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Volume 354:2349-2359 June 1, 2006 Number 22
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Unintended Consequences of Caps on Medicare Drug Benefits
John Hsu, M.D., M.B.A., M.S.C.E., Mary Price, M.A., Jie Huang, Ph.D., Richard Brand, Ph.D., Vicki Fung, B.A., Rita Hui, Pharm.D., Bruce Fireman, M.A., Joseph P. Newhouse, Ph.D., and Joseph V. Selby, M.D., M.P.H.

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ABSTRACT

Background Little information exists about the consequences of limits on prescription-drug benefits for Medicare beneficiaries.

Methods We compared the clinical and economic outcomes in 2003 among 157,275 Medicare+Choice beneficiaries whose annual drug benefits were capped at $1,000 and 41,904 beneficiaries whose drug benefits were unlimited because of employer supplements.

Results After adjusting for individual characteristics, we found that subjects whose benefits were capped had pharmacy costs for drugs applicable to the cap that were lower by 31 percent than subjects whose benefits were not capped (95 percent confidence interval, 29 to 33 percent) but had total medical costs that were only 1 percent lower (95 percent confidence interval, –4 to 6 percent). Subjects whose benefits were capped had higher relative rates of visits to the emergency department (relative rate, 1.09 [95 percent confidence interval, 1.04 to 1.14]), nonelective hospitalizations (relative rate, 1.13 [1.05 to 1.21]), and death (relative rate, 1.22 [1.07 to 1.38]; difference, 0.68 per 100 person-years [0.30 to 1.07]). Among subjects who used drugs for hypertension, hyperlipidemia, or diabetes in 2002, those whose benefits were capped were more likely to be nonadherent to long-term drug therapy in 2003; the respective odds ratios were 1.30 (95 percent confidence interval, 1.23 to 1.38), 1.27 (1.19 to 1.34), and 1.33 (1.18 to 1.48) for subjects using drugs for hypertension, hyperlipidemia, and diabetes. In each subgroup, the physiological outcomes were worse for subjects whose drug benefits were capped than for those whose benefits were not capped; the odds ratios were 1.05 (95 percent confidence interval, 1.00 to 1.09), 1.13 (1.03 to 1.25), and 1.23 (1.03 to 1.46), respectively, for subjects with a systolic blood pressure of 140 mm Hg or more, a serum low-density-lipoprotein cholesterol level of 130 mg per deciliter or more, and a glycated hemoglobin level of 8 percent or more.

Conclusions A cap on drug benefits was associated with lower drug consumption and unfavorable clinical outcomes. In patients with chronic disease, the cap was associated with poorer adherence to drug therapy and poorer control of blood pressure, lipid levels, and glucose levels. The savings in drug costs from the cap were offset by increases in the costs of hospitalization and emergency department care.


Source Information

From the Division of Research (J. Hsu, M.P., J. Huang, V.F., B.F., J.V.S.) and the Pharmacy Outcomes Research Group (R.H.), Kaiser Permanente, Oakland, Calif.; the Department of Epidemiology and Biostatistics, University of California, San Francisco, San Francisco (R.B.); the Department of Health Care Policy, Harvard Medical School, and the Department of Health Policy and Management, Harvard School of Public Health — both in Boston (J.P.N.); and the Kennedy School of Government, Harvard University, Cambridge, Mass. (J.P.N.).

Address reprint requests to Dr. Hsu at the Division of Research, Kaiser Permanente, 2000 Broadway, 3rd Fl., Oakland, CA 94612, or at jth{at}dor.kaiser.org.

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