs, which ranged from an annual mean of US$2382 (Medicare 2007) to US$3339 (commercial 2009) per patient, comprised the majority of total costs in all years for patients with either type of insurance. COPD-related costs were less for Medicare than commercial cohorts. In the multivariate analysis, total costs increased by approximately 6% per year for commercial insurance patients (cost ratio 1.06; 95% confidence interval [CI] 1.04-1.07; P < 0.001) and 5% per year for Medicare patients (cost ratio 1.05; 95% CI 1.03-1.07; P < 0.001). Costs for outpatient and emergency department visits increased significantly over time in both populations. Standard admission costs increased significantly for Medicare patients (cost ratio 1.03; 95% CI 1.00-1.05; P = 0.03), but not commercial patients, and costs for intensive care unit visits remained stable for both populations.

CONCLUSION

COPD imposed a substantial economic burden on patients and the health care system, with costs increasing significantly in both the Medicare and commercial populations.

Drug benefit changes under Medicare Advantage Part D: heterogeneous effects on pharmaceutical use and expenditures

BACKGROUND

Although Medicare Part D improved drug benefits for many beneficiaries, its impact on the coverage of Medicare Advantage Part D (MAPD) enrollees depended on their pre-existing benefits and whether they had gap coverage under Part D.

OBJECTIVE

To examine changes in prescription drug utilization and expenditures associated with drug benefit changes resulting from the implementation of Part D.

PATIENTS

We studied 248,773 continuously enrolled MAPD patients in eight states. Patients whose insurance product or Census block could not be identified or who had atypical benefits, low-income subsidies or Medicaid coverage were excluded.

MAIN MEASURES

The main outcomes were changes in prescription drug days supply and expenditures from 2005 to 2006 and 2005 to 2007.

DESIGN

We linked Census data with 2005-7 MAPD claims, encounter, enrollment, and benefits data and estimated associations of the outcomes with changes in drug benefits, controlling for 2005 comorbidities, demographics, and Census population characteristics.

KEY RESULTS

MAPD enrollees whose drug benefits became potentially less generous after Part D had the smallest increases in drug utilization and expenditures (e.g., drug expenditures increased by $130 between 2005 and 2006), while those who potentially gained the most from Part D experienced the largest increases ($302). The differences in benefit design changes had a stronger association with drug utilization and outcomes among patients at high risk of gap entry than among the entire sample.

CONCLUSIONS

Although Medicare Part D unambiguously improved drug coverage for many elderly, it led to heterogeneous changes in drug benefits among MAPD enrollees, who already had generic and sometimes branded drug benefits. After 2006, benefits were worse for individuals who had branded drug coverage in 2005 but now had a coverage gap, but benefits may have improved for individuals who acquired branded drug coverage. Commensurate with these differential changes in benefits following Part D, changes in drug utilization and expenditures varied substantially as well.

Medicare program; Medicare Advantage and prescription drug benefit programs. Final rule

This final rule finalizes revisions to the regulations governing the Medicare Advantage (MA) program (Part C), prescription drug benefit program (Part D) and section 1876 cost plans including conforming changes to the MA regulations to implement statutory requirements regarding special needs plans (SNPs), private fee-for-service plans (PFFS), regional preferred provider organizations (RPPO) plans, and Medicare medical savings accounts (MSA) plans, cost-sharing for dual-eligible enrollees in the MA program and prescription drug pricing, coverage, and payment processes in the Part D program, and requirements governing the marketing of Part C and Part D plans.

Changes in drug utilization during a gap in insurance coverage: an examination of the medicare Part D coverage gap

BACKGROUND

Nations are struggling to expand access to essential medications while curbing rising health and drug spending. While the US government's Medicare Part D drug insurance benefit expanded elderly citizens' access to drugs, it also includes a controversial period called the "coverage gap" during which beneficiaries are fully responsible for drug costs. We examined the impact of entering the coverage gap on drug discontinuation, switching to another drug for the same indication, and drug adherence. While increased discontinuation of and adherence to essential medications is a regrettable response, increased switching to less expensive but therapeutically interchangeable medications is a positive response to minimize costs.

METHODS AND FINDINGS

We followed 663,850 Medicare beneficiaries enrolled in Part D or retiree drug plans with prescription and health claims in 2006 and/or 2007 to determine who reached the gap spending threshold, n = 217,131 (33%). In multivariate Cox proportional hazards models, we compared drug discontinuation and switching rates in selected drug classes after reaching the threshold between all 1,993 who had no financial assistance during the coverage gap (exposed) versus 9,965 multivariate propensity score-matched comparators with financial assistance (unexposed). Multivariate logistic regressions compared drug adherence (≤ 80% versus >80% of days covered). Beneficiaries reached the gap spending threshold on average 222 d ±79. At the drug level, exposed beneficiaries were twice as likely to discontinue (hazard ratio [HR]  = 2.00, 95% confidence interval [CI] 1.64-2.43) but less likely to switch a drug (HR  = 0.60, 0.46-0.78) after reaching the threshold. Gap-exposed beneficiaries were slightly more likely to have reduced adherence (OR  = 1.07, 0.98-1.18).

