Dual Eligibles Face Significant Prescription Drug Changes

For the approximately six million "dual eligibles" enrolled in both Medicare and Medicaid1 the Medicare Modernization Act (MMA) represents a change in insurance, not an added benefit. Transitioning dual-eligibles from comprehensive prescription coverage under Medicaid to Medicare's private prescription drug plans (PDPs)-requiring co-payments, formularies, and use of network pharmacies-will be a significant experiential shift for these individuals and a challenge for administrators who must ensure that dual-eligibles continue to receive drug benefits critical to their health and well being after January 1, 2006.

A historically vulnerable population, dual eligibles report poorer health status on the Medicare Current Beneficiary Survey, are three times more likely to have a disability, and are disproportionately female, African-American, and Hispanic.2 In addition, one- quarter of dual eligibles are institutionalized.3 Patient advocates fear that for this often underserved group the switch from Medicaid to Medicare will mean unaffordable co-payments, fewer legal protections, gaps in coverage, and changes in complicated medication regimes as patients comply with the new formularies.4

The Center for Medicare and Medicaid Services (CMS) has implemented several measures that it believes will address these fears, including random, drug plan auto-enrollment for those who have not designated one and provisions for individuals to change their PDPs on a monthly, rather than yearly, basis. Additionally, CMS maintains standards for the categories of drugs offered within formularies and the range of pharmacy networks within a given plan.5

However, a recent report by the Government Accountability Office (GAO) questions the extent to which CMS's contingency plans will be effective. "While we credit CMS for taking steps to mitigate potential risk for dual eligible beneficiaries, we believe that the agency's complete confidence in contingency plans that have yet to be fully tested, publicized, or implemented may be premature."6

CMS stands by the efficacy of its initiatives to protect dual eligibles from problems that could affect their receipt of medication, citing additions of a Point of Sale feature at pharmacies that will enroll dual eligibles not assigned to a PDP and an Eligibility Transaction, enabling pharmacies to identify a beneficiary's PDP and provide contact information for the plan.7 Still, advocates and the GAO insist the extent to which pharmacies are informed about these new measures remains unclear.8 Certainly, the first few months of the new year will be a key time to collect data and assess the full impact of this transition.

There are several HCFO projects that investigate either the new prescription drug benefit or dual eligibles' experience under Medicare. Until data is collected and evaluations of this new intervention are completed, this existing research may provide some guidance in effectively meeting the prescription drug needs of the dual eligible population.

Cindy Parks Thomas, Ph.D., of Brandeis University is comparing SeniorCare prescription drug assistance programs in Illinois and Wisconsin to assess the impact of different key features of the prescription drug benefit. Thomas' comparative research examines how the design of seniors' prescription drug benefits affects drug benefit enrollment, utilization, and cost. Preliminary findings indicate that differences in drug plan design within these two states leads to differences in prescription drug utilization by beneficiaries. Jack Hoadley, Ph.D., at Georgetown University 's Health Policy Institute has approached the new drug benefit from the perspective of the states, investigating their experience in implementing pharmaceutical assistance programs serving Medicare beneficiaries. Hoadley finds that the biggest difference between cost containment approaches used by State Pharmacy Assistance Programs and those likely to be used by PDPs under MMA are in the areas of formularies, cost sharing, and benefit limits.

Bruce C. Stuart, Ph.D, of the University of Maryland at Baltimore explored how beneficiaries will fare under the new drug benefit. Stuart assessed factors that effect gaps in coverage and lapses in coverage and determined whether these coverage gaps would be likely to adversely affect beneficiaries' treatment patterns . He conclud ed that the standard Part D structure is likely to lead to higher out-of-pocket costs and reduced use of medications for persons with diabetes, chronic lung problems, and mental illness.

Regarding dual eligibles specifically, Korbin Liu, Ph.D., of the Urban Institute evaluated patterns of end-of-life care for dual eligibles and whether different Medicaid programs influenced this care. Liu analyzed factors that affected care utilization such as age, race, financing, and services provided by Medicare and Medicaid. Findings indicate racial disparities in both M edicare and long-term care costs, as well as variation in the use of services across the ten states studied.

HCFO Funded Research:

Title: The Role of Benefit Design in Enrollment, Use, and Spending in State Prescription Drug Assistant Programs for Seniors-Lessons for Medicare
Institution: Brandeis University
Time: March 2004-February 2006
Principal Investigator: Cindy Parks Thomas, Ph.D.

