Prescription drug use and expenditures among dually eligible beneficiaries

INTRODUCTION

Medicare coverage is available to most persons age 65 or over and to non-elderly disabled individuals who hold received Social Security disability insurance (SSDI) payments for at least 2 years. Medicare beneficiaries who run into income and asset thresholds defined by the States can also qualify to receive Medicaid benefits. In 2001, 7 million individuals were enrol in Medicaid as dually eligible beneficiaries. Representing a poorer and smaller quantity healthy segment of the Medicare population, strength care costs for dually eligible beneficiaries are significantly sophisticated than for other Medicare beneficiaries, with total annual costs per being averaging $20,844 for dually eligible beneficiaries and $10,054 for non-dually eligible beneficiaries in 2001 (Medicare Payment Advisory Commission, 2004). Dually eligible beneficiaries also incur a disproportionate share of costs for State Medicaid Programs. In 2003, dually eligible beneficiaries represented 14 percent of the Medicaid population, but accounted for 40 percent of all Medicaid expenditures (Holahan and Ghosh, 2005).

Dually eligible beneficiaries also account for a disproportionate share of Medicaid spending on prescription medications (Kaiser Commission on Medicaid and the Uninsured, 2006). In 1999, dually eligible beneficiaries represented 19 percent of Medicaid fee-for-service (FFS) beneficiaries, but 55 percent of total FFS Medicaid pharmacy reimbursement (Verdier and Kim, 2005). In 2002, the average cost of drug coverage for a dually eligible beneficiary be estimated to be nearly twice that for all Medicaid beneficiaries (Dale and Verdier, 2003). Among adjectives drug classes, spending on psychotropic drugs (such as antidepressants and antipsychotics) has far outpaced spending for other medication since the mid-1990s due to the greater availability of higher cost atypical antipsychotics, expansions surrounded by insurance coverage for these medications, the shift to difficult use of prescription drugs to treat mental disorders, and expansion of direct-to-consumer advertising (Frank, Conti, and Goldman, 2005). The command has be the predominant purchaser of antipsychotic medications, next to State Medicaid Programs accounting for about 80 percent of adjectives prescriptions for antipsychotics in 2001 (Berndt, 2003)

Medicare Modernization Act

The 2003 Medicare Prescription Drug, Improvement, and Modernization Act introduced a drug benefit (Part D) for Medicare beneficiaries and shifted return for prescription drugs for dually eligible beneficiaries from Medicaid to Medicare. Dually eligible beneficiaries were at random assigned to prescription drug plans (PDPs) with average or below-average monthly premiums, but be given the option of enrol in another plan of their choice between November 15, 2005, and December 31, 2005. Those who did not select a plan be automatically enrolled within their randomly assigned PDP, but keep up the option of varying plans at any time during the year if they find that their assigned plan's formulary does not include their needed medications, or if they are otherwise dissatisfied.

Changes contained by drug coverage for dually eligible beneficiaries brought about by the move to Part D are plausible to affect prescribing patterns and drug expenditures for these beneficiaries. Despite man an optional service, adjectives States and the District of Columbia offer prescription drug benefits to their Medicaid recipient. Federal regulations prohibit the use of restrictive formularies, but States have traditionally used a range of other mechanisms to control spending on prescription drugs, resulting in a diverse array of programs (Morden and Sullivan, 2005; Dale and Verdier, 2003). Some of the mechanism States have used include: (1) preferred drug list; (2) prior authorization; (3) generic substitution; (4) beneficiary copayments; (5) fail first policies, whereby a merciful must fail on a specific drug past trying a more expensive alternative; and (6) caps on the number or duration of prescriptions (Morden and Sullivan, 2005; Koyanagi, Forquer, and Alfano, 2005; Dale and Verdier, 2003). Many of like approaches are being used surrounded by the privately administered Medicare plans participating in the Part D benefit, thus shifting variation within drug coverage for dually eligible beneficiaries from the State level to the plan smooth after January 1, 2006.

Psychotropic medications may be at exceptional risk for cost-cutting efforts because they represent such a full-size and growing segment of prescription drug expenditures for dually eligible beneficiaries (Frank, Conti, and Goldman, 2005; Morden and Garrison, 2006; Elam, Bruen, and Tilly, 2002). A recent study suggests that while all States use cost containment strategies for many psychotropic medication, many exempt antipsychotics and antidepressants (Koyanagi, Forquer, and Alfano, 2005). Under the Part D benefit, plans are required to include adjectives antidepressant and antipsychotic medications surrounded by their formularies, but the plans may still employ cost control mechanism such as fail first and prior authorization to restrict access to more costly medication (Morden and Garrison, 2006).

