Medicare Can Save Quick $5 Billion by Better Part D
Choice for Low-Income Seniors
Researchers find simple way to strengthen Medicare
drug program for low-income seniors and save government billions of
3, 2014 A $5 billion dollar savings for Medicare in the first year of
making a simple and logical policy change sounds great to most seniors
who worry about the financial pressure on their health care insurance
program. Well, its possible, according to a new study that suggests
changing the way Part D plans are selected for low-income beneficiaries
eligible for a government subsidy.
The results of the new research from the University
of Pittsburgh Graduate School of Public Health and funded by the
National Institutes of Health (NIH) and the U.S. Department of Health
and Human Services (HHS), will be published in the June issue of the
Medicare Part D provides assistance to
beneficiaries below 150 percent of the federal poverty level. In 2013,
an estimated 10 million beneficiaries received subsidies, and 75 percent
of the total Part D federal spending of $60 billion is for low-income
enrollees. Since 2006, the government has randomly assigned low-income
enrollees to stand-alone Part D plans, based upon the region in which
"Random assignment is suboptimal because
beneficiaries often are assigned to plans either not covering or
charging higher costs for their medications," said Yuting Zhang, Ph.D.,
associate professor of health economics, Department of Health Policy and
Management, Pitt Public Health, and the study's lead author. "We found
that most people are not in the least expensive plans that satisfy their
Dr. Zhang and her colleagues say an "intelligent
reassignment" that matches beneficiaries to their medication needs would
yield substantial savings.
Using real data from 2008 and 2009 for a 5 percent
random sample of all Medicare beneficiaries who qualified for the
low-income subsidy program, Dr. Zhang and her team simulated potential
medication costs to the beneficiaries and the government under each
alternative plan available in the region.
They then compared the simulated costs with the
actual costs of each plan. They found that if low-income enrollees were
assigned to the least expensive plan instead of a random plan, the
government and beneficiaries could save more than $5 billion in the
In addition to the savings under the proposed
change, beneficiaries would have fewer restrictions when filling their
prescriptions. Some common restrictions used by Part D plans include
quantity limits, prior authorization and step therapy.
The Pitt researchers noted that assigning
beneficiaries to plans could be implemented relatively easily each year,
with the largest savings in the first year but additional savings
Additional authors on this study include Seo Hyon
Baik, Ph.D., Pitt Public Health Pharmaceutical Economics Research Group,
and Chao Zhou, Ph.D., formerly of Pitt Public Health.
The study was funded by the Agency for Healthcare
Research and Quality and the National Institute of Mental Health.
About the University of Pittsburgh Graduate
School of Public Health
The University of Pittsburgh Graduate School of
Public Health, founded in 1948 and now one of the top-ranked schools of
public health in the United States, conducts research on public health
and medical care that improves the lives of millions of people around
the world. Pitt Public Health is a leader in devising new methods to
prevent and treat cardiovascular diseases, HIV/AIDS, cancer and other
important public health problems. For more information about Pitt Public
Health, visit the school's Web site at
Could Save Billions By Scrapping Random Drug Plan Assignment
By Julie Rovner, Kaiser Health
News Blog, Capsules
2, 2014 - A new study finds that Medicare is spending billions of
dollars more than it needs to on prescription drugs for low-income
seniors and disabled beneficiaries.
In 2013, an estimated 10 million
people who participate in the Medicare prescription drug program, known
received government subsidies to help pay for that coverage. They
account for an estimated three-quarters of the programs cost. Most of
those low-income enrollees are randomly placed in a plan that costs less
than the average for the region where the person lives.
But even though these are
lower-cost plans, they often end up costing the government and the
beneficiary more. If Medicare instead assigned those people to a drug
plan based on the actual drugs they took, it could save those patients
hassle and money, and potentially save the government billions of
dollars, according to the
study by researchers from the University of Pittsburgh. The
study appears in the June issue of the policy journal Health Affairs.
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