Medicare Part D and Nondrug Medical Spending

The Medicare Part D prescription drug benefit, implemented in January 2006, has been associated with increased medication use, reduced out-of-pocket expenses, and improved patient adherence rates for essential medications for Medicare beneficiaries. However, according to researchers, the effects of Part D on nondrug medical spending among Medicare beneficiaries have not been clearly documented. The researchers recently conducted a study utilizing nationally representative longitudinal survey data and linked Medicare claims from 2004 through 2007 to compare nondrug medical spending among traditional Medicare beneficiaries with limited prior drug coverage before and after implementation of the Part D benefit. Study results were reported in the Journal of the American Medical Association [2011;306(4):402-409].

The primary outcome measure was nondrug medical spending as assessed from claims, in total and by type of service (inpatient and skilled nursing facility vs physician services). After application of inclusion and exclusion criteria, the final study participants were 6001 Medicare beneficiaries from the Health and Retirement Study; the study cohort included 2538 participants who had generous drug coverage prior to implementation of Part D and 3463 whose drug coverage was limited before Part D was available. The cohort represented 85,669 quarterly spending observations from 2004 to 2007. The researchers defined a control cohort by applying the same inclusion and exclusion criteria to participants in the 2002 survey, yielding a control cohort of 5088 participants for analyses of medical spending from 2002 to 2005; there were 2537 participants with generous drug coverage and 3451 with limited coverage in the control cohort.

Relative to beneficiaries with generous drug coverage prior to Part D, total nondrug medical spending for beneficiaries with limited prior drug coverage was differentially reduced after January 1, 2006 (−$306/quarter; 95% confidence interval [CI], −$586 to −$51; P=.02). The differential reduction was due in the most part to differential changes in spending on inpatient and skilled nursing facility care (−$204/quarter; 95% CI, −$447 to −$2; P=.05). There was also an association of implementation of Part D with small differential reductions in spending on Part B physician and ancillary services for participants whose prior drug coverage was limited (−$67/quarter; 95% CI, −$134 to −$5; P=.03). However, there was no association of those reductions in spending on Part B services with differential changes in outpatient visits (−0.06 visits/quarter; 95% CI, −0.21 to 0.08; P=.37).

The researchers hypothesized the reductions in Part B spending were “likely attributable to reduced use of inpatient rather than outpatient physician services.” In the control cohort, with no access to Part D benefits, there were no differences in nondrug medical spending between those with limited drug coverage and those with generous drug coverage between 2002 and January 1, 2004. Limitations cited by the researchers include limited statistical power and lack of drug claims, preventing the researchers from assessing changes in specific medications and services that may have explained the main results. In addition, drug coverage gains may have reduced early complications of acute conditions and facilitated outpatient receipt of treatments for acute illnesses that had previously only been covered by Medicare for inpatients. In summary, the researchers commented, “the implementation of Medicare Part D was followed by significant reductions in nondrug medical spending, particularly on acute and postacute care, for elderly Medicare beneficiaries with limited prior drug coverage.”