Research Objectives

The primary objective of this study be to examine patterns of prescription drug use by Medicaid dually eligible beneficiaries prior to the shift to the Part D benefit and discuss the implication of these findings for the Part D program. This study builds on an earlier analysis of Medicaid drug use among dually eligible beneficiaries (Verdier and Kim, 2005), but incorporates more extensive analyses including: (1) use of generic versus prescription drugs, (2) use of prescription drugs in specific drug classes, (3) analysis of use and spending for high-cost psychotropic medications, and (4) comparisons of drug use and spending between 1999 and 2001. The analyses: (1) present volume and expenditure level for dually eligible beneficiaries, (2) examine patterns of drug use across dually eligible beneficiaries who are aged, disabled, and full-year nursing home residents, (3) compare rates of utilization of antipsychotics and antidepressants among dually eligible beneficiaries, and (4) examine changeability in drug use and cost across States.

The analyses also illustrate how a just now available source of detailed and uniform State-by-State data can be used to conduct comparative analyses that hold important policy implication for both Medicaid and Medicare. The MAX files are administrative claims files covering all Medicaid-reimbursed services. Because dually eligible beneficiaries historically received payments for prescription drugs through their State Medicaid Program, the MAX prescription drug files are the single comprehensive source of data on payments for prescription medication for dually eligible beneficiaries prior to 2006.

METHODS

Data

The primary data for this study be the 2001 MAX files (formerly known as the State Medicaid Research Files, or SMRFs) prepared by CMS for adjectives 50 States and the District of Columbia. The MAX files are person-level data files containing information on Medicaid eligibility category, beneficiary age and sex, service utilization, and payments in the calendar year. Data for the MAX files are extracted from the Medicaid Statistical Information System (MSIS), the electronic paperwork system by which States submit quarterly Medicaid eligibility and paid claims information to CMS (CMS, 2006). Because the 1997 Balanced Budget Act requires all States to contribute in MSIS reporting, the background contained in the MAX files are standardized across all 50 States and the District of Columbia.

Five types of MAX files are available. The entity summary file contains information on annual and monthly Medicaid eligibility, long-suffering demographics, and managed precision enrollment. The remaining files represent the final action claims for four types of services: (1) inpatient hospital stays, (2) keeping provided in long-term keeping facilities, (3) prescription drugs, and (4) adjectives other types of services. This study used the person summary, long-term protection, and prescription drug files.

Because the MAX data contain individual identifiers, they are protected lower than the Privacy Act of 1974 (5 U.S.C. [section] 552a), but are available for approved research activities through a notes use agreement with CMS. MAX files are currently available for 1999-2002. The analyses for this article are base primarily on the 2001 data, but include some comparisons beside the 1999 files.

Design

The dually eligible population includes Medicare beneficiaries with full Medicaid coverage and those beside more limited Medicaid benefits (e.g., those who receive assistance simply with Medicare premiums and cost sharing). The present analyses excluded the approximately 1 million dually eligible beneficiaries minus Medicaid prescription drug coverage. Medicaid eligibility is assessed on a monthly basis so some beneficiaries may verbs and off Medicaid coverage inside a year or may join the program mid-year. The descriptive statistics include both full- and part-year enrollees. The analyses are further restricted to beneficiaries enrol in FFS because information on service use from managed protection plans are generally not available; however, analyses of the 2001 MAX files indicates that, countrywide, only 10.5 percent of dually eligible beneficiaries are enrol in manage care (Table 1). The manage care access rate exceeds 10 percent in one and only 10 States; and in with the sole purpose 2 of these States (Arizona at 82 percent and Tennessee at 100 percent) does this figure exceed 41 percent (data not presented but available on request from the authors). The analytic files, so include all full-coverage, dually eligible beneficiaries enrol in FFS who enjoy at least partial year enrollment. Statistical findings are presented first for adjectives dually eligible beneficiaries and then for three category of dually eligible beneficiaries: (1) the aged (persons age 65 or over), (2) the disabled, and (3) full-year nursing home residents. The first two groups are the two main category for Medicare eligibility; nursing home residents are examined separately because they represent the sickest subset of dually eligible beneficiaries and account for a colossal share of spending (Kasper, Elias, and Lyons, 2004). Because the focus of this study is on aggregate findings for those in nursing homes, analyses do not distinguish aged from disabled nursing home residents. Data on prescription drug use and expenditures were drawn from the MAX pharmacy files. The expenditures reported do not echo the fact that States subsequently receive federally required rebate from drug manufacturers; the background, therefore, overstate the actual final costs to the Medicaid Program. The descriptive statistics include information for use of patented (i.e., innovator, single source) and off-patent (i.e., innovator, multiple source) brand christen drugs as well as generic (i.e., non-innovator, multiple source) drugs base on a proprietary indicator of First Data Bank (and available to MAX users through a licensing agreement). The drug classes reported are base on the First Data Bank Medi-Span [R] Therapeutic classification system from the Master Drug Data Base.

