Medicare Prescription Coverage and Congressional Gridlock: Time for Compromise

Treatment Costs Related to Bipolar Disorder and Comorbid Conditions Among Medicaid Patients With Bipolar Disorder

Medicare Part D—Lessons Learned and Guidance for Health-care Reform

Pharmaceuticals and medicare managed care: pharmacoeconomic considerations

Benzodiazepines are excluded from prescription drug coverage under Medicare Part D. The objectives of this study were twofold: to provide national estimates of benzodiazepine utilization and expenditure patterns and to examine the impact of drug coverage and other factors associated with utilization of benzodiazepines and potential benzodiazepine substitute classes. The 2002 Medicare Current Beneficiary Survey provided national estimates of benzodiazepine use and expenditures among Medicare beneficiaries. Multivariate logistic regression was conducted to assess the relationships between independent variables and use of benzodiazepines and potential substitute classes. The independent variable of interest was drug coverage, assessed by payer source. Other covariates included in the models were chronic conditions associated with benzodiazepine use, age, sex, race, and income. In 2002, 13.7% of Medicare beneficiaries received at least one benzodiazepine fill, with an average of 5.8 benzodiazepine prescriptions filled at an annual cost of 190 dollars. Specific sources of prescription drug coverage were not significantly associated with benzodiazepine use. Female gender, chronic mental illness, age under 65, and lower income were significantly positively associated with benzodiazepine use in the Medicare population, whereas black and other races were significantly negatively associated with benzodiazepine use in this population. Compared with Medicare beneficiaries without supplemental drug coverage, beneficiaries with supplemental drug coverage were more likely to use potential benzodiazepine substitute classes than benzodiazepines. Benzodiazepines were widely used by Medicare beneficiaries. Drug coverage influences access to benzodiazepines and potential substitute classes. These findings have important implications for identifying beneficiaries potentially affected by the exclusion of benzodiazepine coverage under Medicare Part D.

Medicare Part D

BACKGROUND: Cost-related nonadherence compromises successful and effective management of chronic disease. The Medicare Modernization Act of 2003 (MMA) and Patient Protection and Affordable Care Act of 2010 (ACA) aimed to increase the affordability of outpatient prescription drugs for older adults (older than age 64 years). The Medicare Part D prescription drug insurance coverage gap ("donut hole") created by the MMA was fully closed in 2020 by the ACA. OBJECTIVES: To (1) describe prescription drug coverage and financial hardship from purchasing prescription drugs among older American adults for 2021, (2) compare these results with findings from data collected before the MMA and during the progressive elimination of the Medicare Part D coverage gap, and (3) compute the likelihood for financial hardship from purchasing prescription drugs using variables for year, prescription drug insurance coverage, health-related information, and demographics. METHODS: Data were obtained from 4 nationally distributed, crosssectional surveys of older adults to track coverage for and financial hardship from purchasing prescription drugs. Surveys in 1998 and 2001 were mailed to national random samples of US seniors. Of 2,434 deliverable surveys, 700 (29%) provided useable data. Data were collected in 2015 and 2021 via online surveys sent to samples of US adults. Of 27,694 usable responses, 4,445 were from older adults. Descriptive statistics and logistic regression analyses described relationships among financial hardship and demographics, diagnoses, and daily prescription drug use. RESULTS: Five percent of older adults lacked prescription drug coverage in 2021, continuing a downward trend from 32% in 1998, 29% in 2001, and 9% in 2015. Contrastingly, 20% of older adults reported financial hardship from prescription drug purchases in 2021, bending an upward trend from 19% in 1998, 31% in 2001, and 36% in 2015. Financial hardship from purchasing prescription drugs was more likely to be reported by older adults lacking prescription drug insurance, taking multiple medications daily, and having a low annual household income across all survey years. The latter 2 of these 3 factors were still predictive of financial hardship from purchasing prescription drugs among older adults with prescription drug insurance. CONCLUSIONS: Financial hardship from purchasing prescription drugs is still experienced by many older adults after the full implementation of the MMA and ACA. Lacking prescription drug coverage, taking more than 5 prescription drugs daily, and a low annual household income may increase the likelihood of experiencing this financial hardship. Pharmacists can be a resource for older adults making choices about their prescription drug coverages and purchases. DISCLOSURES: Funding was provided by the American Association of Colleges of Pharmacy New Investigator Program, the University of Minnesota Grant-in-Aid of Research Program, the Peters Endowment for Pharmacy Practice Innovation, the Chapman University Research Program, and the University Minnesota Research Program.

