1 / 12

Taylor Melanson

Providing Prescription Drug Coverage to the Elderly: America’s Experiment with Medicare Part D By Mark Duggan, Patrick Healy, and Fiona Scott Morton. Taylor Melanson. History of Medicare Part D. Medicare did not cover drugs (1966-2006) % of healthcare costs accounted for by drugs

vadin
Download Presentation

Taylor Melanson

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Providing Prescription Drug Coverage to the Elderly: America’s Experiment with Medicare Part DBy Mark Duggan, Patrick Healy, and Fiona Scott Morton Taylor Melanson

  2. History of Medicare Part D • Medicare did not cover drugs (1966-2006) • % of healthcare costs accounted for by drugs • 4.5% – 1982 • 5.6% – 1994 • 10.1 – 2005 • Prior to Part D, 30% of 44 million beneficiaries lacked coverage for drugs (Neuman et al., 2007) • Medicare Prescription Drug, Improvement, and Modernization Act of 2003 • Took effect in 2006 -> Established Part D • 2007 – covered 24 million people, cost $39 billion

  3. Why Study Part D? • Impact on health and economic well-being • Increase in government spending • “Attempt to use market mechanisms in the delivery of a large-scale entitlement program” (70) • Competition • Price negotiation • Preference matching

  4. Coverage Plans • Stand-alone plans • Basic plans • Government defined standard • “actuarially equivalent” • Many options • 4% of plans cover more than half of enrollees

  5. Standard Cost Sharing Scheme Monthly premium Deductible = $275 Low cost coverage Donut hole Catastrophic coverage Only 17% of plans

  6. Coverage of Medications • Basic Plan coverage - $1676 + catastrophic coverage • Formularies • Tier system • Prior authorization • Step therapy • Off formulary drugs

  7. Choice of Plan • Out-of-pocket cost • Formulary status of current drugs • Maintenance vs acute need drugs • Reputation • Incentive to enroll early • Incentivizes alternative plans • 2008 - 10% of eligible people did not enroll

  8. Influence on Drug Prices • Formulary placement • Incentives for patients and pharmacies • Average price of drugs declined • Treatments without substitutes • CMS required coverage • Protected Classes

  9. Incentives for Sponsors • Firms make bid to CMS • Base beneficiary premium • Incentives to make bid accurate • Risk factor adjustment • Offsets approximately ¼ of variance in drug spending • Plans have better data than government • Catastrophic coverage • Risk absorption

  10. Issues Enrollees without financial incentives Catastrophic coverage Formulary manipulation Inefficient treatment patterns Impact on budget

  11. Conclusions • Successes • Drug prices • Drug utilization • Costs • Failures • Suboptimal choices • Treatments without substitutes • Administrative costs • Unsuccessful incentives

  12. Citations • Images • http://www.epsilonregistration.com/ERImages/378/CMS%20log%20blue.jpg • http://www.alan.com/wp-content/uploads/2012/04/doughnut_21023028-300x286.jpg • http://www.mymedicarematters.org/images/copayGraphic.gif

More Related