Impact of the Medicare Modernization Act on Dually Eligible Persons With Psychiatric Diagnoses: A New York State Case Study

Abstract

The 2003 Medicare Modernization Act shifted medication coverage from Medicaid to Medicare for persons dually eligible for both programs. This study examined the extent to which access to psychiatric and concomitant medications was reduced for dually eligible individuals in New York State. It also examined the extent to which consumer copayments and state costs were changed when the act was implemented in 2006. Data were from psychiatric medication Medicaid claims in 2002 for the 36,842 dually eligible adults with severe mental illness and from the 2006 formulary data of New York State's 15 prescription drug plans available after the Medicare Modernization Act was implemented. The study simulated how dually eligible persons in New York State would fare under the plans' random and best-fit enrollment scenarios, taking into account the additional coverage provided by New York State's 2006 safety net policy. Implementation of the Medication Modernization Act reduced drug availability and increased usage restrictions. A study-defined generosity measure estimated a 51%+/-19% reduction in access. Dually eligible individuals with depression experienced the largest treatment gap. Cost changes to the state were essentially budget neutral, primarily because of the required claw-back payment. Consumer copayments increased percentage-wise, but actual dollar amounts remained small; increases were higher under best-fit enrollment compared with random enrollment. Without a generous safety net policy, dually eligible beneficiaries, especially those with depression, are likely to experience large gaps in their medication coverage and somewhat higher out-of-pocket costs. Treatment gaps were somewhat reduced by placement in best-fit plans, and such placement resulted in no added financial burden to the state. However, this resulted in higher consumer copayments--payments that are small in the actual dollar amount but that might have an impact on spending and on medication access for a largely poor consumer group.