To identify determinants of drug coverage among elderly Medicare beneficiaries and to investigate the impact of drug coverage on drug expenditures with and without taking selection bias into account. The primary data were from the 2000 Medicare Current Beneficiary Survey (MCBS) Cost and Use file, linked to other data sources at the county or state-level that provided instrumental variables. Community-dwelling elderly Medicare beneficiaries who completed the survey were included in the study (N=7,525). A probit regression to predict the probability of having drug coverage and the effects of drug coverage on drug expenditures was estimated by a two-part model, assuming no correlation across equations. In addition, the discrete factor model estimated choice of drug coverage and expenditures for prescription drugs simultaneously to control for self-selection into drug coverage, allowing for correlation of error terms across equations. Findings indicated that unobservable characteristics leading elderly Medicare beneficiaries to purchase drug coverage also lead them to have higher drug expenditures on conditional use (i.e., adverse selection), while the same unobservable factors do not influence their decisions whether to use any drugs. After controlling for potential selection bias, the probability of any drug use among persons with drug coverage use was 4.5 percent higher than among those without, and drug coverage led to an increase in drug expenditures of $308 among those who used prescription drugs. Given significant adverse selection into drug coverage before the implementation of the Medicare Prescription Drug Improvement and Modernization Act, it is essential that selection effects be monitored as beneficiaries choose whether or not to enroll in this voluntary program.

Preliminary Responses Confirm Jury Is Still Out on Part D

People without prescription drug coverage face greater financial burdens and may sometimes be unable to follow the courses of treatment prescribed by their physicians. The U.S. legislature is considering Medicare coverage for prescription drugs and the use of managed care approaches for containing costs associated with senior citizens. prescription drug therapy. The purpose of this study was to describe selected characteristics of senior citizens. prescription drug payment and procurement. Data were obtained via mailed survey from national random samples of senior citizens in 1998 and in 2001. Descriptive statistics and regression analyses were used to describe relationships among study variables. Of 2,434 deliverable surveys, 946 (39%) were returned. Of these, 700 (29%) respondents provided usable data for analysis. Results showed that in 2001, compared with 1998, the proportion of senior citizens without any prescription insurance coverage did not change significantly, 29% and 32%, respectively. However, the proportion of respondents with prescription drug coverage who had to share costs of prescriptions through copayments and coinsurance rose significantly, from 69% in 1998 to 89% in 2001. Between 1998 and 2001, the proportion of senior citizens using mail-order pharmacies rose significantly, from 17% to 27%, and the proportion who reported financial hardship also rose, from 19% in 1998 to 31% in 2001. Controlling for year, prescription drug use, and income, logistic regression analysis showed that respondents without any prescription insurance coverage were about 5 times more likely to report financial hardship compared with those having coverage. The proportion of senior citizens without any prescription drug insurance coverage did not change significantly between 1998 and 2001, but cost sharing in terms of the proportion that had cost-sharing requirements and the amount of the cost sharing through copayments and coinsurance rose significantly. Self-reported financial hardship and the use of mail-order pharmacies among seniors increased between 1998 and 2001.

To describe existing prescription drug insurance coverage for older Americans, to describe out-of-pocket payment levels per prescription associated with service benefit prescription drug plans used by older persons, and to examine the association of prescription drug coverage types with the reported use of prescription drugs by older persons. Data were obtained from a national survey of 1570 community-dwelling older persons (>65 y) conducted in June 1998. A 2-part utilization model was estimated using logistic regression and ordinary least-squares regression. Data from 310 respondents were used for analysis. Overall, 66.1% of respondents reported having prescription drug insurance coverage. A majority (76.6%) of respondents having private drug coverage reported having a service benefit plan (requiring copayment or coinsurance amount to be paid for each prescription). The median copayment per brand name and generic prescription for persons reporting having coverage by service benefit plans was $10 and $5, respectively. Overall, a majority of older persons reported paying relatively small amounts out-of-pocket per prescription during 1998. Among persons who reported having drug insurance coverage, there were no statistically significant differences in the reported number of drugs used daily, regardless of out-of-pocket payment amount per prescription. Patient need and level of past drug use were significantly associated with both the likelihood of using any prescription drugs and the level of use among users. More research is needed to examine differences in drug expenditures and characteristics of drugs used across prescription drug insurance types for older persons.

