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Supplements Prescription Drug Copays and Their Effect on Vulnerable Populations
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Impact of Copays in Vulnerable Populations

Finally, Rosen et al evaluated the effect of making angiotensin-converting enzyme (ACE) inhibitors available to Medicare beneficiaries with no copays, a plan similar to the value-based insurance proposal outlined in the employer perspective section elsewhere in this supplement. Other studies showed ACE inhibitors were significantly underused, with prescription copays being 1 barrier to their use. Rosen et al found first-dollar coverage of ACE inhibitors not only saved lives, but reduced Medicare costs about $1606 per beneficiary and increased quality-adjusted life-year by 0.23. Results were similar even when the model was adjusted to account for the coverage under the new Medicare drug
benefit, Medicare Part D.19

Dual Eligibles and Mental Illness
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 provided for a change in outpatient prescription drug benefit, known as Medicare Part D. Although the implementation of drug coverage under Medicare Part D in January 2006 may mean greater access to medication for many Medicare beneficiaries, it may have unintended consequences for the 6.1-million dual eligibles, individuals who are enrolled in both Medicare and Medicaid, who previously received drug coverage through state Medicaid programs. This vulnerable population is more than twice as likely to have fair or poor health as other Medicare beneficiaries (52% vs 24%, respectively).20

Consequences may be particularly severe for those with mental health conditions. Because Medicare has had a very limited mental health benefit, there is no parity between mental and physical health benefits. The current Medicare benefit allows 190 days of psychiatric inpatient care for mental disease during a patient's lifetime, and an outpatient coinsurance of 50%.21

Thus, Medicare pays for about 7% of mental health and substance abuse spending, compared with 17% of total healthcare spending. Overall, 3% of Medicare dollars are spent on mental health and substance abuse services compared with 4% of private insurance and 12% of Medicaid dollars.21

Yet, about 25% of elderly patients and 50% of disabled Medicare beneficiaries used 1 or more psychotropic drugs in 2002.21 Beneficiaries with mental illness have increased overall drug costs, with dual eligibles costing an average of $1408 each for medications in 2002.21 They also have increased drug costs overall because of the presence of comorbidities. Studies find increased rates of chronic diseases, such as hypertension, diabetes, congestive heart failure, and osteoarthritis, among those with depression, and at least 1 comorbidity among those with schizophrenia, including hypertension.22,23

Among the possible implications of Medicare Part D on this vulnerable population:

- The law excludes coverage for benzodiazepines, a drug important to dual eligibles.24 Abrupt discontinuation of benzodiazepines may have an adverse effect, possibly leading to withdrawal reactions, seizures, and ED visits.25
- All noninstitutionalized beneficiaries must participate in some cost sharing; thus, some dual eligibles may find themselves paying more for medications than with Medicaid.24 Cost sharing for dual eligibles is to be limited to nominal copays of $1 to $3 and can be waived. However, in patients who require multiple medications, the higher cost-sharing requirements of Medicare Part D can be a financial burden, thereby forcing these patients to be selective in which illnesses they treat.
- Although about 50% of the cost of antipsychotics and antidepressants has moved to Medicare Part D, the cost of most mental healthcare remains with Medicaid, adding to an already fragmented system, with as many as 5 payers for mental health services: local government, state government, Medicaid, Medicare, and Part D of Medicare.26 Also, most Medicaid programs have elected to continue coverage for benzodiazepines, further fragmenting care.21
- Medicare Part D permits more access restrictions, allowing for pharmacy utilization management measures, such as prior authorization, step therapy, and quantity limits for psychotropic drugs to control drug expenditures and ensure appropriate use of medications.21 Although the Centers for Medicare & Medicaid Services (CMS) has specifically asked that such restrictions not be placed on psychotropic drugs,27 it is up to the individual prescription drug plan whether or not to implement them.
- The aggressive management of formularies permitted under the Medicare prescription drug law could, and probably will, restrict access to medications. The law also allows prescription drug plans to deny coverage for off-label uses of medications that are currently covered by Medicaid.28
- Dual eligibles who have been unresponsive to previously available medications could be affected by not having access to newly approved drugs, because plans are permitted substantial time before considering a new medication for its formulary.28
- If drugs are withheld because beneficiaries are unable to pay their copay, it could interrupt treatment regimens and increase adverse events.28

In conclusion, information based on health outcome studies,29,30 Medicaid sector studies, CMS guidance regarding antipsychotic drug classes, and the effects of copays on vulnerable populations suggest that access without impediment by financial barriers is critically important for vulnerable, high-risk patient populations. Pursuing alternatives to restricting access can help achieve clinical and economic goals.29,30

1. Smith C, Cowan C, Heffler S, Catlin A. National health spending in 2004: recent slowdown led by prescription drug spending. Health Aff (Millwood). 2006;25:186-196.

2. Kaiser Family Foundation. Section 9: prescription drug benefits. In: Employer Health Benefits 2005 Annual Survey. Available at: Accessed July 31, 2006.

3. Reed MC. An update on Americans’ access to prescription drugs. Issue Brief Cent Stud Health Syst Change. 2005:1-4.

4. Kaiser Commission on Medicaid and the Uninsured. (2003a). Access to care for the uninsured: an update. September 2003. Publication No. 4142. Available at: Accessed August 4, 2006.

