Cost Minimization of Medicare Part D Prescription Drug Plan Expenditures

Study results indicate that outreach interventions performed by trained student pharmacists assist Medicare beneficiaries to effectively navigate their Part D benefit, thereby reducing out-of-pocket costs.

Published Online: August 07, 2009
Rajul A. Patel, PharmD, PhD; Helene Levens Lipton, PhD; Timothy W. Cutler, PharmD; Amanda R. Smith, MPH; Shirley M. Tsunoda, PharmD; and Marilyn R. Stebbins, PharmD

Objective: To minimize out-of-pocket prescription drug plan (PDP) expenditures by Medicare beneficiaries.

Study Design: Cost-minimization analysis.

Methods: Trained student pharmacists from 6 California pharmacy schools provided expert guidance on Medicare Part D PDPs to beneficiaries through interventions at statewide outreach events. Demographic and insurance information for 2008 was collected via survey. Cost information for the beneficiary’s current PDP for 2008 and for the least expensive PDP for 2008 was obtained using the Medicare Plan Finder tool (

Results: Data were collected from 250 beneficiaries at 22 outreach events. For the cost-minimization analysis, data were excluded from 72 beneficiaries who were not enrolled in a stand-alone PDP before the intervention and from another 23 beneficiaries for whom information regarding their current PDP or prescription drug profile was incomplete. Of the remaining 155 study participants, 39.4% were male, the mean (SD) age was 74.6 (8.7) years, and they were taking a mean (SD) of 5.3 (3.5) prescription drugs each month. In addition, 68 beneficiaries (43.9%) had limited or no English proficiency, and 85 beneficiaries (54.8%) were enrolled in both Medicare and Medicaid. In total, 89.7% of beneficiaries could have realized cost savings by switching to a different PDP. The median annual potential cost savings was $98 per beneficiary but this varied as a function of subsidy level.

Conclusion: Targeted community outreach services to Medicare Part D beneficiaries can help optimize patient selection of a PDP, thereby resulting in lower out-of-pocket expenditures.

(Am J Manag Care. 2009;15(8):545-553)

Targeted community outreach services to Medicare beneficiaries can help optimize selection of a prescription drug plan, thereby resulting in lower out-of-pocket expenditures.

  • Trained student pharmacists who are proficient in using the Web-based Medicare Plan Finder tool can systematically evaluate Medicare Part D plan choices available to beneficiaries.
  • Beneficiaries should reevaluate their Part D plans annually, as 9 of 10 could have saved money by doing so.
  • Targeted community outreach could not only lower beneficiaries’ out-of-pocket prescription drug plan costs, but also help identify those who may qualify for additional governmental assistance (receipt of the low-income subsidy).
Medicare Part D (Part D), the prescription drug program for Medicare beneficiaries, went into effect on January 1, 2006.1 In its third year of operation, 25.4 million beneficiaries were enrolled in a Part D plan, with 68% of enrollees in a stand-alone prescription drug plan (PDP) and the remainder in a plan that combines prescription drug coverage with hospital and medical coverage (ie, Medicare Advantage Prescription Drug plan).2 The program has enjoyed some important successes. Since the introduction of Part D, the proportion of Medicare-eligible beneficiaries without drug coverage has decreased by 60%.3 Research suggests that Part D has improved some beneficiaries’ access to and use of prescription medicines, while decreasing out-of-pocket expenditures.4

Nonetheless, some important challenges remain. Despite having lowered out-of-pocket costs for some beneficiaries, Part D plans may still burden many with high out-of-pocket costs, creating a significant barrier to accessing prescription drugs. Compared with those having employersponsored or Department of Veterans Affairs PDPs, more seniors with Part D have high out-of-pocket prescription drug expenditures.5 More than 25% of Medicare-eligible individuals reported spending at least $100 per month on their prescription medications; these same investigators found that 8% of such individuals reported spending at least $300 per month on their prescription medications.5 A 2007 study6 of national patient-level retail pharmacy claims data found that 14% of Part D enrollees (excluding those receiving federal subsidies)—3.4 million beneficiaries—reached the coverage gap in 2007, with monthly out-of-pocket spending almost doubling from $104 before the gap to $196 during the gap. Among those who reached the gap, 15% stopped taking their medications, and 5% switched to an alternative drug in the same drug class. These findings are especially important because many Medicare beneficiaries are senior citizens with fixed incomes or limited resources, and high out-of-pocket expenses may result in increased rates of noncompliance (eg, forgoing filling a prescription or delaying to fill a prescription).5 Finally, other evidence suggests that access to the benefit remains problematic for some. Of 12.5 million most vulnerable Medicare beneficiaries who may qualify for extra help (“low-income subsidy” [LIS]) to pay for their prescription drug costs, 2.6 million (20.8%) have yet to apply for the subsidy. Many of these individuals may be unaware of the existence of or may fail to fully understand the Part D benefit and the extra help available to them.2,5,7

These challenges notwithstanding, perhaps the greatest barrier to accessing the Part D benefit is the enrollment process. Part D allows the beneficiary to choose and enroll in a privately sponsored Medicare-approved PDP. However, the number of PDP plan offerings can be overwhelming for a beneficiary and differs among 34 Medicare PDP regions set by the Centers for Medicare & Medicaid Services (CMS). The number of PDPs per region in 2008 ranged from a low of 47 in Alaska to a high of 63 in the Pennsylvania and West Virginia region.

