Crossing the Doughnut Hole: The Effects of the Medicare Drug Coverage Gap for Patients who Require High-cost Medications
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1 Crossing the Doughnut Hole: The Effects of the Medicare Drug Coverage Gap for Patients who Require High-cost Medications AcademyHealth Annual Research Meeting June 29, 2009 Dominick Esposito 1, Margaret Colby 1, Daniel Ball 2, Susan Garavaglia 3, Eric Meadows 2, Martin Marciniak 2 1 Mathematica Policy Research, Inc. 2 Eli Lilly and Company 3 Medco Health Solutions, Inc.
2 Research Objectives Estimate the proportion of beneficiaries that reach the Part D doughnut hole or catastrophic coverage in 2007 Calculate the time to reach each coverage phase from each person s first fill Identify the factors affecting the likelihood of reaching each coverage phase 1
3 Study Design 2007 pharmacy claims from Medco Health Solutions, Inc. Medicare Part D beneficiaries with cancer, osteoporosis, or rheumatoid arthritis Prescription drug plan (PDP) or retiree drug subsidy (RDS) PDP varying exposure to doughnut hole Standard PDP Enhanced PDP Medicare Advantage PDP RDS no doughnut hole Randomly selected a matched comparison group with other chronic conditions Plan type (PDP/RDS), age, gender, geography, chronic disease score, and low-income subsidy (LIS) eligibility 2
4 Sample Characteristics: Plan Enrollment Other Cancer Osteoporosis Rheumatoid Arthritis Chronic Conditions Sample Size 31, ,091 5, ,412 Drug Plan Type Standard PDP Enhanced PDP Medicare Advantage PDP Retiree drug subsidy Doughnut Hole Exposure No doughnut hole Partial doughnut hole Standard doughnut hole Figures in table are percentages. Among PDP enrollees, about 50% had the standard doughnut hole. 3
5 Sample Characteristics: Demographics Cancer Osteoporosis Rheumatoid Arthritis Other Chronic Conditions Sample Size 31, ,091 5, ,412 LIS Eligible Female or More Chronic Conditions Age Under and over Figures in table are percentages. 4
6 Study Design: Methods Equivalent drug spending thresholds were calculated for plans without a standard Part D doughnut hole. Survival analysis Time until spending reached $2,400 (doughnut hole) or $5,451 (catastrophic coverage) Logistic regression analysis Likelihood of reaching each spending threshold Key explanatory variables included: plan type, doughnut hole exposure, disease type, demographic characteristics 5
7 7 Results: Proportion Reaching Each Spending Threshold
8 Results: Time to Reach Spending Thresholds Beneficiaries Reached the Doughnut Hole Spending Equivalent ~ 3 to 6.5 Months After Their First Fill From First Fill, Average Days to Reach: Cancer Osteoporosis Rheumatoid Arthritis Other Chronic Conditions $2,400 (Doughnut hole) $5,451 (Catastrophic coverage) From Doughnut Hole, Average Days to Reach Catastrophic Coverage In a standard PDP design, out-of-pocket cost would reach $800 by the time a beneficiary reaches the doughnut hole, and $3,850 by catastrophic coverage. 8
9 Results: Time Spent in the Doughnut Hole Estimated probability of spending not reaching $5,451 (catastrophic coverage) Patients Who Reach Catastrophic Coverage Spending Equivalent Spent 1 to 7 Months in the Doughnut Hole (Estimated Survival Function) Cancer Osteoporosis RA Other Days after spending reached $2,400 (doughnut hole) 9
10 Results: Odds of Reaching Spending Thresholds $2,400 $5,451 (Doughnut Hole) (Catastrophic Coverage) Primary Condition Cancer 12.12** 4.08** Osteoporosis 2.12** 1.35** Rheumatoid arthritis 19.81** 22.40** Other chronic conditions (reference) Drug Coverage Type Enhanced PDP ** Medicare Advantage PDP 0.72** 0.94* Retiree Drug Subsidy Standard PDP (reference) Benefit Plan Design Partial doughnut hole ** Doughnut hole 0.91** 0.62** No doughnut hole (reference) Note: The catastrophic coverage regression includes only individuals who reached the doughnut hole. Results for the entire research sample were qualitatively similar. ** (*) denotes significance at 1% (5%) level. 10
11 Conclusions and Policy Implications Beneficiaries with cancer, rheumatoid arthritis, or osteoporosis may face expensive drug regimens. Most in this sample had spending that reached the doughnut hole. Differences by plan type and benefit design raise further questions. Despite high out-of-pocket costs, many spend through the doughnut hole to reach catastrophic coverage. By the time beneficiaries reach catastrophic coverage, they have incurred $3,850 in out-of-pocket costs in the standard PDP. Continued 5% cost sharing in catastrophic coverage. For beneficiaries with these conditions, available prescription drug coverage may not provide adequate protection from severe financial strain. 11
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