RESULTS

Characteristics

Table 2 describes the characteristics of the dually eligible population identified through the MAX files. Due to the exclusions previously discussed, the files contain claims for approximately 5.7 million beneficiaries. Overall, aged beneficiaries represent 56 percent of all dually eligible beneficiaries and 43 percent are disabled; however, nearly 22 percent of dually eligible beneficiaries are both aged and disabled. The reason that such a sizeable percentage of dually eligible beneficiaries are classified as both aged and disabled is that in oodles States beneficiaries who originally qualified for Medicaid on the basis of disability are retained in that eligibility category even after they turn 65; other States automatically shift them to the aged category. Fifteen percent of dually eligible beneficiaries are full-year nursing home residents, while another 7.6 percent resided in nursing services for some part of 2001.

Females are a majority of dually eligible beneficiaries (64 percent), markedly among the aged and nursing home residents where females comprise more than 70 percent of the population. White folks are the predominant racial group at around 60 percent of the dually eligible population and nearly 79 percent of dually eligible nursing home residents. Black those and other or unknown racial and ethnic groups represented nearly an equal percentage of the remaining dually eligible beneficiaries (18 and 23 percent, respectively). Although the MAX facts from 1999 and forward include additional codes for see and ethnicity (i.e., Asian, Hispanic or Latino with no see information available, and Hispanic or Latino with one or more races), abundant States failed to report this information.

Patterns of Drug Use

Table 3 describes the pattern of drug use among dually eligible beneficiaries in 2001 and highlights the weighty use of prescription drugs within this population. Across adjectives categories of dually eligible beneficiaries more than 85 percent have at least one prescription claim contained by 2001. Nursing home residents filled more prescriptions, on average, than other dually eligible beneficiaries; they averaged 5.7 prescriptions per month (versus 3.8 among all dually eligible beneficiaries) and over 45 percent have 5 or more prescription claims per month (as compared with 26 percent for aged and 24 percent for disabled beneficiaries). (1) Overall, dually eligible beneficiaries complete 4.4 more prescriptions per year, on average, in 2001 than within 1999. The greatest increase in prescription claims was among nursing home residents, who complete 6.5 more prescriptions per year over the study period.

Although the average number of prescriptions for patented, brand-name drugs did not differ significantly from the number for generic drugs across any of the beneficiary groups, the average monthly cost of patented drugs be 3.5 to 5 times higher than for generic drugs (i.e., $159 versus $35 across adjectives categories of beneficiaries). Disabled dually eligible beneficiaries have the highest average monthly drug costs at $250 and expenditures among nursing home residents be also high at $249 per month. Aged beneficiaries have considerably lower average monthly expenditures ($179). After adjusting 1999 expenditures to story for inflation in Medicaid prescription drug prices using MAX data from 1999 to 2001, the average monthly prescription cost per beneficiary increased from $187 in 1999 to $211 in 2001 (a nearly 13 percent increase of $24).

Utilization of Antipsychotics and Antidepressants

One factor contributing to the discrepancy in drug costs between aged beneficiaries and other dually eligible beneficiaries is that a lower percentage of aged beneficiaries have any prescription claims for antipsychotic medications within 2001 (Table 4). As noted, antipsychotics are among the most costly drug classes but also have have the highest medication cost increases for any invigorating category in recent years (Binder et al., 2006). Between 1999 and 2001 (after adjust for inflation), antipsychotic medications alone accounted for one-quarter of the increase in average monthly pharmacy costs per beneficiary ($6 out of the $24 reported in Table 3). A larger number of claims for antidepressants from 1999 to 2001 also accounted for one-quarter of the rise in expenditures. Twenty percent of aged dually eligible beneficiaries have a prescription for antipsychotics in 2001 and 37 percent have a prescription for an antidepressant; these percentages be 39 and 52 percent for nursing home residents. Among disabled dually eligible beneficiaries, 31 percent used an antipsychotic in 2001 and 47 percent used an antidepressant; individuals under age 65 made up 89 percent of disabled beneficiaries who used an antipsychotic medication and 85 percent of those who used an antidepressant despite the reality that they account for lone 78 percent of all disabled dually eligible beneficiaries (data not presented but available from the authors on request).

