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DataWatch

Do Drug Benefits Help Medicare Beneficiaries Afford Prescribed Drugs?

Abstract

 
We surveyed a random sample of 1,500 elderly people with chronic diseases who were enrolled in eight Medicare+Choice plans with a zero-premium, $200–$300 annual drug benefit and no deductible. An estimated 32 percent did not fill a prescription or reduced a prescribed dosage because of out-of-pocket costs. Lower drug benefits, higher out-of-pocket costs, lower income, and poorer health were associated with underuse of medications. Drug benefits with high out-of-pocket costs might not be effective for beneficiaries who use medications for chronic diseases, especially those with low incomes.

Study Data And Methods

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 
Population. Medicare beneficiaries enrolled in M+C plans in eight metropolitan areas in five states in the South, Midwest, and Northeast participated in this investigation. These plans offered a supplemental drug benefit ranging from $200 to $300 per year. Retail prescription copayments ranged from $5 to $12 for generic medications and from $35 to $75 for brand-name medications. Beneficiaries did not pay for premiums or deductibles out of pocket.

A key test of a Medicare drug benefit is whether it fosters effective drug use by chronically ill beneficiaries.³ Therefore, the sampling frame was restricted to enrollees that had at least one claim for a physician visit or hospital stay that listed an International Classification of Diseases (ICD) code for hypertension (401.xx–405.xx), hyperlipidemia (272.0, 272.2), ischemic heart disease (410.xx–413.xx, 414, 414.0x, 414.8x, 414.9x), congestive heart failure (428.xx), non–insulin dependent diabetes (250.x0, 250.x2), arthritis (714.xx, 715.xx), glaucoma (365.1x, 365.2x, 365.9), or gastrointestinal ulcers (531.xx to 534.xx). Drug claims were not used to define the study population, since those who did not fill prescriptions because of out-of-pocket costs might be missed.

One of the limitations of this study was the exclusion of the 9 percent of beneficiaries who were not continuously enrolled during the first six months of 2002. This helped assure complete claims data but likely excluded some beneficiaries who disenrolled because they exceeded the annual limit on their drug benefit.⁴ The final sampling frame included 51,327 (56 percent) of the 91,030 elderly Medicare beneficiaries who enrolled in the plans during the first half of 2002. A sample of 1,500 enrollees was selected for the survey by randomly taking a constant fraction (1,500/51,327 = 0.0292) of beneficiaries who met the study inclusion criteria from each of the eight health plans.

Survey data. Data were collected during the fourth quarter of 2002 using two mailings of the questionnaire and an interim reminder postcard followed by up to four attempts to reach nonresponders by telephone. A consent process approved by an institutional review board was used. The overall response was 1,088 (72 percent). Eight percent chose not to participate, 2 percent were deceased or too ill to respond, and no contact was made with 18 percent.

The questionnaire began by asking respondents to rate their health status, review a list of medical conditions, and recall the number of different drugs they had in 2002.⁵ The review of conditions was included in an effort to reduce under-reporting of medication use.⁶ Subsequent questions asked about out-of-pocket costs, problems paying for prescription drugs, whether the beneficiary asked for a less costly medication, household income, and other sources of financial support for prescription medications (employer or union, other insurance or a Medigap policy, veterans or military programs, Medicaid or state/local assistance programs, drug company assistance programs, relatives, or friends).

Respondents were asked to indicate whether they did not fill or refill a prescription and whether they skipped or reduced doses to make a prescription last longer. Separate analyses of each behavior gave similar results. In this paper we use the word "stinted" when beneficiaries reported either behavior. Beneficiaries who stinted were asked whether the condition being treated got worse and whether they had to visit a doctor or stay overnight in the hospital because they could not afford to use the medication as prescribed. Questions about ethnicity, race, and education were also part of the survey.

