Study Finds Savings From Medicare's Drug Plan Extend Beyond Cost of Meds
TUESDAY July 26, 2011 -- The savings for U.S. seniors who participate in the Medicare Part D prescription drug plan may extend far beyond the cost of medications, a new study indicates.
Part D participants also seemed to have lower hospital and nursing home bills, possibly because easier access to medicines has kept them healthier longer.
"That effect of Part D was mostly explained by reduced spending on hospital and shorter-term nursing home stays that follow hospitalization," said Dr. J. Michael McWilliams, lead author of a study published in the July 27 issue of the Journal of the American Medical Association. "There was no effect of Part D on outpatient care."
Previous studies had found that enrollees used more prescription medications, used them as directed and had less out-of-pocket costs after Medicare Part D was implemented in January 2006.
"What hasn't been clear is whether this has translated into preventing costly complications and reduced non-drug medical care," said McWilliams, who is a general internist with Brigham & Women's Hospital and an assistant professor of health care policy and medicine at Harvard Medical School in Boston.
McWilliams and his team looked at Medicare claims data on 6,000 enrollees in the two years before and two years after implementation of Part D.
About 2,500 of the participants had "generous" prescription drug benefits before Part D kicked in and served as a "control group," while about 3,400 had limited drug coverage before Part D.
For those who had limited drug coverage before 2006, non-drug health care was about $1,200 a year lower compared with what would have been expected in the absence of Part D.
Those who started out with generous coverage had slightly decreased costs after Part D, McWilliams said.
This was largely because of fewer inpatient stays and less time at skilled nursing facilities. That is about 10 percent lower than expected in the absence of Part D, McWilliams said.
"From previous studies, we knew that the Part D program was very valuable for seniors in improving drug coverage and improving adherence," McWilliams said. "What this suggests also is that implementation of Part D may not cost as much as was initially thought."
"This is an example of how primary and preventive care, and ongoing continuity of care, is important," added Joe Baker, president of the Medicare Rights Center. "In the old days, before we had a drug benefit, people would skip pills, not take appropriate dosages and wouldn't renew prescriptions because they couldn't afford it. [Now we know] that if we provide comprehensive drug benefits, we can save money down the line and keep people out of higher, costlier levels of care. . . This is important, not only for people's health, but also for the bottom line."
And there may be ramifications in light of the recent Affordable Care Act.
"These partial savings from expanded drug coverage weren't considered in the costs of recent provisions to close the so-called 'donut' hole in prescription drug coverage, suggesting an added benefit of health-care reform," McWilliams said.
"By extension, these findings suggest that that, too, might cost less than expected and help keep seniors out of the hospital, which would represent a significant benefit of health-care reform," he added.
Visit the official Medicare site for more on Part D.
Posted: July 2011
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