Medicare 'Doughnut Hole' Can Undermine Medication Adherence

August 19, 2011

August 19, 2011 — The infamous coverage gap, or "doughnut hole," in the Medicare Part D program that pays for prescription drugs leads many seniors to stop taking their medications and risk a turn for the worse in their health, according to an article published online August 16 in PLoS Medicine.

Previous doughnut-hole studies that focused on seniors in Medicare Advantage plans, which incorporate the Part D program, also have reported reduced drug use and adherence. However, 70% of Part D beneficiaries are enrolled in stand-alone Part D plans. The study focused on this kind of beneficiary, along with seniors covered for medications under private retiree plans.

The doughnut hole, write the authors, was conceived as a cost-containment tool that would encourage beneficiaries to resort to more cost-effective medications, particularly generics. In 2011, Part D beneficiaries hit the coverage gap after they incur $2840 in drug expenses. They then pay out-of-pocket for medications until they reach a second spending threshold for "catastrophic coverage," which in 2011 is $4550. Once catastrophic coverage starts, beneficiaries are generally responsible for 5% of medication costs.

The Affordable Care Act lightens the financial burden of seniors inside the doughnut hole. In 2011, they are eligible for a 50% discount on brand-name drugs and a 7% discount on generics that they buy out of pocket. These discounts will grow over time, eventually eliminating the coverage gap by 2020.

"A Blunt Cost-Sharing Mechanism"

The study, however, examined the first 2 years of the Part D program (2006 and 2007), when drug discounts were not in effect. At that time, as is the case now, some Part D beneficiaries qualified for subsidies to help them pay for medications inside the doughnut hole. However, between 11% and 14% of Part D beneficiaries reach the coverage gap each year and receive no subsidy, according to the authors of the study.

They compared the drug utilization of Part D beneficiaries who received full or partial subsidies during the doughnut-hole period with that of beneficiaries who did not qualify for this assistance, as well as seniors whose retiree plans lacked any coverage gap. They found that seniors who received no subsidy were twice as likely to stop taking a drug compared with the other seniors in the study. In addition, they were 40% less likely to switch to another drug, such as a generic, and 18% more likely to reduce drug adherence when their complete regimens were accounted for.

"Our results demonstrate that while a blunt cost-sharing mechanism like the coverage gap does raise consumer sensitivity, it produces surprising consequences," the authors write. "Instead of incentivizing beneficiaries to switch to lower-priced or generic drugs, entry into the coverage gap resulted in an abrupt discontinuation of or reduced adherence to drugs among elderly Medicare beneficiaries."

The authors acknowledge that the Affordable Care Act will eventually close the doughnut hole, but warn that in the meantime, beneficiaries may continue to stop taking medications when Part D coverage is interrupted. To rein in spending, they recommend "more nuanced, clinically informed insurance strategies that specifically promote the use of drugs with high benefit and low cost."

This study was supported by the National Institute on Aging, the National Institute of Mental Health, the National Heart Lung and Blood Institute, a Robert Wood Johnson Foundation Investigator Award in Health Policy Research, and a research grant from CVS Caremark. The authors report various conflicts of interest, which are listed at the end of the article.

PLoS Med. 2011:8:e1001075. Published online August 16, 2011. Full text

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