Administrative data. Several variables were derived from pharmacy claims to characterize use of the drug benefit during the nine months prior to the survey. The number of claims and the total copayments made were calculated for each beneficiary. Cumulative plan payments for each enrollee were compared to the annual drug benefit limits to indicate when, if ever, payments made by the plan reached the benefit limit. The number of different medications listed on claims was also counted.

The number of outpatient physician visits during the nine months prior to commencing the survey was ascertained from claims. A count of the number of hospital inpatient stays was extracted from facility claims. Enrollees’ age and sex were also obtained from administrative data.

Data analysis. A multiple imputation procedure using IVEware software was used to estimate missing values on the questionnaire.⁷ The extent of missing values ranged from 2 percent for questions about race and education to 12 percent for the question about household income. Values were imputed for 7–8 percent of the questions about cost-related compromises in drug use. All analyses were stratified by health plan. Respondents were compared to the remainder of the sampling frame using the variables derived from administrative data. There were no significant differences (results not shown); thus, each respondent was weighted equally to represent the study population. Differences between subgroups were compared by t-tests. Cited p values were not adjusted for multiple comparisons.

Study Results

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 
Sample characteristics. Three-quarters of the study sample reported an income of $2,000 per month or less, and nearly a third reported an income of less than $1,000 per month (Exhibit 1). Nearly 40 percent rated their health as fair or poor. Respondents averaged more than three physician visits during the nine months prior to the survey, and 18 percent were admitted to a hospital.

Percentage who stinted on medication use. Twenty-four percent (95 percent confidence interval = 22, 27 percent) reported that they skipped or reduced doses to make a prescription last longer. Thirteen percent (95 percent CI = 11, 15 percent) did not fill or refill a prescription because it was too expensive. Overall, 32 percent (95 percent CI = 29, 35 percent) reported making one or both of these cost-related compromises in the use of prescribed medication.

Conditions that were used to select the sample (hyperlipidemia, hypertension, arthritis, gastrointestinal ulcers, diabetes, and ischemic heart disease) were the most frequently listed conditions when beneficiaries were asked about indications for drugs on which they stinted. An estimated 9 percent (95 percent CI = 7, 11 percent) of the total population studied thought that their condition got worse because cost kept them from using medications as prescribed. Four percent (95 percent CI = 3, 6 percent) reported that they visited a physician’s office or emergency room because they could not afford their medicines, and 1 percent (95 percent CI = 0.4, 2 percent) indicated that they had to stay overnight in a hospital.

Characteristics of beneficiaries who reported stinting. Sizable percentages of all demographic subgroups stinted on prescription drugs (Exhibit 2). Significantly greater percentages of beneficiaries with lower household incomes reported using less medication than prescribed because of cost. Percentages who stinted varied significantly by self-rated health status, tending to increase as health status decreased. Medication underuse was not significantly related to age, sex, race, education, or number of people in the household.

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

These results indicate that some drug benefits may not be adequate for Medicare beneficiaries who have chronic medical conditions, especially those with low incomes. The drug benefits we studied were similar to the majority of drug benefits offered by M+C plans in 2002 that had annual limits of $500 or less and copayments for brand-name medications of $20 or more. Benefits offered to seniors by others, such as former employers, Medicaid, and the Department of Veterans Affairs (VA), are generally more extensive than the benefits we examined here. How the out-of-pocket costs incurred under these latter benefits affect use of prescribed medications has not been studied extensively.

This study foretells continued access problems for Medicare beneficiaries under the recently approved Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. MMA will provide an outpatient drug benefit beginning in 2006 that has a premium of $35 per month; an annual deductible of $250; and a coinsurance requirement that is initially 25 percent of the costs of covered medications from $250 to $2,250, then 100 percent of the costs up to $3,600.⁸ Research is needed to determine whether or not this drug benefit, which includes subsidies for low-income beneficiaries, will effectively reduce underuse of prescription drugs because of out-of-pocket costs.