Prescription Drug Use and Cost Variation

Tables 5-8 present data on the pattern of drug use and cost variation among dually eligible beneficiaries across States. The percentage of dually eligible beneficiaries beside at least one prescription sundry from a low of 66 percent in Washington, DC, to a big of 92 percent in Maine (Table 5). However, these be not necessarily the highest or lowest contained by terms of average number of monthly prescriptions or average cost per beneficiary.

Across States, the median number of prescriptions jam-packed per beneficiary per month was 4.3, but range from a low of 2.2 in South Carolina to a soaring of 5.5 in Ohio and Utah (Table 6). Notably, within 2001, South Carolina had a dispensing delineate set at 4 prescriptions per month, but other States where beneficiaries chock-full less than 4 prescriptions per month (for example, Massachusetts and Minnesota which fell in the 25th percentile next to 3.8 prescriptions filled per dually eligible beneficiary) have no such restrictions (National Pharmaceutical Council, 2002). Thus, factors excluding dispensing limits predictable played a role in determining the number of prescription claims per month.

The median monthly drug expenditure for dually eligible beneficiaries be $218 per beneficiary across States (Table 7). This varied from a low of $153 (South Carolina, New Mexico, and Washington, DC) to a giant of $286 (Utah). As noted, Washington, DC, had the lowest percentage of beneficiaries next to at least one prescription claim, which plausible contributed to its lower spending; and in 2001, had relatively few cost containment strategies in place (for example, some precincts on refills and the amount of medication that could be dispensed per prescription and the use of prior authorization) (National Pharmaceutical Council, 2002), which suggests that some other factor were at work. South Carolina have the dispensing limit previously mentioned, as capably as the use of mandatory generic substitution and prior authorization. New Mexico did not have dispensing boundaries on the number of prescriptions in 2001, but did use mandatory generic substitution and prior authorization (National Pharmaceutical Council 2002). However, it is without a solution to determine with this information whether or not the cost containment measures directly influenced the monthly expenditures reported.

Finally, the use of generic drugs among dually eligible beneficiaries also diverse considerably across States (Table 8). Generic drugs represented the lowest percentage of all prescriptions within New York at 37 percent (conversely, patented, brand-name drugs were 54 percent of adjectives prescriptions, and another 9 percent of prescriptions were for off-patent, brand-name drugs). At the other running out of the spectrum, generics were 53 percent of the drugs prescribed to dually eligible beneficiaries within Oregon (41 percent were patented, brand-name drugs, and 6 percent be off-patent, brand-name drugs).

DISCUSSION

Implications for Medicare Part D

This study's findings have several implications for coverage of dually eligible beneficiaries underneath Medicare Part D. First, there may be opportunity in plentiful States to achieve significant funds by providing incentives for greater use of generics. The average cost per Medicaid prescription filled by dually eligible beneficiaries contained by 2001 was substantially smaller amount for generic drugs than for patented or off-patent brand-name drugs ($20 versus $92 and $53, respectively; data not presented, but available on request from the authors). Given that generic drugs made up 46 percent of adjectives prescriptions to Medicaid dually eligible beneficiaries in 2001, moving a larger percentage of beneficiaries to equally efficacious generic drug products could generate substantial stash. Suppose, for example, a State at the 25th percentile in Table 8 (Connecticut), where on earth generic drugs accounted for 44.9 percent of all prescription fill in 2001, increased the rate of generic drug fill to match States at the 75th percentile (New Mexico and Illinois), where on earth generic drugs accounted for 47.4 percent of all prescription fill. In 2001, dually eligible beneficiaries in Connecticut chock-full nearly 3.7 million prescriptions at a total cost of $213 million. Increasing its generic dispense rate to 47.4 percent would have reduced total prescription drug costs among dually eligible beneficiaries by $6.8 million.

Second, the illustrious use of costly antipsychotic drugs among the under age 65 disabled dually eligible population underscore the importance for Part D plans of focusing on the mental condition needs of this population, over one-half of whom hold significant mental or cognitive impairments (Medicare Payment Advisory Commission, 2004), and whose current drug use may not fully correspond to their needs. Third, the glorious use of antipsychotics in nursing services also warrants attention surrounded by light of longstanding concerns on the subject of the overuse and misuse of this class of psychotropic drugs among nursing home residents (Ray, Federspiel, and Schaffner, 1980; Buck, 1988; Gurvich and Cunningham, 2000; Briesacher et al., 2005). Stand-alone PDPs are required by CMS to have medication treatment management programs that focus on drug use by high-need and high-use populations, and Medicare Advantage-Prescription Drug manage care plans are at risk for increased inpatient hospital and other costs that may result from rude drug use, so both types of Part D plans have incentives to focus on drug use by the lower than age 65 disabled population and those in nursing services.