CONCLUSIONS

A lack of financial assistance after reaching the gap spending threshold was associated with a doubling in discontinuing essential medications but not switching drugs in 2006 and 2007. Blunt cost-containment features such as the coverage gap have an adverse impact on drug utilization that may conceivably affect health outcomes.

Implementation of Medicare Part D and nondrug medical spending for elderly adults with limited prior drug coverage

CONTEXT

Implementation of Medicare Part D was followed by increased use of prescription medications, reduced out-of-pocket costs, and improved medication adherence. Its effects on nondrug medical spending remain unclear.

OBJECTIVE

To assess differential changes in nondrug medical spending following the implementation of Part D for traditional Medicare beneficiaries with limited prior drug coverage.

DESIGN, SETTING, AND PARTICIPANTS

Nationally representative longitudinal survey data and linked Medicare claims from 2004-2007 were used to compare nondrug medical spending before and after the implementation of Part D by self-reported generosity of prescription drug coverage before 2006. Participants included 6001 elderly Medicare beneficiaries from the Health and Retirement Study, including 2538 with generous and 3463 with limited drug coverage before 2006. Comparisons were adjusted for sociodemographic and health characteristics and checked for residual confounding by conducting similar comparisons for a control cohort from 2002-2005.

MAIN OUTCOME MEASURE

Nondrug medical spending assessed from claims, in total and by type of service (inpatient and skilled nursing facility vs physician services).

RESULTS

Total nondrug medical spending was differentially reduced after January 1, 2006, for beneficiaries with limited prior drug coverage (-$306/quarter [95% confidence interval {CI}, -$586 to -$51]; P = .02), relative to beneficiaries with generous prior drug coverage. This differential reduction was explained mostly by differential changes in spending on inpatient and skilled nursing facility care (-$204/quarter [95% CI, -$447 to $2]; P = .05). Differential reductions in spending on physician services (-$67/quarter [95% CI, -$134 to -$5]; P = .03) were not associated with differential changes in outpatient visits (-0.06 visits/quarter [95% CI, -0.21 to 0.08]; P = .37), suggesting reduced spending on inpatient physician services for beneficiaries with limited prior drug coverage. In contrast, nondrug medical spending in the control cohort did not differentially change after January 1, 2004, for beneficiaries with limited prior drug coverage in 2002 ($14/quarter [95% CI, -$338 to $324]; P = .93), relative to beneficiaries with generous prior coverage.

CONCLUSION

Implementation of Part D was associated with significant differential reductions in nondrug medical spending for Medicare beneficiaries with limited prior drug coverage.

Choice Inconsistencies Among the Elderly: Evidence from Plan Choice in the Medicare Part D Program

We evaluate the choices of elders across their insurance options under the Medicare Part D Prescription Drug plan, using a unique data set of prescription drug claims matched to information on the characteristics of choice sets. We document that elders place much more weight on plan premiums than on expected out of pocket costs; value plan financial characteristics beyond any impacts on their own financial expenses or risk; and place almost no value on variance reducing aspects of plans. Partial equilibrium welfare analysis implies that welfare would have been 27% higher if patients had all chosen rationally.

Independently owned pharmacy closures in rural America, 2003-2010

The purpose of this policy brief is to provide policy makers, researchers, and stakeholders with information about the closure of rural independently owned pharmacies, including pharmacies that are the sole source of access to local pharmacy services, from 2003 through 2010. This period coincides with the implementation of two major policies related to payment for prescription medications: (1) Medicare prescription drug discount cards were introduced on January 1, 2004; and (2) the Medicare prescription drug benefit began on January 1, 2006. In this brief, we focus on rural pharmacy closure because of the potential threat such closures present to access to any local pharmacy services in a community. Those services include providing medications as needed (not waiting for mail order), overseeing administration of medications to nursing homes and hospitals, and patient consultation.

How do seniors respond to 100% cost-sharing for prescription drugs? Quality of the evidence underlying opinions about the Medicare Part D coverage gap

Popular press coverage of the Medicare Part D coverage gap is based largely on research conducted using retrospective analyses of administrative claims data. These datasets are incomplete because they lack information about methods of obtaining medication that are commonly used by seniors, including free samples, generic drug discount programs, over-the-counter substitution, and patient assistance programs. As a result, evidence about the effects of 100% cost sharing on seniors is limited and suboptimal. Although the current deficit of information about the coverage gap is not entirely unexpected because the Medicare Part D program is relatively new, reliance on claims-based analyses to inform questions that claims data cannot possibly address accurately has tended to mislead and politicize rather than produce constructive policy guidance. Numerous important health policy questions remain unaddressed. These questions are becoming especially important as optimal approaches to providing health care to seniors are the subject of an increasingly vigorous debate.