Given limited financial resources, policymakers must make a difficult choice between a drug benefit that provides some coverage for all Medicare beneficiaries, regardless of need, and a benefit that is adequate for those who need to stint.⁹ Estimates of cost-related underuse of medications from the Medicare Current Beneficiary Survey (MCBS), which is representative of all Medicare beneficiaries, are much lower than estimates from studies that focused on those with chronic illness.¹⁰ Questions used to ascertain the percentage of beneficiaries who stint differ across studies. The MCBS asks about "not getting prescribed medication." Nevertheless, if beneficiaries who need fewer medications or are better able to afford their medications are less likely to stint, a Medicare drug benefit that allocates available resources to all Medicare beneficiaries might not be cost-effective.

Further research is needed to understand how to design cost-constrained drug benefits that promote effective use of prescription drugs. Presumably drug benefits improve use of medications by reducing out-of-pocket costs. In this study, the percentage of beneficiaries who reported they stinted decreased with self-reported out-of-pocket costs. Also, fewer beneficiaries stinted when their annual drug coverage was $300 rather than $200. The $300 benefit had a lower copayment for brand-name medications ($75 versus $50), which would have further reduced the out-of-pocket costs of beneficiaries who used medications. The sum of drug copayments—a measure of out-of-pocket costs—was not associated with underuse of drugs. Beneficiaries with the larger benefit had more drug claims, and hence higher total copayments (results not shown). Such beneficiaries might have had more drug claims because they were less likely to stint, because the slightly greater benefit prompted them to use more medications, or because there was selection bias whereby the more generous benefit attracted enrollees with more need for medications. Furthermore, those who stinted to avoid exceeding a drug benefit limit would tend to have low total copayments, whereas those who stinted to reduce out-of-pocket costs after they exceeded a limit would have higher total copayments.¹¹ Analysis of our data cannot separate these complex relationships between drug benefits, copayments, and use of medications.

The clinical outcome of not using a drug as prescribed depends on the severity of the condition, efficacy of the drug, extent and duration of underuse, and use of alternatives. Although self-reports of adverse effects secondary to reduced adherence to prescribed drug regimens are of questionable validity, other studies have observed a relationship between lack of adherence and hospital admissions, and between cost controls, decreased use of essential drugs, and increased use of health care services.¹² Future studies need to determine whether drug benefits effectively reduce cost-related underuse of drugs and improve clinical outcomes. Providing drug coverage as part of disease management programs for beneficiaries who have conditions for which drugs have been proved to reduce hospital use may be one cost-effective way to allocate limited resources for drug benefits.

While policymakers strive to provide an effective Medicare drug benefit, health care professionals might try to use questions similar to those in this survey to identify patients who are most likely to stint on prescribed medications. Health care providers should ask patients about their problems paying for medications and whether they want less costly medications. Other research suggests that physicians often do not discuss out-of-pocket costs with patients.¹³ Health care professionals might help patients who are likely to stint by considering more affordable formulary alternatives or by guiding patients to available assistance programs offered by government programs, community organizations, and drug manufacturers.¹⁴ However, these programs’ ability to overcome the adverse effects of costs on medication use and assure effective use is not well documented. Beneficiaries who were given free samples in this study were still more likely to stint. Thus, free samples may not be a viable long-term solution for beneficiaries who can’t afford medications for chronic conditions.

This research indicates that provision of a limited Medicare drug benefit because of limited financial resources, as is now the case with capitated M+C plans, may not be sufficient to prevent stinting on use of prescribed drugs. More effort is needed to identify beneficiaries who are likely to stint and to find ways to provide them with adequate financial access to necessary drugs.

Editor's Notes

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 
Thomas Rector (Thomas.Rector{at}med.va.gov) is a research specialist at the Center for Chronic Disease Outcomes Research, Veterans Affairs Medical Center, in Minneapolis, Minnesota. Patricia Venus is a senior researcher at the Center for Health Care Policy and Evaluation in Eden Prairie, Minnesota, where Rector was also a senior researcher when this study was conducted.

