All About Part D

The launch of the new Medicare Part D prescription drug benefit is raising questions about the program's ability to meet the needs of the population it serves, particularly low-income beneficiaries and individuals with chronic health conditions. Enrollees have until May 15, 2006, to choose among the plans offered—a sometimes dizzying array of options, each with different premium costs and benefit features. We talked to Bruce Stuart, Ph.D., professor and executive director of the Peter Lamy Center on Drug Therapy and Aging at the University of Maryland School of Pharmacy, about his early observations regarding Part D, the kinds of challenges beneficiaries may face, and his Fund-supported effort to profile beneficiaries' medication use.

Ever since the Medicare drug benefit became law, there have been concerns about beneficiaries maintaining access to their medications. What is it about the new benefit that prompts concerns about access?
Bruce Stuart: Complexity, complexity, complexity. The plans vary in a number of domains that make individual choice inherently difficult. And, unlike Part B, which covers physician and other ambulatory care, Part D is opt-in—eaning the beneficiary must choose to enroll—ather than opt-out. That may sound fairly insignificant, but it is a major difference in terms of the likelihood that people will take it or not take it. Finally, there is the question of timing and penalties. Individuals can sign up for a plan anytime up until May 2006 without being subject to a penalty, but after that, there is a penalty of 1 percent of premium cost per month.

Also, because of the myriad of health plans out there, and all the questions beneficiaries have, there will be inevitable missteps and communications breakdowns. It could be that these are just transitional pains, but they point up the fact that this is not a simple plan. And it's clear now (in early January) that a substantial proportion of the Medicare population that is eligible to sign up has not done so.


Your research published in Health Affairs last year discussed some of the gaps in coverage that people may face under the prescription drug plan. How does this translate to the experience that the average beneficiary can expect to face?
Stuart: Actually, if individuals meet the asset requirements for a low-income subsidy, they won't face the gap in coverage and they'll have relatively low copayments. The average beneficiary would be someone not eligible for the subsidy, but whether they face a gap in coverage will really depend on the plan they sign up for. There is a standard benefit that every prescription drug plan must offer, but they can also offer other kinds of combinations. There are a lot out there: some with no deductibles, some without "doughnut holes" (i.e., gaps in coverage between an initial spending threshold and a catastrophic spending threshold), others with the coverage gap as well as other limitations in terms of prior authorizations and step therapy.


What is coverage like under the average plan?
Stuart: It varies depending on where you are in the U.S. The very same package offered for $1.86 in the Midwest is offered for $20 in parts of Florida. You have variations in premiums and incredible variations in terms of the actual benefit. It's widely known that plans vary in terms of formularies. One can go to the Medicare Web site and find out what the formulary restrictions are. That's an important first step for beneficiaries in determining which plan is for them. But the second step is: where on the formulary are they available? If the drug is branded, it might not be available on the second tier, or the third tier, or the fourth tier. There are plans out there with five or six tiers—and the required payment per use of the drug is higher the higher the tier. A plan may look like it covers all these drugs, but the required payment could be significant—it could be $50 for each month's prescription.

The third step is prior authorization and step therapy. Information about these policies is not available to beneficiaries or physicians or anyone outside the plan at the drug level. If your drug is a brand-name drug, it might well be the case that a generic or another drug is required as first drug. Then you have to take it if you want any drug in that class. To get the higher-priced drug, you have to get a physician to override the step therapy and prior authorization. Those are really hidden impediments to drug utilization. Those really have not come to bear yet, and they won't until the plans are fully functioning and there are studies done.


Are any groups of beneficiaries in particular more vulnerable to potential problems?
Stuart: In the intermediate term, the vulnerable beneficiaries are those who anticipate getting retiree benefits but have companies that decide not to offer them. This is part of a pattern that has been evident for a number of years. Most companies that currently offer retiree benefits for drugs will continue to do so in 2006, partly because they get a significant subsidy if their retiree drug benefits meet a certain standard. However, it's cheaper for companies to abandon their drug benefits and provide coordination with a Part D plan. In the process, employees may end up with prescription coverage that is less good than what they've had in the past.


How would you rate the efforts CMS has made to address the problems that these vulnerable groups may face?
Stuart: A+. That's not to say that the efforts have all been successful, but they were handed an almost impossible task. However, in hindsight, we know that there were really significant problems associated with automatically enrolling Medicaid beneficiaries. At first, it seemed like a perfectly sensible solution, but there are serious concerns regarding choice. A large group of people—16 percent—were automatically enrolled even if they had the capability to choose, which many have. Many others have caregivers who could help them but didn't have the opportunity. They were all automatically enrolled, and some in plans that were just not right for them. Now they have to go through the process of disenrollling and re-enrolling. That's just not a good policy. In retrospect, it would have made sense to have a voluntary enrollment period.


Currently, you're profiling a nationally representative sample of beneficiaries to benchmark their drug utilization, assess medication use and prescribing, and explore disparities in utilization patterns. What have you found so far?
Stuart: We're really excited about this project. You'd think that with all our automated systems, policymakers and clinicians would have a clear sense of drug use patterns. But we found that is not true—there is very little information about patterns of medication use for individuals with particular diseases.

The preliminary work we've done is on beneficiaries with diabetes. If you have individuals with diabetes, who also have heart failure or asthma or emphysema, how does that affect the use of drugs for those conditions, but also the use of drugs for diabetes? We found some really intriguing patterns. We refer to the major finding as the "inverted U": people who have a particular disease but are relatively healthy are far less likely to take basic preventive drugs than people who are slightly sicker or moderately sicker. But when people have the underlying disease and a much higher disease burden, utilization goes down. So, people with the lowest utilization rates for needed drugs relative to their conditions tend to be reasonably healthy or very, very sick. The underuse of important drugs, particularly among the healthy, is something no one else has found.


What is the plan once these data are gathered?
Stuart: There's an important preventive public health message underlying this initial effort. We are going to be developing a chartbook of medication profiles for 10 diseases, which will be available toward the end of 2006. It will be really important for researchers, policymakers, and health plans administrators, because we really need to find ways of targeting populations with these conditions for interventions.


January 2006

Publication Details

Publication Date: January 23, 2006
Authors: Bruce Stuart

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