Choosing the right medicare prescription drug plan: the effect of age, strategy selection, and choice set size

OBJECTIVE

The Medicare Modernization Act of 2003 (better known as Medicare Part D) represents the most important change to Medicare since its inception in the mid-1960s. The large number of drug plans being offered has raised concern over the complex design of the program. The purposes of this article are to examine the effect of age and choice set size (3 vs. 9 drug plans) on decision processes, strategy selection, and decision quality within the Medicare Part D program.

METHOD

One hundred fifty individuals completed a MouselabWeb study, a computer-based program that allowed us to trace the information acquisition process, designed to simulate the official Medicare Web site.

RESULTS

The data reveal that participants identified the lowest cost plan only 46% of the time. As predicted, an increase in choice set size (3 vs. 9) was associated with 0.25 times the odds of correctly selecting the lowest cost plan, representing an average loss of $48.71. Older participants, likewise, tended to make poorer decisions.

CONCLUSION

The study provides some indication that decision strategy mediates the association between age and choice quality and provides further insight regarding how to better design a choice environment that will improve the performance of older consumers.

Are Drugs Substitutes or Complements for Intensive (and Expensive) Medical Treatment

Little is known about the relationship between variation in drug and non-drug medical treatment and how areas may substitute one type of care for the other. Using pharmacy and medical claims data for Medicare beneficiaries, we examine whether areas with more drug use have lower non-drug medical costs and how the quality of prescribing and primary care are associated with medical costs. We find that areas with higher drug spending do not have lower non-drug medical spending; however, poorer-quality prescribing and primary care are associated with higher medical spending in general and inpatient spending in particular.

Heterogeneity in Choice Inconsistencies Among the Elderly: Evidence from Prescription Drug Plan Choice

This paper investigates the degree to which choice inconsistencies documented in the context of Medicare Part D plan choice vary across consumers and geographic regions. Our main finding is that there is surprisingly little variation: regardless of age, gender, predicted drug expenditures or the predictability of drug demand consumers underweight out of pocket costs relative to premiums and fail to consider the individualized consequences of plan characteristics; as a result, they frequently choose plans which are dominated in the sense that an alternative plan provides better risk protection at a lower cost. We find limited evidence that the sickest individuals had more difficulty with plan choice, and we document that much of the variation in potential cost savings across states comes from variation in choice sets, not variation in consumers' ability to choose.

Using medicare data for comparative effectiveness research: opportunities and challenges

BACKGROUND

With the introduction of Part D drug benefits, Medicare began to collect information on diagnoses, treatments, and clinical events for millions of beneficiaries. These data are a promising resource for comparative effectiveness research (CER) on treatments, benefit designs, and delivery systems.

OBJECTIVE

To explore the data available for researchers and approaches that could be used to enhance the value of Medicare data for CER. CHALLENGES AND OPPORTUNITIES: Using currently available Medicare data for CER is challenging; as with all administrative data, it is not possible to capture every factor that contributes to prescribing decisions and patients are not randomly assigned to treatments. In addition, Part D plan selection and switching may influence treatment decisions and contribute to selection bias. Exploiting certain program aspects could address these limitations. For example, ongoing changes in Medicare or plan policies and the random assignment of beneficiaries with Part D low-income subsidies into plans with different formularies could yield natural experiments.

POLICY IMPLICATIONS

Refining policies for time to data release, provision of additional data elements, and linkage with more beneficiary level information would improve the value and usability of these data. Improving the transparency and reproducibility of findings, and potential open access for qualified stakeholders are also important policy considerations. Data needs must be reconciled with current policies and goals.

CONCLUSIONS

Medicare data provide a rich resource for CER. Leveraging existing program elements, combined with some administrative changes in data availability, could create large data sets for evaluating treatment patterns, spending, and coverage decisions.

Regulations regarding income-related monthly adjustment amounts to Medicare beneficiaries' prescription drug coverage premiums. Interim final rule with request for comments

We are adding a new subpart to our regulations, which contains the rules we will apply to determine the income-related monthly adjustment amount for Medicare prescription drug coverage premiums. This new subpart implements changes made to the Social Security Act (Act) by the Affordable Care Act. These rules parallel the rules in subpart B of this part, which describes the rules we apply when we determine the income-related monthly adjustment amount for certain Medicare Part B (medical insurance) beneficiaries. These rules describe the new subpart; what information we will use to determine whether you will pay an income-related monthly adjustment amount and the amount of the adjustment when applicable; when we will consider a major life-changing event that results in a significant reduction in your modified adjusted gross income; and how you can appeal our determination about your income-related monthly adjustment amount. These rules will allow us to implement the provisions of the Affordable Care Act on time that relate to the income-related monthly adjustment amount for Medicare prescription drug coverage premiums, when they go into effect on January 1, 2011.

