Links Found Among High Co-Payments, Poor Adherence, Higher Medicare Costs in Diabetes

June 8, 2015
Mary K. Caffrey

A study of Medicare claims suggests that policies that ask seniors to pay more out of pocket for prescriptions may lead to lower adherence and result in higher healthcare costs.

An analysis of Medicare claims data, presented Sunday at the 75th Scientific Sessions of the American Diabetes Association, found that when seniors with type 2 diabetes mellitus (T2DM) did a better job of sticking with their medication, the result was less overall healthcare spending. At the same time, the study found associations among higher out-of-pocket costs, lower adherence, and higher total spending.

Joanna P. MacEwan, PhD, research economist with Precision Health Economics, told the attendees at the session, “Cost-Effectiveness of Managing Diabetes and Related Complication,” that her findings were consistent with earlier literature, but she added some important wrinkles: the data show, for example, that small differences in adherence really add up when it comes to spending.

That’s important for policymakers to know, because managed care programs that ask seniors to carry more of the cost of prescription drugs—especially for chronic illness—could end up costing Medicare significantly in the long run.

The study used a sample of 12,305 person-year observations from 2006 to 2009 Medicare claims data, all for patients at least 65 years of age. A diagnosis of T2DM was confirmed through ICD-9 diagnostic codes and at least 1 prescription claim for an antidiabetic drug. Researchers segmented the cost and adherence outcomes into deciles, and used the medication possession ratio to further analysis levels of adherence. Age and gender did not differ across deciles.

Unsurprisingly, the patients who accounted for the highest overall spending had the poorest overall health, Dr MacEwan said. However, these costs were not on the pharmacy side. “Healthcare spending that increases dramatically, and accounts for the bulk of the total spending, is coming from the medical side,” she said, which would include items like hospitalizations or visits to the emergency department.

According to the authors’ abstract, the most adherent patients, those in the top decile, had higher pharmacy costs compared with those who were least adherent: $4839 compared with $3046. However, these highly adherent patients had lower overall expenditures: $12,531 compared with $24,468. Of note, their medical expenses were about a third of those who were least adherent to medications: $7692 compared with $21,421.1

In her presentation, Dr MacEwan presented data to show that higher out-of-pocket costs were associated with poor medication adherence, and that poor adherence was associated with higher healthcare spending. Her slide showed that while pharmacy spending stayed relatively flat, the more adherence improved, the more medical and total spending fell. This, she said, showed that, “Medical and total expenditures could be relatively sensitive to small differences in adherence.”

Cost-sharing programs aimed at lowering pharmacy costs could be counterproductive, Dr MacEwan said, because, “Small differences could have a large impact on spending.”

She recommended additional research to pinpoint connections between levels of co-payment and health outcomes. The study was supported by AstraZeneca.

Controlling the ABCs. Ping Zhang, PhD, presented an analysis on behalf of the CDC that tried to pin down at what point it ceases to be cost-effective to add an additional medication to treat glycated hemoglobin (A1C), blood pressure, or low-density lipoprotein (LDL) cholesterol. Treatment of the 3 is a fundamental part of T2DM care. While the CDC abstract says that some evidence now questions this approach, providers cannot ignore these measurements, because CMS is increasingly connecting Medicare reimbursement to the ability of physicians and health systems to keep T2DM patients at goal.

The CDC analysis looked at the cost-effectiveness in quality-adjusted-life-years (QALY) of separately adding an additional drug to treat A1C, blood pressure, and LDL cholesterol. The analysis, however, did not consider the synergistic effects that some medications would have in combination, or the fact that some T2DM therapies also help patients achieve weight loss, points that were noted with some alarm during the question-and-answer period.

The analysis found that for newly diagnosed patients, adding a second and third drug for A1C would yield incremental cost-effectiveness ratios (ICERs) of $17,225 and $106,059 per QALY, respectively. ICERs above $50,000 are considered not cost-effective. For established T2DM patients, adding a second or third A1C drug would yield ICERs of $20,275 and $112,710 per QALY, respectively. For a newly diagnosed or established T2DM patients taking 2 blood pressure drugs, adding a third would yield an ICER of $31,000 per QALY. For newly diagnosed or established patients with uncontrolled, untreated cholesterol a moderate dose statin has ICERs of $15,267 and $15,929 per QALY, respectively.2


1. MacEwan JP, Sheehan J, Yin W, et al. Penny-wise, pound foolish: association between medication adherence, out-of-pocket expenses, and healthcare costs in Medicare patients with type 2 diabetes. Diabetes. 2015; 64(suppl1) asbtract 262-OR.

2. Hoerger TJ, Zhuo X, Gregg Ew, Pavkov ME, Zhang P. Controlling the ABCs. The cost-effectiveness of A1C blood pressure and cholesterol control in type 2 diabetes. Diabetes. 2015; 64(suppl1) asbtract 260-OR.