In Medicare, Connecting Medical and Drug Coverage Results in Richer Benefits, AJMC Study Finds

A study just published in The American Journal of Managed Care examined how benefit design differences affected seniors who received prescription coverage through Medicare Advantage compared with a stand-alone Medicare drug plan. The review showed that integrating drug coverage with medical care resulted in fewer barriers to name-brand drugs, with lower copayments.

PLAINSBORO, N.J. — Seniors who have prescription drug coverage integrated with their health plan through Medicare Advantage have easier access to brand-name drugs than those covered by a stand-alone drug benefit. And out-of-pocket costs may be lower for the Medicare Advantage clients, too.

Those were the findings of a study just published in The American Journal of Managed Care. The study’s lead author, Haiden Huskamp, PhD, is with the Department of Health Care Policy at Harvard Medical School. For the full study, click here.

Huskamp and her co-authors compared both varieties of Medicare prescription drug coverage for 2012, examining each program’s formulary, prior authorization or step-therapy requirements, and copayment levels. Researchers looked at six commonly used classes of drugs among Medicare beneficiaries for their comparison.

Truven Health MarketScan claims from 2011 were used to estimate pricing and compute market share.

The group found that “modest, confirmatory evidence” suggests that different incentives drive policy in Medicare Advantage prescription coverage, compared with stand-alone drug plans. In integrated coverage, easier access to the right drug, even if the short-term cost is higher, may prevent more costly outcomes in the long run. But this work suggests that in a stand-alone drug plan, only drug costs drive decision-making, although the researchers call for more work to understand the factors at work. The article discussions how factors such as adverse selection may work to determine how seniors make enrollment decisions in the first place.

The authors note that in both Medicare Advantage and stand-alone plans, define standard benefits and enhanced benefits are available. For 2013, the defined standard benefit had a deductible of $325, after which the consumer paid 25 percent of costs up to $2,970. From that point until $6,733.75, consumers pay a higher share, 79 percent of generic costs and 47.5 percent of brand-name costs. Above that amount, the consumer pays 5 percent.

About the Journal

The American Journal of Managed Care, now in its 20th year of publication, is the leading peer-reviewed journal dedicated to issues in managed care. Other titles in the AJMC family of publications include The American Journal of Pharmacy Benefits, which provides pharmacy and formulary decision makers with information to improve the efficiency and health outcomes in managing pharmaceutical care. In December 2013, AJMC introduced The American Journal of Accountable Care, which publishes research and commentary devoted to understanding changes to the healthcare system due to the 2010 Affordable Care Act. AJMC’s news publications, the Evidence-Based series, bring together stakeholder views from payers, providers, policymakers and pharmaceutical leaders in the areas of oncology, diabetes management, and immunology and infectious disease. To order reprints of articles appearing in AJMC publications, please call (609) 716-7777, x 131.

CONTACT: Mary Caffrey (609) 716-7777 x 144

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