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Out-of-Plan Medication in Medicare Part D
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Out-of-Plan Medication in Medicare Part D

Pamela N. Roberto, MPP, and Bruce Stuart, PhD
Out-of-plan medication use accounted for a small share of diabetes, hypertension, and hyperlipidemia prescriptions filled by Medicare Part D beneficiaries.
To determine the extent to which Medicare Part D enrollees fill unadjudicated prescriptions for diabetes, hypertension, and hyperlipidemia medications outside of the Part D benefit.

Study Design
Retrospective analysis of prescriptions filled by community-dwelling beneficiaries continually enrolled in a Medicare Part D plan in 2009.

We used the Medicare Current Beneficiary Survey to compare self-reported prescription fills for oral antidiabetes medications, renin-angiotensin-aldosterone system inhibitors, and statins to adjudicated prescription drug event data recorded by Part D plan sponsors. For unadjudicated prescriptions with no evidence of Part D payment, we determined whether the fills were paid for in cash, filled through VA pharmacies or discount generic programs, or had other reported sources of coverage.

A total of 6.2% of all prescriptions filled by Part D beneficiaries were unadjudicated, ranging from 5.3% of all oral antidiabetes medications to 6.8% of statins. Cash prescriptions accounted for more than half of all out-of-plan use, but we found little evidence of unadjudicated out-of-plan use of discount generics. Prescriptions filled at VA pharmacies and those with other reported sources of coverage each accounted for about 1% of total fills.

Out-of-plan medication use accounts for a small share of total prescriptions filled by Part D beneficiaries. Nevertheless, CMS should continue to work with plan sponsors to develop initiatives that facilitate the collection of beneficiaries’ complete utilization data, as a more complete reporting could improve the quality of care delivered to Part D enrollees.

Am J Manag Care. 2014;20(9):743-748
Out-of-plan use of oral antidiabetic medications, renin-angiotensin-aldosterone system (RAAS) inhibitors, and statins accounted for a small share of total utilization by Medicare Part D beneficiaries.
• 6.2% of prescriptions were unadjudicated, ranging from 5.3% of oral antidiabetes medications to 6.8% of statins.

• Cash prescriptions accounted for more than half of all out-of-plan use, but we found little evidence of unadjudicated prescriptions filled through discount generic programs.

• Prescriptions filled at Veterans Affairs (VA) pharmacies accounted for 1.1% of total fills.

• CMS should continue to work with plan sponsors to collect complete and accurate utilization data, including cash, VA, other third-party, and discount generic prescriptions.
The Medicare prescription drug program, known as Part D, provides an optional drug benefit for Medicare beneficiaries administered by CMS through contracts with private health plan sponsors. Each time a beneficiary fills a prescription for a medication covered by Part D, the plan sponsor is responsible for electronically submitting documentation of the transaction, called a prescription drug event (PDE) record, to CMS. Each PDE record contains detailed information about the prescription fill, including the name of the drug, the quantity and number of days’ supply of medication dispensed, payment made by the plan sponsor, and beneficiary cost-sharing. While CMS relies on the submission of PDE records to accurately administer the benefit and make payments to plans for drugs covered by Part D, there are several reasons why these data may provide an incomplete picture of a beneficiary’s entire medication history. For example, over-thecounter (OTC) drugs, medications excluded from Part D coverage by law, off-formulary products, and medication samples obtained from physicians typically do not generate PDE records.1 In addition, documentation of prescription fills for medications otherwise covered by the Part D program might also be missing if they are not adjudicated at the pharmacy and are therefore unknown to the plan sponsor. 2 Important sources of such out-of-plan use may include unadjudicated prescriptions paid in cash by the beneficiary, prescriptions filled at non-network pharmacies, prescriptions obtained through the Department of Veterans Affairs (VA), generic drugs purchased through pharmacy discount programs, and products obtained through other prescription assistance programs that operate outside of the Part D benefit.

Out-of-plan medication use by Part D enrollees raises a number of concerns. First, spending on drugs covered by Part D that occurs outside of the plan adjudication process may not be counted toward beneficiaries’ true out-of-pocket spending, which can reduce program benefits for beneficiaries with high drug expenditures. Second, for payers, clinicians, and researchers who rely upon accurate administrative data, missing claims may lead to biased or unreliable estimates of drug adherence, spending, and outcomes. Third, incomplete information on beneficiaries’ drug use can inhibit plan sponsors’ ability to target adherence programs, such as medication therapy management (MTM), or may interfere with other quality and safety assurance processes, including drug utilization review (DUR). While these challenges are not unique to the Part D program, Part D plan sponsors face the additional concern that incomplete utilization records may negatively impact the performance measures that determine their Star Ratings.

The Part D Star Ratings program evaluates the quality and performance of prescription drug plans (PDPs) and Medicare Advantage prescription drug plans (MAPDs) offered to Medicare beneficiaries. Based on an assessment of their performance on 18 quality measures across 4 domains of care, plan sponsors receive an overall annual score ranging from 1 to 5 stars, in half-star increments, with a higher number of stars indicating better performance. While CMS initially designed the Star Rating system to help enrollees choose high-quality Part D plans, the Affordable Care Act and a subsequent CMS demonstration project expanded the scope of the program beginning in 2012, allowing high-performing MAPDs to qualify for quality-based bonus payments. PDPs are not eligible for additional quality payments based on their Star Ratings, but 5-star PDPs and MAPDs are allowed to enroll beneficiaries year-round, giving them a competitive advantage in the market. Meanwhile, plan sponsors with consistently low quality ratings may be denied permission to expand their service areas, and in some cases, prohibited from marketing to, enrolling, or providing coverage to beneficiaries.

