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The Impact of Drug Benefit CapsThe Impact of Drug Benefit Caps
Geoffrey Joyce, PhDGeoffrey Joyce, PhD
A6794c-2 6/06
AcknowledgementsAcknowledgements
Collaborators:Collaborators:
Dana GoldmanDana Goldman
Pinar Karaca-MandicPinar Karaca-Mandic
This research was funded by:This research was funded by:
National Institute on AgingNational Institute on Aging
A6794c-3 6/06
Benefit CapBenefit Cap
• Annual limit on the plan’s contributionAnnual limit on the plan’s contribution
• In this case, $2,500 benefit capIn this case, $2,500 benefit cap
• Common in Medicare M+C plansCommon in Medicare M+C plans
• Impact of caps on retirees < age 65 and 65+ in Impact of caps on retirees < age 65 and 65+ in 2003-20042003-2004
A6794c-4 6/06
Imposing a Spending Cap Creates aImposing a Spending Cap Creates aFundamental Trade-offFundamental Trade-off
Imposing a spending cap decreases the cost to provide Imposing a spending cap decreases the cost to provide the prescription benefitthe prescription benefit
Makes coverage available to more beneficiariesMakes coverage available to more beneficiaries
A spending cap creates a coverage gap (or “donut A spending cap creates a coverage gap (or “donut hole”) for beneficiarieshole”) for beneficiaries
Increases the risk that patients will reduce or cease Increases the risk that patients will reduce or cease drug therapydrug therapy
A6794c-5 6/06
As Set Up, Medicare Part D Raises Some As Set Up, Medicare Part D Raises Some IssuesIssues
50% of Costs Paid
by Insurer ($2,113)
25% Copay ($500)
Beneficiary Pays Next
$2,850 in Rx Spending
Catastrophic CoverageInsurer Pays 90% of CostsStop-Loss $5,100
($3,600 in out-of-pocket)
Initial Coverage Limit
$2,250
5% Cost-Sharing Above Stop-Loss
75% Paid by Plan
($1,500)
Catastrophic Coverage
Insurer Pays 95% of Costs
2006
Insurer Paid
Beneficiary Paid
$250 Deductible
A6794c-6 6/06
Tseng et al (2004): Surveyed Beneficiaries to Tseng et al (2004): Surveyed Beneficiaries to Assess the Effects of Spending CapsAssess the Effects of Spending Caps
1,300 Medicare+Choice enrollees in one state in 1,300 Medicare+Choice enrollees in one state in 2001:2001:
Group who exceeded their annual prescription Group who exceeded their annual prescription benefit cap of $750 or $1,200benefit cap of $750 or $1,200
Matched controls who did not exceed their Matched controls who did not exceed their annual cap of $2,000 annual cap of $2,000
Those exceeding the cap had resulting coverage Those exceeding the cap had resulting coverage gaps of 75–180 daysgaps of 75–180 days
A6794c-7 6/06
Beneficiaries Reported Using Several Beneficiaries Reported Using Several Strategies When They Exceeded CapsStrategies When They Exceeded Caps
0 10 20 30 40
Switched Drugs
Percent of Beneficiaries Using Strategy
Used Drugs Less Often
Used Free Samples
15 (9)
18 (10)
34 (27)
A6794c-8 6/06
Hsu et al (2006): Impact of $1,000 Cap on Hsu et al (2006): Impact of $1,000 Cap on Utilization, Costs, & Clinical MeasuresUtilization, Costs, & Clinical Measures
Compared clinical and economic outcomes in 2003 Compared clinical and economic outcomes in 2003 among Kaiser M+C members in capped vs. non-among Kaiser M+C members in capped vs. non-capped plans in 2002-2003 (age 65+)capped plans in 2002-2003 (age 65+)
Employer-supplemental insurance – No capEmployer-supplemental insurance – No cap
Individual-purchased - $1,000 benefit capIndividual-purchased - $1,000 benefit cap
About 13% reached the cap in 2003About 13% reached the cap in 2003
Those in capped plan:Those in capped plan:
31% lower Rx costs31% lower Rx costs
No difference in total medical costsNo difference in total medical costs
A6794c-9 6/06
Hsu et al (2006)Hsu et al (2006)
But had higher rates ofBut had higher rates of
ED visits (RR=1.09)ED visits (RR=1.09)
Nonelective hospitalizations (RR=1.13)Nonelective hospitalizations (RR=1.13)
Mortality rate (1.22)Mortality rate (1.22)
Non-adherence (1.2-1.3)Non-adherence (1.2-1.3)
Capped members had higher odds (1.2 – 1.3)Capped members had higher odds (1.2 – 1.3)
Elevated LDLElevated LDL