The lack of an outpatient prescription drug benefit under Medicare has become a conspicuous omission in the face of accelerated growth in prescription drug expenditures and increased availability of highly effective medications. This article provides a critical review of the empirical evidence on the effect of drug coverage on the use of prescription drugs, health care outcomes, and health care costs among Medicare beneficiaries. The existing literature provides considerable evidence that drug coverage is associated with greater use of all drugs and clinically essential medications and that not all forms of coverage provide the same protection. Longitudinal evidence from elderly and disabled persons in Medicaid indicates that restricting coverage has serious adverse health outcomes for sick and low-income beneficiaries that actually lead to increased health care costs.

Using data from the 1998 Medicare Current Beneficiary Survey (MCBS), we examine changes in beneficiaries' prescription drug coverage from 1997 to 1998 and compare drug use and spending data for beneficiaries with and without drug coverage. The data show that in 1998 the aggregate prescription drug coverage rate of Medicare beneficiaries may have reached a plateau. Also, prescription drug use declined for beneficiaries without drug coverage and increased for those with drug coverage. Covered beneficiaries also paid a larger percentage of their total drug costs out of pocket in 1998 than in 1997. The result was a widening of use and spending differences between beneficiaries with and without coverage.

The introduction of Medicare Part D has generated interest in the cost of providing drug coverage to the elderly. Of paramount importance—often unaccounted for in budget estimates—are the salutary effects that increased prescription drug use might have on other Medicare spending. This paper uses longitudinal data from the Medicare Current Beneficiary Survey to estimate how prescription drug benefits affect Medicare spending. We compare spending and service use for Medigap enrollees with and without drug coverage. Owing to concerns about selection, we use variation in supply-side regulations of the individual insurance market—including guaranteed issue and community rating—as instruments for prescription drug coverage. We employ a discrete factor model to control for individual-level heterogeneity that might induce bias in the effects of drug coverage. We find Medigap prescription drug coverage significantly increases drug spending and reduces Medicare Part A spending. Medigap prescription drug coverage reduces Medicare Part B spending, but the estimates are not statistically significant. Furthermore, the substitution effect decreases as income rises, and thus provides support for the low-income assistance program of Medicare Part D.

Although most of the elderly are covered by Medicare, they potentially face large out-of-pocket costs for their health care because of excluded services. Aside from nursing home care, the exclusion of prescription drugs is one of the most significant. Several earlier policy initiatives have proposed adding prescription drug coverage to the Medicare program. To determine the effects of such an expansion, one must account for the potential increase in the demand for prescription drugs from providing insurance coverage. The study uses a new data source, the RAND Elderly Health Supplement to the 1990 Panel Study of Income Dynamics (PSID). The endogenity of insurance coverage is tested using instruments that exploit the longitudinal nature of the data. Equations are estimated on 910 persons (> or = 66 years) using a two-part model. Insurance coverage for prescription drugs significantly increases the probability of use, but not of total expenditures, among those who use prescription drugs. However, insurance coverage significantly lowers out-of-pocket expenditures, thereby decreasing the financial burden on elderly households associated with prescription drug use. Medicaid coverage has effects that are smaller than those for private insurance, but the magnitude is less precisely estimated. These findings imply that if prescription drug coverage were added to Medicare, expected expenditures on drugs would rise by on average $83 for each elderly Medicare beneficiary (in 1990 dollars), although this increase is significant only at the 90% level. If the benefit had been included under Medicare, expected spending on prescription drugs by the elderly would have risen by approximately 20%, or $2.6 billion in 1990.

