Medicare Part D reduces nondrug medical spending

August 15, 2011

?Implementation of Medicare Part D and Nondrug Medical Spending for Elderly Adults With Limited Prior Drug Coverage? report finds that Part D implementation reduces nondrug medical spending for Medicare beneficiaries with limited prior drug coverage.

A study published by the Journal of the American Medical Association (JAMA) titled “Implementation of Medicare Part D and Nondrug Medical Spending for Elderly Adults With Limited Prior Drug Coverage” found that “implementation of Part D was associated with significant differential reductions in nondrug medical spending for Medicare beneficiaries with limited prior drug coverage.”

"This study is a potential 'game-changer' and shows how better prescription drug benefits can generate significant savings in other healthcare settings,” said Pharmaceutical Care Management Association (PCMA) President and CEO Mark Merritt in a press statement. “Many illnesses, hospitalizations, and emergency room visits occur because seniors with sub-par benefits didn't have access to the medications they needed.  The Part D example shows that more competition and greater use of PBM (pharmacy benefit management) tools like home delivery of chronic refills can help address this issue.”

According to the report abstract, nationally representative longitudinal survey data and linked Medicare claims from 2004-2007 were used to compare nondrug medical spending before and after the implementation of Part D by self-reported generosity of prescription drug coverage before 2006. Participants included 6,001 elderly Medicare beneficiaries from the Health and Retirement Study, including 2,538 with generous and 3,463 with limited drug coverage before 2006.

“Total nondrug medical spending was differentially reduced after Jan. 1, 2006, for beneficiaries with limited prior drug coverage, relative to beneficiaries with generous prior drug coverage. This differential reduction was explained mostly by differential changes in spending on inpatient and skilled nursing facility care. Differential reductions in spending on physician services were not associated with differential changes in outpatient visits, suggesting reduced spending on inpatient physician services for beneficiaries with limited prior drug coverage,” according to the report abstract. “In contrast, nondrug medical spending in the control cohort did not differentially change after Jan. 1, 2004 for beneficiaries with limited prior drug coverage in 2002, relative to beneficiaries with generous prior coverage.”