The Medicare prescription drug benefit has helped beneficiaries avoid needing care in hospitals or nursing homes, saving the program $12 billion annually, according to a study published on Wednesday in the Journal of the American Medical Association, the AP/Washington Post reports (AP/Washington Post, 7/26).
Study Methodology
For the study, researchers at Harvard Medical School and Brigham and Women's Hospital used Medicare claims data from 2004 to 2007 to compare medical spending on non-drug health care before and after the implementation of Part D in 2006 (Donnelly, Boston Business Journal, 7/26).
The study split 6,000 Medicare beneficiaries into two groups: those who had generous drug coverage before the implementation of Part D and those who had limited drug coverage.
Study Findings
The study found that health care spending on non-drug health services for beneficiaries who had limited drug coverage declined by 10%, or $1,200 per beneficiary annually. About $800 of those savings were because of improved medication adherence, the researchers noted.
However, the study did not identify which drugs helped create the savings or whether the savings offset the cost of administering the drug benefit. According to lead researcher Michael McWilliams, the savings likely are a "partial offset" to the total cost of Part D.
Eliminating 'Doughnut Hole' Could Produce More Savings
The study also indicated that a provision in the federal health reform law eliminating the "doughnut hole" in Part D coverage could save the program more money, MedPage Today reports.
Beneficiaries enrolled in Part D pay 25% of the cost of their drugs until the total bill reaches $2,830. They then have to pay the full cost of the drugs until their total out-of-pocket spending reaches $4,550, a gap in the coverage known as the doughnut hole. The health reform law called for Medicare beneficiaries in 2010 to receive one-time, $250 rebates when they reached the doughnut hole. This year, the rebate was replaced by a 50% discount on brand-name drugs. The overhaul will increase that discount gradually until 2020, when the coverage gap will be closed.
McWilliams said that eliminating the doughnut hole might result in beneficiaries staying healthier -- because they would not skip medications while in the coverage gap -- and they might not seek additional treatment, which could result in additional savings (Walker, MedPage Today, 7/26).