While it has been a boon to elderly Americans, Medicare Part D includes a complicating factor that has proven to be a headache.
Despite its seemingly charming name, the doughnut hole has proven to be a headache for many seniors. Also known as the Medicare Part D coverage gap, the doughnut hole is when drug costs reach a point when the patient becomes responsible for the entire cost, and Medicare doesn’t pay for them again until they reach the catastrophic-coverage threshold. The hole and threshold change from year to year.
Starting this year, the Centers for Medicare and Medicaid Services introduced a program that offers a 50% discount of branded drugs. But according to a December survey of 1,243 beneficiaries commissioned by the Medicare Today coalition and conducted by KRC Research, only 1-in-5 seniors were aware of the discount.
In many cases, entering the doughnut hole can be avoided or at least postponed by switching from branded drugs to generic drugs, but according to a study conducted by researchers form CVS Caremark, Harvard University and Brigham and Women’s Hospital released last month, Medicare Part D beneficiaries who enter the doughnut hole are twice as likely to discontinue their medications as they are to switch to more affordable or generic medications.
The study, published in PLoS Medicine, examined prescription drug use among more than 660,000 Medicare beneficiaries enrolled in more than 200 Medicare Part D and retiree drug plans in 2006 and 2007.
“Proponents of the doughnut hole argue the coverage gap benefits the healthcare system by making participants more sensitive to medication costs. There is an expectation that people will seek less expensive drug options when they enter the doughnut hole and that action will result in cost savings both for them and for their health plans,” stated Jennifer Polinski of the division of pharmacoepidemiology and pharmacoeconomics at Brigham and Women’s Hospital and Harvard Medical School, and lead author of the study. “However, our findings show that when beneficiaries have to bear the full financial burden of the cost of their medications, they are twice as likely to stop taking their medications altogether and become nonadherent as they are to switch to more affordable or generic drugs. The resulting decrease in medication adherence could ultimately result in higher medical costs as a result of adverse health events.”
The research team said that approximately one-third of the 663,850 beneficiaries it tracked in 2006 and 2007 reached the doughnut hole seven months into the fiscal year. Other studies estimated between 11% and 14% of Part D enrollees who do not receive a low-income subsidy reach the doughnut hole each year.
“No doubt, this is a difficult area for policy-makers. Taking cost out of the healthcare system is something everyone is trying to achieve,” added Troyen Brennan, EVP and chief medical officer of CVS Caremark, who heads the research initiative that conducted the study. “The Affordable Care Act incrementally eliminates the doughnut hole by 2020, but until that time, program beneficiaries remain at risk of decreased drug utilization because of high out-of-pocket drug costs. A strategy that promotes the use of low cost medications and that keeps people adherent would result in better health outcomes and overall reduced healthcare costs.”
The Medicare Part D study is a product of a three-year research collaboration between CVS Caremark, Harvard, and Brigham and Women’s Hospital that is focused on understanding why many consumers do not take their prescriptions as directed and developing solutions to assist patients in using their medications effectively.