The Agency for Healthcare Research and Quality (AHRQ) provided support for this research as part of contract no. 290-00-0012. Identifiable information on which this report is based is confidential and protected by federal law, Section 903(c) of the Public Health Service Act, 42 U.S.C. 299a-1(c). Any identifiable information that is knowingly disclosed is disclosed solely for the purpose for which it has been supplied. No identifiable information about any individual supplying the information or described in it will be knowingly disclosed except with the prior consent of that individual.

NOTES

Top Study Data And Methods Study Results Discussion Editor's Notes NOTES

 

1. See, for example, S.B. Soumerai and D. Ross-Degnan, "Inadequate Prescription Drug Coverage for Medicare Enrollees—A Call to Action," New England Journal of Medicine 340, no. 9 (1999): 722–728[Free Full Text]; J.A. Poisal and L. Murray, "Growing Differences between Medicare Beneficiaries With and Without Drug Coverage," Health Affairs 20, no. 2 (2001): 74–85[Abstract/Free Full Text]; and A.S. Adams, S.B. Soumerai, and D. Ross-Degnan, "The Case for a Medicare Drug Coverage Benefit: A Critical Review of the Empirical Evidence," Annual Review of Public Health 22 (2001): 49–61.[CrossRef][ISI][Medline]
2. See, for example, D.G. Safran et al., "Prescription Drug Coverage and Seniors: How Well Are States Closing the Gap?" Health Affairs, 31 July 2002, content.healthaffairs.org/cgi/content/abstract/hlthaff.w2.253 (20 April 2004); M.A. Steinman, L.P. Sands, and K.E. Covinsky, "Self-Restriction of Medications Due to Cost in Seniors without Prescription Coverage, A National Survey," Journal of General Internal Medicine 16, no. 12 (2001): 793–799[CrossRef][ISI][Medline]; D.A. Taira, K.A. Iwane, and R.S. Chung, "Prescription Drugs: Elderly Enrollee Reports of Financial Access, Receipt of Free Samples, and Discussion of Generic Equivalents Related to Type of Coverage," American Journal of Managed Care 9, no. 4 (2003): 305–312[ISI][Medline]; and R. Mojtabai and M. Olfson, "Medication Costs, Adherence, and Health Outcomes among Medicare Beneficiaries," Health Affairs 22, no. 4 (2003): 220–229.[Abstract/Free Full Text]
3. Poisal and Murray, "Growing Differences"; Steinman et al., "Self-Restriction of Medications"; E.P. Steinberg et al., "Beyond Survey Data: A Claims-Based Analysis of Drug Use and Spending by the Elderly," Health Affairs 19, no. 2 (2000): 198–211[Abstract]; and W. Hwang et al., "Out-of-Pocket Medical Spending for Care of Chronic Conditions," Health Affairs 20, no. 6 (2001): 267–278.[Abstract/Free Full Text]
4. T.S. Rector, "Exhaustion of Drug Benefits and Disenrollment of Medicare Beneficiaries from Managed Care Organizations," Journal of the American Medical Association 283, no. 16 (2000): 2163–2167.[Abstract/Free Full Text]
5. "Different" refers to prescriptions for medications that contain different active ingredients rather than repeated use of the same prescription or use of different formulations of the same active ingredient(s). A copy of the complete questionnaire is available from Tom Rector, Thomas.Rector{at}med.va.gov.
6. M.L. Berk, C.L. Schur, and P. Mohr, "Using Survey Data to Estimate Prescription Drug Costs," HealthAffairs 9, no. 3 (1990): 146–156; and S.B. Cohen and V.L. Burt, "Data Collection Frequency Effect in the National Medical Care Expenditure Survey," Journal of Economic and Social Measurement 13, no. 2 (1985): 125–151.[ISI][Medline]
