After the implementation of Medicare Part D, elderly Medicare beneficiaries spend considerably less money on non-drug medical services, including skilled nursing facility and inpatient care, researchers from Harvard Medical School reported in JAMA (Journal of the American Medical Association).

The authors wrote:

“Implementation of the Medicare prescription drug benefit (Part D) in January 2006 was followed by increased medication use, reduced out-of-pocket costs, and improved adherence to essential medications for elderly persons. The effects of Part D on nondrug medical spending for Medicare beneficiaries have not been clearly defined.”

J. Michael McWilliams, M.D., Ph.D. and team set out to compare how much Medicare beneficiaries spent on nondrug medical items before the implementation of Part D and after it. They gathered data from nationally representative sources and linked Medicare claims from 2004 to 2007.

Comparing nondrug medical spending before and after Part D implementation was done by self-reported generosity of prescription drug coverage (the degree of how much medication costs were covered) before 2006. Their data included 6,001 seniors from the Health and Retirement Study, all of them Medicare beneficiaries, including 2,538 with generous (total) and 3,463 with limited drug coverage before 2006.

Those with limited drug coverage spent 7.6% more on nondrug medical items compared to those with generous coverage before Part D implementation.

After Part D implementation, those with limited prior drug coverage spent 3.9% less than those with generous previous drug coverage – a total reduction of minus 10.6% for those with limited drug coverage when compared to what they were spending before implementation.

The authors wrote:

“This differential reduction in relative terms corresponded to an average absolute difference of -$306/quarter between observed and expected spending for participants with limited prior drug coverage.”

Part A inpatient and skilled nursing facility spending made up most of the reduction (minus $204 per quarter), the authors found.

The researchers wrote:

“Part D implementation was also associated with small differential reductions in spending on Part B physician and ancillary services for participants with limited prior drug coverage (-$67/quarter). These differential reductions in spending on Part B services were not associated with differential changes in outpatient visits (-0.06 visits/quarter) and were thus likely attributable to reduced use of inpatient rather than outpatient physician services.

In concert with previous studies, these findings suggest that increased medication use and adherence achieved through expanded drug coverage for seniors have been associated with decreased spending for non-drug medical care.

The economic and clinical benefits suggested by these reductions may be enhanced by further expansions in prescription drug coverage for seniors, improvements in benefit designs for drug-sensitive conditions, and policies that integrate Medicare payment and delivery systems across drug and nondrug services. “

“Implementation of Medicare Part D and Nondrug Medical Spending for Elderly Adults With Limited Prior Drug Coverage”
J. Michael McWilliams, MD, PhD; Alan M. Zaslavsky, PhD; Haiden A. Huskamp, PhD
JAMA. 2011;306(4):402-409. doi: 10.1001/jama.2011.1026

Written by Christian Nordqvist