Stuart B, Doshi J, Briesacher B, Wrobel M; AcademyHealth. Meeting (2004 : San Diego, Calif.).
Abstr AcademyHealth Meet. 2004; 21: abstract no. 1411.
University of Maryland Baltimore, Pharmaceutical Health Services Research, 515 W. Lombard Street, Room 157, Baltimore, MD 21201 Tel. 410.707.5389 Fax 410.706.1488
RESEARCH OBJECTIVE: To determine whether prescription drug coverage for Medicare beneficiaries produces cost offsets in Medicare Part A and B spending. STUDY DESIGN: We created a 2-year panel of respondents (1999-2000) to the Medicare Current Beneficiary Survey (MCBS). We estimated 4 cross-sectional regression models for spending in 2000 for (1) prescription drugs measured in average wholesale prices (the AWP measure standardizes differences in drug spending for persons with and without coverage and avoids the problem of comparing retail prices for the former with discounted prices for the latter), (2) hospital services,(3) physician services, and (4) all Medicare covered services combined. Explanatory variables included a binary measure of drug coverage and lagged values (1999) for an extensive list of demographic and health status characteristics including predicted Medicare spending derived from the Diagnostic Cost Group/Hierarchical Coexisting Condition (DCG/HCC) risk adjuster developed by CMS. The regressions were estimated using generalized linear models with a gamma distribution and log link. Tests for endogeneity and omitted variable bias were conducted. The analysis was replicated using propensity scoring (PS) techniques in which subjects observations were weighted based on their propensity to have drug coverage derived from predicted values in a logistic regression containing the same variables as in the GLM regressions. POPULATION STUDIED: Community-dwelling MCBS respondents enrolled in fee-for-service Medicare throughout 1999 and 2000. Sample (N=3,365) was restricted to persons with Medicare supplementation that included drug coverage or not for both years of the study. PRINCIPAL FINDINGS: Drug coverage was associated with a statistically significant increase in AWP-priced drug spending of between 49% (GLM) and 66% (PS). Drug coverage had an insignificant effect on all of the Medicare spending measures. Coefficient values varied from +7% (total Medicare spending in the GLM model) to -3% (hospital spending using PS methodology). CONCLUSIONS: Drug coverage induces significant additional spending on prescribed medications by Medicare beneficiaries. Higher spending on drugs among those with coverage appears to have little aggregate impact on spending for hospital and physician services. This does not mean that drug therapy cannot substitute or complement other therapies, but rather that neither effect predominates across the Medicare population as a whole. Additional research is necessary to identify particular disease-therapy combinations for which cost offsets are likely to occur. IMPLICATIONS FOR POLICY, DELIVERY OR PRACTICE: The new Medicare drug benefit is likely to result in a large increase in spending on prescribed medications for those who currently have no coverage, particularly for low-income beneficiaries who qualify for the most comprehensive benefits. The impact of the drug benefit on the rest of the Medicare budget remains to be seen. If the management of drug therapy by private health plans under the law follows the current practices of third party payers, our findings suggest that the law will have a neutral effect on non-drug spending.
Publication Types:
Keywords:
- Data Collection
- Health Expenditures
- Medicare
- Prescriptions, Drug
- economics
- hsrmtgs
UI: 103624445
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