7. D.B. Rubin, "Multiple Imputation after Eighteen-Plus Years," Journal of the American Statistical Association 91, no. 434 (1996): 473–489[CrossRef]; J.L. Schafer and J.W. Graham, "Missing Data: Our View of the State of the Art," Psychological Methods 7, no. 2 (2002): 147–177[CrossRef][ISI][Medline]; and T.E. Raghunathan et al., "A Multivariate Technique for Multiply Imputing Missing Values using a Sequence of Regression Models," Survey Methodology 27, no. 1 (2001): 85–95.
8. Henry J. Kaiser Family Foundation, Prescription Drug Coverage for Medicare Beneficiaries: A Summary of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, 10 December 2003, www.kff.org/medicare/6112.cfm (8 January 2004).
9. D.M. Walker, Medicare: Observations on Program Sustainability and Strategies to Control Spending on any Proposed Drug Benefit, Pub. no. GAO-03-650T (Washington: U.S. General Accounting Office, April 2003).
10. DHHS, Report to the President; and B.M. Craig, D.H. Kreling, and D.A. Mott, "Do Seniors Get the Medicines Prescribed for Them? Evidence from the 1996–1999 Medicare Current Beneficiary Survey," HealthAffairs 22, no. 3 (2003): 175–182.
11. E.R. Cox and R.R. Henderson, "Prescription Use Behavior among Medicare Beneficiaries with Capped Prescription Benefits," American Journal of Managed Care 8, no. 5 (2002): 360–364; and E.R. Cox et al., "Medicare Beneficiaries’ Management of Capped Prescription Benefits," Medical Care 39, no. 3 (2001): 296–301.[CrossRef][ISI][Medline]
12. See, for example, N. Col, J.E. Fanale, and P. Kronholm, "The Role of Medication Noncompliance and Adverse Drug Reactions in Hospitalizations of the Elderly," Archives of Internal Medicine 150, no. 4 (1990): 841–845[Abstract]; S.D. Sullivan, D.H. Kreling, and T.K. Hazlet, "Noncompliance with Medication Regimens and Subsequent Hospitalizations: A Literature Analysis and Cost of Hospitalization Estimate," Journal of Research in Pharmacy and Economics 2, no. 1 (1990): 19–33; J. Kennedy and J.C. Erb, "Prescription Noncompliance Due to Cost among Adults with Disabilities in the United States," American Journal of Public Health 92, no. 7 (2002): 1120–1124[Abstract/Free Full Text]; R. Tamblyn et al., "Adverse Events Associated with Prescription Drug Cost-Sharing among Poor and Elderly Persons," Journal of the American Medical Association 285, no. 4 (2001): 421–429[Abstract/Free Full Text]; S.B. Soumerai et al., "Payment Restrictions for Prescription Drugs under Medicaid: Effects on Therapy, Cost, and Equity," New England Journal of Medicine 317, no. 9 (1987): 550–556[Abstract]; S.B. Soumerai et al., "Effects of Medic-aid Drug-Payment Limits on Admission to Hospitals and Nursing Homes," New England Journal of Medicine 325, no. 15 (1991): 1072–1077[Abstract]; and S.B. Soumerai et al., "Effects of Limiting Medicaid Drug Reimbursement Benefits on the Use of Psychotropic Agents and Acute Mental Health Services by Patients with Schizophrenia," New England Journal of Medicine 331, no. 10 (1994): 650–655.[Abstract/Free Full Text]
13. G.C. Alexander, L.P. Casalino, and D.O. Meltzer, "Patient-Physician Communication about Out-of-Pocket Costs," Journal of the American Medical Association 290, no. 7 (2003): 953–958[Abstract/Free Full Text]; and L.M. Korn et al., "Improving Physicians’ Knowledge of the Costs of Common Medications and Willingness to Consider Costs When Prescribing," Journal of General Internal Medicine 18, no. 1 (2003): 31–37.[CrossRef][ISI][Medline]
14. M.D. Schoen et al., "Impact of the Cost of Prescription Drugs on Clinical Outcomes in Indigent Patients with Heart Disease," Pharmacotherapy 21, no. 12 (2001): 1455–1463.[CrossRef][ISI][Medline]

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