Medicare Part D, Adherence, and the Value of Pharmaceuticals

Before enactment of the health care reform legislation two years ago, the most significant change in the health care landscape over the past decade was the Medicare drug benefit. When benefits began in 2006, there were many questions about how Medicare beneficiaries would fare. A new study published in the July 27 issue of the Journal of the American Medical Association found some positive changes in non-drug medical spending by Medicare beneficiaries whose drug coverage was limited prior to implementation of the Medicare Part D benefit.  The study compared these beneficiaries’ spending trend for medical services other than drugs with the trend for those who had generous drug coverage prior to the start of the Medicare drug benefit. After the start of the Medicare drug benefit, spending by beneficiaries with limited prior drug coverage was more than 10 percent lower than expected based on pre-Part D trends. Most of the difference was due to changes in use of inpatient and skilled nursing facility services, so post-Part D, those with the poorest prior coverage for drugs showed improved ability to remain at home and in their communities.

There is considerable prior research cited in this new article that shows increased use of drugs, improved medication adherence, and lower out-of pocket drug spending after the start of the drug benefit, but there is little assessment of what happened to spending on other medical services. Using nationally representative data, this new study suggests that the positive effects of Part D on drug use are associated with decreased spending on other services, such as hospital stays. The study also provides yet another example of the importance of broadly assessing the effects of changes in policies so that costs and benefits can be appropriately weighed and balanced. NPC’s sponsored research has emphasized this broad approach in comparative effectiveness research to ensure that findings characterize not only the impact on use of drugs and other medical services, but also the full range of effects that are important to patients’ health, quality of life, and their ability to perform in the workplace. Translation of this research to drug benefit and coverage policies, the subsequent effects on adherence to medications, and the effects of changes in adherence to therapy are important parts of this picture as well. As noted in previous columns, identifying opportunities to improve care and understanding the impact of improved care must also be part of the agenda.

Improving the quality of care is part of the charge for the new Accountable Care Organizations (ACOs), and the new Medicare research findings may have some implications for these organizations that are just beginning to develop. The research, with its positive findings, is based on data for Medicare enrollees in freestanding Part D drug benefit plans.  These plans have no formal links to services provided under traditional Medicare Parts A and B and thus no coordination to ensure the best interaction between drug therapies and other health services. The new cost and quality goals that ACOs will need to meet may be more easily attained through the coordination with drug therapy that will be possible in these new care delivery structures.

The Medicare drug benefit will also see improvements as the well-known “donut hole” in coverage shrinks over the next few years.  The latest research discussed here suggests that there may be additional benefits as Medicare patients make better use of medications when they reach the spending limits that previously defined a gap in their coverage.  More research will be needed to assess the full range of impacts that result from this change.