Recent research on MAPDs suggests that plans’ Star Ratings significantly influence the enrollment decisions of both first-time enrollees and current Part D beneficiaries who are looking to switch coverage.3 Plan sponsors wishing to maximize their Star Ratings have a specific incentive to focus on improving enrollees’ adherence with oral antidiabetic medications, renin-angiotensin-aldosterone system (RAAS) inhibitors, and statins. CMS evaluates plans on the share of enrollees that are adherent to these medications and triple-weights the results relative to other quality indicators, accounting for over 27% of the overall Part D Star Rating. Data published by CMS indicate that on average, both MAPDs and PDPs score more poorly on these adherence measures than on measures across the other 3 domains.Anecdotal reports from plan sponsors suggest that plans are unable to capture enrollees’ complete utilization data, and are therefore unable to accurately measure adherence, due to beneficiaries filling prescriptions through the VA and discount generic programs.5,6 According to CMS guidance, PDE data reported by plan sponsors may only include prescriptions processed by network pharmacies or prescription reimbursement requests received directly from beneficiaries. Due to data validation and beneficiaryprivacy concerns, CMS currently prohibits plan sponsors from augmenting their utilization files with additional data obtained from other sources, such as third-party vendors.6

The extent of out-of-plan use among Medicare Part D beneficiaries and its impact on plans’ Star Ratings have not been well documented in the literature. This study addresses several knowledge gaps related to out-of-plan use. First, to address plan sponsors’ concerns that the adherence measures included in their Star Ratings may be negatively impacted by prescriptions filled outside of the Part D benefit, we examine the extent to which enrollees filled unadjudicated prescriptions for oral antidiabetic medications, RAAS inhibitors, and statins. Second, we estimate the potential scope of out-of-plan use due to unadjudicated cash prescriptions, medications filled at VA pharmacies, and discount generic drugs that might not have been electronically transmitted to Part D plan sponsors. Third, we track the growth in beneficiaries’ use of discount generic programs in 2009, relative to published estimates for 2007 and 2008. Finally, we discuss the policy implications of our findings for CMS and Part D plan sponsors.


We used data from the 2009 Medicare Current Beneficiary Survey (MCBS) to conduct the research. The MCBS is an ideal data source for this analysis because it reports adjudicated PDEs from Part D plan sponsors together with self-reported prescription medication events (PMEs) that may or may not have been adjudicated. Self-reported PMEs are collected from survey respondents 3 times during the year and include data on the drug name, quantity dispensed, and source(s) of payment. PDE records are extracted directly from CMS. Each medication event in the MCBS identifies whether the prescription was reported solely as a PME (ie, with no matching PDE record), recorded solely as a PDE (ie, with no self-reported PME), or whether CMS was able to identify and match both a PME and PDE for that fill. We restricted our analysis to prescriptions filled by community-dwelling beneficiaries continually enrolled in an MAPD or PDP in 2009, excluding beneficiaries who died during the year. The study was approved by the institutional review board at the University of Maryland, Baltimore.

We limited the drugs in the analysis to those included in the Pharmacy Quality Alliance (PQA) specifications for the Star Ratings adherence measures. In 2009, these included 4 classes of oral antidiabetes drugs (biguanides, dipeptidyl peptidase-4 inhibitors, sulfonylureas, and thiazolidnediones), RAAS inhibitors, and statins.7 To estimate the extent to which Part D beneficiaries filled outof- plan prescriptions for these medications, we identified self-reported PMEs and calculated the share without plan sponsor adjudication, as evidenced by the absence of a matching PDE record. We restricted our analysis of unmatched PMEs to those for which Medicare Part D was not reported as a payment source (eg, prescriptions paid for in cash, by the VA, or by other payers). To determine the share of unmatched PMEs potentially attributable to generic discount program use, we calculated the share of generic cash PMEs with reported out-of-pocket payments of either $4 or $10, which correspond to amounts commonly charged by pharmacies with discount programs.We then determined whether or not those fills had any evidence of adjudication, as indicated by matching PDE records. All analyses were conducted using SAS 9.2 (SAS Institute, Cary, North Carolina).


Table 1 presents characteristics of MCBS respondents continuously enrolled in a Medicare Part D plan throughout 2009, weighted to reflect the entire Medicare population. Half of all beneficiaries (50.2%) filled 1 or more prescriptions for a RAAS inhibitor, 50.2% filled 1 or more prescriptions for a statin, and 19.9% filled 1 or more prescriptions for an oral antidiabetic medicine. About 38% of the sample filled prescriptions for 2 of these medications, and 11.3% filled prescriptions for all 3. Roughly 60% of beneficiaries were enrolled in a PDP for all of 2009, and a small share—less than 2%—switched between PDP and MAPD coverage during the year. A third of the sample received the low-income subsidy. Reflective of the distribution of the broader Part D population, the majority of the sample was female and more than 70% of the subjects were white; however, survey respondents   were older than Part D enrollees in general.9 Geographically, more than a third of respondents lived in the South, and about 18% of the sample reported having ever served in the military.

Analysis of the PME and PDE data showed that Part D enrollees in our MCBS sample filled a total of 45,322 prescriptions for oral antidiabetics, RAAS inhibitors, and statins in 2009 (Table 2). The vast majority of these fills (93.8%) had evidence of Part D adjudication and there was little variation across drug classes (93.2% for statins to 94.7% for oral antidiabetic agents). Altogether, 82.5% of prescriptions in the sample had an associated Part D payment. A total of 14.4% of fills were reported as cashonly with a ratio of about 3 to 1 being Part D adjudicated (10.7% versus 3.7%). Prescriptions filled through the VA accounted for a very small share of total fills, ranging from just 0.8% of RAAS inhibitors to 1.6% of statins. Equally small shares of prescriptions for these drug classes had other reported sources of payment.

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