5. Pomerantz J. Prescription drug copayments and vulnerable populations: problems and opportunities. Presented at: Impact of Prescription Drug Copayments on Vulnerable Populations. Roundtable meeting; June 13, 2006; Philadelphia, Pa.

6. Goldman DP, Joyce GF, Escarce JJ, et al. Pharmacy benefits and the use of drugs by the chronically ill. JAMA. 2004;291:2344-2350.

7. Tamblyn R, Laprise R, Hanley JA, et al. Adverse events associated with prescription drug cost-sharing among poor and elderly persons. JAMA. 2001;285:421-429.

8. Huskamp HA, Deverka PA, Epstein AM, et al. Impact of 3-tier formularies on drug treatment of attentiondeficit/hyperactivity disorder in children. Arch Gen Psychiatry. 2005;62:435-441.

9. Roblin DW, Platt R, Goodman MJ, et al. Effect of increased cost-sharing on oral hypoglycemic use in five managed care organizations: how much is too much? Med Care. 2005;43:951-959.

10. Piette JD, Heisler M, Wagner TH. Problems paying out-of-pocket medication costs among older adults with diabetes. Diabetes Care. 2004;27:384-391.

11. Zeber JE, Copeland LA, Miller AL, Kilbourne AM, Velligan D, Mortensen EM. Ethnicity and the impact of higher medication copayments among veterans with schizophrenia [abstract]. Abstract No. 3029. Health Services Research and Development. National Meeting 2006. Available at: Accessed August 3, 2006.

12. Soumerai SB. Benefits and risks of increasing restrictions on access to costly drugs in Medicaid. Health Aff (Millwood). 2004;23:135-146.

13. Stuart B, Zacker C. Who bears the burden of Medicaid drug copayment policies? Health Aff (Millwood). 1999;18:201-212.

14. Soumerai SB, McLaughlin TJ, Ross-Degnan D, et al. Effects of limiting Medicaid drug-reimbursement benefits on the use of psychotropic agents and acute mental health services by patients with schizophrenia. N Engl J Med. 1994;331:650-655.

15. Sokol MC, McGuigan KA, Verbrugge RR, Epstein RS. Impact of medication adherence on hospitalization risk and healthcare cost. Med Care. 2005;43:521-530.

16. Weiden PJ, Olfson M. Cost of relapse in schizophrenia. Schizophrenia Bull. 1995;21:419-429.

17. Thieda P, Beard S, Richter A, Kane J. An economic review of compliance with medication therapy in the treatment of schizophrenia. Psychiatr Serv. 2003;54:508-516.

18. Gilmer TP, Dolder CR, Lacro JP, et al. Adherence to treatment with antipsychotic medication and health care costs among Medicaid beneficiaries with schizophrenia. Am J Psychiatry. 2004;161:692-699.

19. Rosen AB, Hamel MB, Weinstein MC, Cutler DM, Fendrick AM, Vijan S. Cost-effectiveness of full Medicare coverage of angiotensin-converting enzyme inhibitors for beneficiaries with diabetes. Ann Intern Med. 2005;143:89-99.

20. The Kaiser Commission on Medicaid and the Uninsured. Implications of the new Medicare law for dual eligibles: 10 key questions and answers. Kaiser Family Foundation. January 9, 2004. Available at: Accessed August 4, 2006.

21. McGuire TG. Outpatient benefits for mental health services in Medicare. Alignment with the private sector? Am Psychol. 1989;44:818-824.

22. Himelhoch S, Weller WE, Wu AW, Anderson GF, Cooper LA. Chronic medical illness, depression, and use of acute medical services among Medicare beneficiaries. Med Care. 2004;42:512-521.

23. Dixon L, Postrado L, Delahanty J, Fischer PJ, Lehman A. The association of medical comorbidity in schizophrenia with poor physical and mental health. J Nerv Ment Dis. 1999;187:496-502.

24. Koyanagi C. Medicare part D: issues for state agencies. Prescriptions for Progress. 2005;1:10-13. Available at: Accessed August 2, 2006.

25. Bambauer KZ, Sabin JE, Soumerai SB. The exclusion of benzodiazepine coverage in Medicare: simple steps for avoiding a public health crisis. Psychiatr Serv. 2005;56:1143-1146.

26. Surles R. Consequences of and alternatives to impeded access. Presentation at: Impact of Prescription Drug Copayments on Vulnerable Populations. Roundtable meeting; June 13, 2006; Philadelphia, Pa.

27. National Council for Community Behavioral Health. Available at: Accessed August 2, 2006.

28. Kaiser Family Foundation. The new Medicare prescription drug law: issues for dual eligibles with disabilities and serious conditions. 2004. Available at: Accessed August 3, 2006.

29. Huskamp HA, Deverka PA, Epstein AM, Epstein RS, McGuigan KA, Frank RG. The effect of incentive-based formularies on prescription-drug utilization and spending. N Engl J Med. 2003;349:2224-2232.

30. Goldman DP, Joyce GF, Karaca-Mandic P. Varying pharmacy benefits with clinical status: the case of cholesterollowering therapy. Am J Manag Care. 2006;12:21-28.

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