Choice, numeracy, and physicians-in-training performance: the case of Medicare Part D

OBJECTIVE

In this study, we examined the effect of choice-set size and numeracy levels on a physician-in-training's ability to choose appropriate Medicare drug plans.

DESIGN

Medical students and internal medicine residents (N = 100) were randomly assigned to 1 of 3 surveys, differing only in the number of plans to be evaluated (3, 10, and 20). After reviewing information about stand-alone Medicare prescription drug plans, participants answered questions about what plan they would advise 2 hypothetical patients to choose on the basis of a brief summary of the relevant concerns of each patient. Participants also completed an 11-item numeracy scale.

MAIN OUTCOME MEASURE

Ability to answer correctly questions about hypothetical Medicare Part D insurance plans and numeracy levels.

RESULTS

Consistent with our hypotheses, increases in choice sets correlated significantly with fewer correct answers, and higher numeracy levels were associated with more correct answers. Hence, our data further highlight the role of numeracy in financial- and health-related decision making, and also raise concerns about physicians' ability to help patients choose the optimal Part D plan.

CONCLUSION

Our data indicate that even physicians-in-training perform more poorly when choice size is larger, thus raising concerns about the capacity of physicians-in-training to successfully navigate Medicare Part D and help their patients pick the best drug plan. Our results also illustrate the importance of numeracy in evaluating insurance-related information and the need for enhancing numeracy skills among medical students and physicians.

Disentangling incentives effects of insurance coverage from adverse selection in the case of drug expenditure: a finite mixture approach

This paper takes a finite mixture approach to model heterogeneity in incentive and selection effects of drug coverage on total drug expenditure among the Medicare elderly US population. Evidence is found that the positive drug expenditures of the elderly population can be decomposed into two groups different in the identified selection effects and interpreted as relatively healthy with lower average expenditures and relatively unhealthy with higher average expenditures, accounting for approximately 25 and 75% of the population, respectively. Adverse selection into drug insurance appears to be strong for the higher expenditure component and weak for the lower expenditure group.

Take-up of Medicare Part D: results from the Health and Retirement Study

OBJECTIVES

To estimate the impact of Medicare Part D on prescription drug coverage among elderly Medicare beneficiaries and to analyze the predictors of program enrollment ("take-up") among those with no prior drug coverage.

METHODS

Multivariate analyses of data from the 2002, 2004, and 2006 waves of the Health and Retirement Study.

RESULTS

Take-up of Part D among those without drug coverage in 2004 was high; about 50%-60% of this group had Part D coverage in 2006. Only 7% of senior citizens lacked drug coverage in 2006 compared with 24% in 2004. Demand for prescription drugs was the most important determinant of the decision to enroll in Part D among those with no prior coverage. Many of those who remained without coverage in 2006 reported that they do not use prescribed medicines, and the majority had relatively low out-of-pocket spending.

CONCLUSION

For the most part, Medicare beneficiaries seem to have been able to make economically rational decisions about Part D enrollment despite the complexity of the program.

Out-of-pocket burden of health care spending and the adequacy of the Medicare Part D low-income subsidy

BACKGROUND

Evaluating the adequacy of Medicare prescription drug program (Part D) and its low-income subsidy (LIS) requires a comprehensive understanding of drug spending in relation to household resources.

OBJECTIVE

: To estimate out-of-pocket health care costs in the year before Part D, in context of total household spending, health status, and LIS eligibility.

RESEARCH DESIGN

Nationally representative cross-sectional study.

SUBJECTS

Two thousand two hundred thirty-one Medicare families in the 2005/2006 Health and Retirement Study.

METHODS

We assessed health care costs as a share of household resources remaining after spending on essential housing, food, personal care, and transportation. Burdensome health care costs were defined as exceeding 40% of nonessential resources. We used logistic regressions to assess the probability of incurring burdensome health expenditures, controlling for LIS eligibility.

RESULTS

In the year before Part D, more than half of Medicare families [56.0%; 95% confidence interval (CI): 55.3-59.9] experienced burdensome health care costs. Families in poor health allocated a median of 68.1% [interquartile range (IQR): 35.1-82.9] of nonessential resources to health care (compared with 34.0% median; IQR 11.9-52.2 among families in excellent health, P < 0.011). Most (64%) out-of-pocket health care spending was allocated to health insurance premiums and medications. As many as 26% of Medicare families had burdensome health care costs but were not eligible for LIS assistance.

CONCLUSIONS

Before Part D, burdensome health care expenditures were common in Medicare families. Our estimates of Part D and LIS benefits indicate a limited scope of relief.