In addition, because each plan can differ with regard to premium, deductible, cost-sharing provisions, formulary coverage, and other design features, beneficiaries may find it difficult to select a PDP that best meets their needs. To enroll in the plan with the best coverage and the lowest  out-of-pocket costs, Part D enrollees need to understand factors beyond premium and deductible costs, including copayment and coinsurance structure, coverage gap (doughnut hole) protection, and catastrophic coverage costs. However, many Medicare beneficiaries, particularly low-income and other vulnerable populations, lack the knowledge and experience to select a PDP that best suits their needs. The CMS will facilitate autoassignment and enrollment of LIS and dualeligible (dual-eligible individuals are those with full Medicaid and Medicare benefits) recipients into a Part D plan. This autoassignment and enrollment is a random process, and a limited number of plans qualify for having LIS or dual-eligible beneficiaries assigned to them. These plans are called benchmark plans. The autoassignment and enrollment process fails to take into account the prescription history or medication needs of the beneficiary. However, those who receive the LIS or are dual eligible have increased flexibility when selecting a Part D plan and in fact may switch plans at any time throughout the course of the year.

For those who must choose a Part D plan or those who want to reevaluate their Part D plan annually, the sole way to compare plans is through the Plan Finder tool ( located on the Medicare Web site, a challenge for 54% of beneficiaries who lack Internet access.8 Beneficiaries who rely on the CMS hotline (1-800-MEDICARE [1-800-633-4227]) may find obtaining information difficult if they have low literacy skills or are not fluent in English. A recent study9 of 112 seniors, all English-speaking with Internet experience, found that 72% were unable to select a drug plan or encountered difficulties navigating the site to find drug plan information. These findings are likely to be even more pronounced among those with limited or no English proficiency, as well as those having little familiarity with the Internet.

Given their accessibility, knowledge of prescription drugs, and understanding of Part D, pharmacists are in an ideal position to serve as Part D patient advocates. In addition, the American Association of Colleges of Pharmacy10 states that pharmacy educators should teach their students to serve society as caring ethical professionals and as enlightened citizens. Finally, the most recent Accreditation Council for Pharmacy Education11 accreditation standards reflect the increasing value of training student pharmacists to provide patient-centered care during their professional graduate education. Given these factors, Partners in D, a statewide research program among 7 schools of pharmacy in California, was developed by the faculty at the University of California, San Francisco School of Pharmacy to train student pharmacists to assist underserved Medicare beneficiaries in various ways, including distinguishing which PDP may result in the lowest out-of-pocket cost, explaining plan formulary changes, describing a plan’s cost-sharing structure, and identifying duplicative or unnecessary drug therapy.

The research reported herein examines our efforts to enable seniors who were enrolled in a Part D plan to select a PDP that minimized their out-of-pocket expenditures. This study used a cost-minimization analysis (CMA) to determine whether and to what extent student pharmacists’ interventions reduce out-of-pocket PDP costs for Medicare beneficiaries.

Cost-minimization analysis is a pharmacoeconomic method that has been increasingly adopted by studies reported in the medical literature. Examination of the number of articles using CMA revealed an increase of almost 100% in the 5-year period from 2001 to 2005 (212 articles in PubMed and 657 articles in SCOPUS) compared with 1996 to 2000 (122 articles in PubMed and 366 articles in SCOPUS).12,13 A CMA is undertaken when outcomes between comparator groups are equivalent. In clinical studies in which a CMA is performed, investigators have assumed14-16 or proven17-19 that outcomes between differing treatments or interventions were equivalent. As such, the ultimate goal of a CMA is to determine which treatment or intervention minimizes cost.


Study Design

This study was a cross-sectional CMA of beneficiary annual out-of-pocket Part D expenditures. We sought to reduce beneficiary spending by identifying the PDP resulting in the lowest estimated annual cost given the beneficiary’s current prescription drug regimen. This was compared with the estimated out-of-pocket costs that the beneficiary would have incurred if he or she did not change his or her current PDP. Potential cost savings for each beneficiary were calculated as follows:

Potential annual cost savings

= the cost of staying in the current PDP in 2008

- the cost of the least expensive PDP in 2008.

The study intervention was performed without making any changes to a beneficiary’s prescription drug regimen. As such, outcomes were not expected to change, and a CMA was conducted.

One of the collaborating schools of pharmacy was unable to participate in this part of the study. Therefore, in total, 22 outreach events were conducted by 6 schools of pharmacy in California (Loma Linda University, University of California–San Diego, University of California–San Francisco, University of the Pacific [Stockton], University of Southern California [Los Angeles], and Western University of Health Sciences [Pomona]) between November 3, 2007, and December 31, 2007 (the end of open enrollment for Part D PDPs in 2007). Most beneficiaries may only change their Part D PDP during the open enrollment window (November 15 to December 31). Approval to conduct this research was obtained by the institutional review boards at all 6 schools of pharmacy.

Study Population

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