MANY CLINICIANS HAVE ORDERED A LIPID PANEL for an elderly patient with diabetes and coronary artery disease, only to find that the statin drug prescribed 6 weeks ago has failed to lower the patient’s low-density lipoprotein cholesterol level. “Are you taking your cholesterol pill every day?” the physician is likely to ask. “I hate to tell you, doc, but I just couldn’t afford that pill. I never even bought it.” Recent studies indicate that lack of prescription drug coverage for Medicare beneficiaries is associated with lower use of essential medications and may lead to higher rates of adverseoutcomessuchashospitalizationandnursinghomeplacement. These studies comprise a subset of the medical literature demonstrating that imposing out-of-pocket costs on patients reduces use of medical services, especially for lowincome persons, with worsening of clinical processes or outcomes. In the Rand Health Insurance Experiment, patients contributing to the cost of their care had fewer ambulatory visits, fewer Papanicolaou tests, and higher diastolic blood pressures (for people with hypertension) compared with the freecare group, which had prescription drug coverage. In another survey, 37% of patients with uncontrolled hypertension reported difficulty paying for their medications compared with 16% of those whose blood pressure was controlled; the investigators concluded that pharmacy costs contributed to inadequate hypertension control. In this issue of THE JOURNAL, Federman et al add important findings to this literature, showing that for Medicare beneficiaries with coronary heart disease, only 4% of those without drug coverage—compared with 27% with adequate coverage—used high-priced statin drugs to lower cholesterol in 1997. The association was less marked for lowercost -blockers and nitrates, suggesting that the price of a drug was related to its use in this population. The implication is that elderly patients with coronary heart disease who lack coverage for high-cost medications are at greater risk for myocardial infarction and death. This article appears at a critical time for national health care policy. Serious concerns and anger about drug costs are pervasive among elderly patients. Whereas 73% of the 41 million Medicare beneficiaries have some drug coverage, only 39% have reliable coverage, since Medicare managed care and Medigap drug plans have deteriorated in the past few years. Among Medicare beneficiaries, 27% will spend more than $1000 out-of-pocket for medications in 2001. The average cost per prescription for an elderly person increased from $28 in 1992 to $42 in 2000 and is expected to reach $73 by 2010. However, the currently elected representatives may have painted themselves intoacorneron theMedicareprescription drug issue. The budget agreement stemming from the recent $1.35 trillion tax cut stipulates that only $300 billion can be spent for Medicare prescription drugs over the next 10 years. Yet, the Congressional Budget Office projects drug expenditures forelderlypatients at$1.3 trillion in thecomingdecade. Prescription drug coverage will pay for only 23% of Medicare drug costs unless beneficiaries are charged substantial premiums to increase thepoolof available funds.AsofAugust2001, someRepublicanandDemocraticdrugcoverageproposalscontained a $636 yearly premium that would double by 2011. These are devastatingly high sums for elderly persons, whose median income in 1999 was only $14425. Even with high premiums, these congressional proposals will still require large co-payments. Unless the budget agreement is modified, the $300 billion 10-year limit has sabotaged the chances of a Medicare drug benefit that makes prescriptions affordable to allelderlypersons.TheonlyhopeforreasonableMedicaredrug coverage is a reduction in the cost of medications. From 1998 to 1999, national expenditures for prescription drugs increased 16.9% compared with a 5.6% growth in all other health expenditures. From 1999 to 2000, drug expenditures increased another 18.8%. Three factors have played major roles in the increase in pharmaceutical expenditures from 1993 to 1998: 18% of the increase resulted from higher prices for drugs; 43% from the increasing number of prescriptions written; and 39% from newer, higher-priced drugs replacing older, less-expensive drugs. Price Increases. The pharmaceutical industry claims that high drug prices are needed to finance research and development of new products, each of which costs an average of $500 million to develop. While this argument has some merit, it does not tell the entire story. For years, pharmaceutical manufacturing has been the most profitable of all industries, earning a 1999 median net profit after taxes equal to 19% of revenues, compared with 5% for all Fortune 500 firms. In 1998, the 10 largest drug companies spent only 11.1% of their sales