Although based on 2001 background, a number of considerations suggest that the findings from these analyses can provide adjectives information for understanding potential patterns of drug use and expenditures among dually eligible beneficiaries surrounded by 2006. First, the MAX data are the single comprehensive source of information on prescription drug utilization among dually eligible beneficiaries. The files include all prescription claims generated by patients enrol in the FFS Medicaid drug program. Estimates derived from sources such as the Medicare Current Beneficiary Survey (MCBS) and the Medical Expenditure Panel Survey (MEPS) are subject to bring to mind bias and potential errors arising from sample screening.

Second, previous analyses suggest that the dually eligible population is relatively stable over time (Stuart, Shea, and Briesacher, 2001; Medicare Payment Advisory Commission, 2004; Stuart and Singhal, 2006). Stuart and Singhal's (2006) analyses suggested that program turnover results primarily from new enrollments and passing. Using the MCBS for 1997 to 2000, they found that 83 percent of dually eligible beneficiaries either maintain continuous coverage over the entire study period or obtain coverage after 1997 but retained it through the study period; the remaining 17 percent experienced a loss of entitlement. Similarly, MedPAC's analysis, base on the Medicare 5-percent denominator files from 1993 to 2002, found that 41 percent of Medicare beneficiaries who became dually eligible between 1994 and 1996 be still alive and remained dually eligible 6 to 9 years later; another 24 percent died during the study term and only 8.5 percent remained dually eligible for 1 year or smaller number (Medicare Payment Advisory Commission, 2004). This persistence within Medicaid eligibility suggests that drug use patterns surrounded by Medicaid dually eligible beneficiaries are likely to be strictly stable, and not subject to the fluctuations that may result when members lose or regain eligibility, adjust doctors, or stop using drugs needed to treat chronic conditions. Furthermore, there are significant Federal confines on the ability of State Medicaid agencies to use the kind of cost containment tools that have become adjectives in the private sector contained by recent years, such as increased beneficiary cost sharing and restrictive formularies, so major change in utilization related to cost containment hard work are less expected in Medicaid than contained by other contexts.

Finally, several studies suggest that the MAX prescription claims data can provide accurate estimates of adjectives drug expenditures for dually eligible beneficiaries (Wrobel et al., 2003-2004; Zhao et al., 2005). Zhao et al. (2005) showed that models using drug claims alone (versus those that used both drug claims and diagnoses) were sufficient to predict adjectives pharmacy costs. These authors also showed that more recent data provided an modification over estimates based on models using more clinically specific classifications. Similarly, Wrobel et al. (2003-2004) showed that accumulation lagged drug expenditures to prospective models more than doubled the predictive power for models of adjectives drug spending. As more recent years of MAX files become available, these data will become even more essential for forecasting, risk adjustment, and overall form plan management (Huskamp and Keating, 2005).

Future Research

The findings also suggest several avenues for further research using the MAX notes. For example, while it is possible to disaggregate drug use and expenditures by specific therapeutic classes, near MAX data one could also study individual utilization pattern for a wide series of different drugs to determine whether or not Medicaid beneficiaries are adhering to drug regimens. This would be specifically helpful information for those drug classes where on earth not adhering regularly to medication could lead to long-term adverse effects, such as various cardiovascular medications and psychotropic drugs.

Limitations

Although the information present important information on strength care utilization among dually eligible Medicare and Medicaid beneficiaries that have not been available using other information sources (such as, the MCBS and the MEPS), using the MAX files alone omits notes on services for which Medicare is the primary payer (i.e., physician and hospital care). However, the data are designed to facilitate linkage between Medicare and Medicaid claims.

Many Part D plans have little prior experience dealing with Medicaid beneficiaries and, accordingly, may not have have a good sense of the volume and sources of drug expenses for dually eligible beneficiaries when designing their programs (Moran, 2005). The present analyses provide invaluable insights into the entail for comprehensive drug coverage, particularly for psychotropic medication. It is unclear at this point whether the Part D drug background will be made available for research purposes; until they are, the MAX data will tender the best information for estimating outcomes and costs for dually eligible beneficiaries.

ACKNOWLEDGEMENTS

We would like to thank Myoung Kim, David Baugh, and Deo Bencio for their assistance and support.