How does the design of a prescription drug benefit for seniors-either under Medicare or in individual states-affect drug use and costs? Building on evaluation currently underway for CMS, the researchers are comparing the SeniorCare prescription drug assistance programs in Illinois and Wisconsin to asses the impact of different key features, including enrollment approach and fees and pharmacy benefit manager use. The scope of the CMS evaluation of Medicaid 1115 waivers in each state does not permit direct comparison of the programs, which would allow for assessing the impact of the different design features. The researchers plan to (1) compare enrollment selection between the two programs; (2) compare utilization and spending patterns for enrollees; (3) assess the impact of Illinois' 'soft cap' and Wisconsin's deductible on drug use and spending; and (4) compare patterns of use for specific diseases (e.g., COPD/asthma, congestive heart failure, diabetes, and arthritis) and drug therapeutic classes in each of the states.

Title: State Experience with Pharmaceutical Assistance Programs
Institution: Georgetown University
Time: January 2004-September 2005
Principal Investigator: Jack F. Hoadley, Ph.D

What has been the state experience in implementing pharmaceutical assistance programs serving Medicare beneficiaries? Through a series of case studies, the researchers will gather information on issues such as communicating with enrollees, administering eligibility and cost sharing, and managing drug costs. The objective of the project is to reveal best practices and lessons learned that are useful to policymakers considering a Medicare prescription drug benefit and those in states implementing or modifying pharmaceutical assistance programs.

Title: Establishing the Value of Stable Prescription Coverage for Medicare Beneficiaries
Institution: University of Maryland at Baltimore
Time: February 2004-July 2005
Principal Investigator: Bruce C. Stuart, Ph.D.

How will future beneficiaries fare under the proposed Medicare prescription drug benefit programs? This research relies on data from the Medicare Current Beneficiary Survey (MCBS) 1997-2001 to identify gaps in pharmaceutical coverage for Medicare beneficiaries. The researchers (1) characterize beneficiaries who experience gaps in coverage; 2) identify factors that contribute to lapses in coverage; 3) assess the impact of coverage gaps on drug utilization patterns and spending; and 4) determine whether gaps in coverage adversely affect treatment patterns for beneficiaries with selected chronic cardiovascular conditions.

Title: Factors Affecting End-of-Life Care for Beneficiaries who are Dually Eligible for Medicare and Medicaid
Institution: The Urban Institute
Time: October 2002-March 2005
Principal Investigator: Korbin Liu, Ph.D.

What are the factors affecting end-of-life care for the dually eligible? Using the "Multi-State Dual Eligible Data Files" developed by Mathematica, Inc. under contract with CMS, researchers at the Urban Institute are examining (1) services provided by the Medicare and Medicaid programs, as well as variations among states; (2) the composition and proportion of expenditures on end-of-life care (e.g., hospital, physician, prescription drug, long-term care); (3) variation over time in use and expenditures of health and long-term care services; and (4) variation by race and age in utilization, and source of financing end-of-life care. The study is intended to inform policymakers and providers about use of care patterns by dual eligibles at the end of life as policies addressing such care are reexamined and improved.

Grantee Publications

Stuart, B. etal. , "Assessing the Impact of Coverage Gaps in the Medicare Part D Drug Benefit," Health Affairs, Web Exclusive, April 2005, pp. W5-167 Also see www.healthaffairs.org/cgi/content/abstract/hlthaff.w5.167

Goodell, S. et al. State Pharmacy Assistance Programs vs. Medicare Prescription Drug Plans: How Do They Contain Costs? Changes in Health Care Financing and Organization Issue Brief, AcademyHealth, October 2005. Also see www.hcfo.net/pdf/issue1005.pdf

Williams, C. et al. State Pharmacy Assistance Programs at a Crossroads: How Will They Respond to the Medicare Drug Benefit? Changes in Health Care Financing and Organization Issue Brief, AcademyHealth, July 2005. Also see www.hcfo.net/pdf/brief0705.pdf

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1. Medicare Payment Advisory Commission (MEDPAC), Report to the Congress: New Approaches in Medicare , June 2004, p. 72.

2. Ibid, p. 75

3. Ibid, p. 75

4. Gearon, C. "For the Most Needy, A Tough Switch," The Washington Post, December 20, 2005, p. HE01.

5. Government Accountability Office, " Dual Eligible Beneficiaries and Part D, " December 16, 2005, p.16.

6. Ibid, p. 14

7. Ibid, p. 3

8. Ibid