Systolic blood pressureSystolic blood pressure
HbA1cHbA1c
A6794c-10 6/06
Aims of This StudyAims of This Study
Examine Rx utilization and costs in more detailExamine Rx utilization and costs in more detail
Behavior pre- and post-capBehavior pre- and post-cap
Timing of capTiming of cap
Stopping, switching, mail-order use, by classStopping, switching, mail-order use, by class
Do those who stop resume drug therapy in Do those who stop resume drug therapy in subsequent yearsubsequent year
Impact on hospitalizations and ED visitsImpact on hospitalizations and ED visits
A6794c-11 6/06
Data & MethodsData & Methods
We linked health care claims to health plan benefits We linked health care claims to health plan benefits of 30 large employers (1997-2004)of 30 large employers (1997-2004)
Over 50 health plansOver 50 health plans
Nearly 8 million person-yearsNearly 8 million person-years
Analyze 7 plans in 2003-2004 from large employerAnalyze 7 plans in 2003-2004 from large employer
2 plans had an annual Rx benefit cap of $2,5002 plans had an annual Rx benefit cap of $2,500
Compare Rx and medical use Compare Rx and medical use
Among groups within the same (capped) planAmong groups within the same (capped) plan
Among persons in capped vs. uncapped plansAmong persons in capped vs. uncapped plans
A6794c-12 6/06
Distribution of Health Plan Spending Distribution of Health Plan Spending in Capped Plans (PPPY) in Capped Plans (PPPY)
PPPY Spending by Health Plan
< $2,400
$2,401- $2,499
>= $2,500
Plan 1 N 6,843 192 239 % 94.1 2.6 3.3
Plan 2 N 25,972 1,359 1,981 % 88.6 4.6 6.8
A6794c-13 6/06
Classify Members Into 3 GroupsClassify Members Into 3 Groups
Group 0: Rx spending by the health plan <= $2,400Group 0: Rx spending by the health plan <= $2,400
Group 1: Rx spending by the health plan > $2,400Group 1: Rx spending by the health plan > $2,400
But no subsequent Rx claimsBut no subsequent Rx claims
Group 2: Rx spending by the health plan > $2,400Group 2: Rx spending by the health plan > $2,400
With subsequent Rx claimsWith subsequent Rx claims
A6794c-14 6/06
When Do Members Reach the Cap?When Do Members Reach the Cap?
Percentile of Those Reaching the Cap
5th 10th 25th 50th 75th 90th
Feb April June Sept Nov Dec
A6794c-15 6/06
Monthly Rx Spending in Capped vs. Monthly Rx Spending in Capped vs. Non-capped Plans (>$2,400)Non-capped Plans (>$2,400)
0
100
200
300
400
500
600
700
1 2 3 4 5 6 7 8 9 10 11 12
Month in 2004
PM
PM
Rx
Sp
en
din
g
A6794c-16 6/06
Monthly Rx Use in Capped vs. Non-capped Monthly Rx Use in Capped vs. Non-capped Plans (>$2,400)Plans (>$2,400)
0
2
4
6
8
10
12
1 2 3 4 5 6 7 8 9 10 11 12
Month in 2004
PM
PM
N3
0D
E S
cri
pts
A6794c-17 6/06
Percent Switching Medications Post-CapPercent Switching Medications Post-Cap (Among Those Reaching the Cap Before November)(Among Those Reaching the Cap Before November)
Percent Switching Post-Cap Cap No Cap Diabetes
3.3 5.8
Cardiac
9.6 8.1
Hypertension
7.2 6.3
Depression
4.2 6.1
Cholesterol 2.1 2.4
A6794c-18 6/06
Percent Stopping Medications Post-CapPercent Stopping Medications Post-Cap(Among Those Reaching the Cap Before November)(Among Those Reaching the Cap Before November)
Percent Stopping Post-Cap Cap No Cap Diabetes
4.9 3.3
Cardiac
5.2 5.4
Hypertension
7.0 6.6
Depression
16.4 8.7
Cholesterol 13.0 4.8
A6794c-19 6/06
Resumption of Medication UseResumption of Medication Use
• Among those who stopped taking a class of Among those who stopped taking a class of medications in capped plansmedications in capped plans
Modest take-up in Q1 of 2004Modest take-up in Q1 of 2004
May be related to data problem in 2003May be related to data problem in 2003
A6794c-20 6/06
Preliminary ConclusionsPreliminary Conclusions
Imposing a spending cap:Imposing a spending cap:
Reduces Rx use overall Reduces Rx use overall
50% - 66% reductions in Nov-December50% - 66% reductions in Nov-December
Effects vary modestly by therapeutic classEffects vary modestly by therapeutic class
Increases the risk of adverse health outcomesIncreases the risk of adverse health outcomes
Inconsistent evidence on medical useInconsistent evidence on medical use