Medicare Part D Pays Off in Lower Nondrug Spending

Individuals who once had limited drug coverage in their insurance plan spent less on nondrug medical treatment following implementation of the Medicare Part D prescription drug benefit, according to a study published in the July 27 Journal of the American Medical Association. Earlier research found that introduction of the Part D benefit in 2006 was associated with increased prescription drug use and regimen adherence. This new study examined the postbenefit spending of Medicare enrollees on other forms of health care.

Study authors J. Michael McWilliams, M.D., Ph.D.; Alan Zaslavsky, Ph.D.; and Haiden Huskamp, Ph.D., all of whom are affiliated with Harvard Medical School's Department of Health Care Policy, used data from the University of Michigan's longitudinal Health and Retirement Study and linked Medicare claims from 2004 to 2007 to evaluate the nondrug spending of 6,001 elderly Medicare beneficiaries.

The study participants were divided into two groups—those whose pre-2006 insurance covered most or all of their medications and those whose previous insurance provided only partial coverage or no coverage. Similar research was conducted with a control group with no access to Part D, using linked claims data from 2002 to 2005.

Prior to the implementation of Medicare Part D, the group with formerly "limited" coverage spent 7.6 percent more on nondrug medical treatment than did the group with formerly "generous" coverage, the researchers found. However, after implementation of Part D, those with little to no former coverage were shown to have spent 3.9 percent less on nondrug medical treatment than those who had significant coverage prior to the new benefit.

The researchers attributed this comparative drop-off in nondrug spending primarily to a decrease in inpatient and skilled nursing facility expenditures. They extrapolated that the honing of Medicare system integration and the broader availability of drug coverage for seniors could lead to even greater financial savings and nondrug usage reductions in the future.

The study was supported by grants from the Doris Duke Charitable Foundation, the William F. Milton Fund, and a Robert Wood Johnson Foundation Investigator Award in Health Policy Research.

An abstract of "Implementation of Medicare Part D and Nondrug Medical Spending for Elderly Adults With Limited Prior Drug Coverage" is posted at <jama.ama-assn.org/content/306/4/402.abstract>.