Medicare Part D reduces out-of-pocket costs and modestly boosts prescription volume

Research Activities October 2011, No. 374

A new study found a substantial ($179.86) reduction in out-of-pocket costs and a modest increase of two prescriptions per patient year from the Medicare Part D outpatient prescription drug benefit during its first year. However, it found no significant association between Part D and emergency department visits, hospitalizations, or health utility.

The modest increases in prescription use may reflect that both poor and wealthy Medicare beneficiaries already had access to prescription drugs through various alternative methods of financing. The results regarding non-medication health services suggest that the prescription increases tended to accrue in individuals or therapies that were not likely to result in reduced health services. Overall, their results support the findings of earlier studies that found Part D substantially transferred payment for prescription drugs from the private sector to the public sector.

The researchers compared the 12-month period before and after Part D implementation using the Medical Expenditure Panel Survey of the Agency for Healthcare Research and Quality (AHRQ). The study examined patterns of use of 556 elderly and 549 near-elderly persons. Eighty-nine percent of Medicare beneficiaries included in the study had one or more chronic diseases. The researchers call for more studies to characterize whether cost reductions may be realized over the longer term or for other populations. Their study was supported by AHRQ (HS15699).

See "The impact of Medicare Part D on out-of-pocket costs for prescription drugs, medication utilization, health resource utilization, and preference-based health utility," by Frank Xiaoqing Liu, Ph.D., G. Caleb Alexander, M.D., M.S., Stephanie Y. Crawford, Ph.D., and others in HSR: Health Services Research 46(4), pp.1104-1123, 2011.

Current as of October 2011
Internet Citation: Medicare Part D reduces out-of-pocket costs and modestly boosts prescription volume: Research Activities October 2011, No. 374. October 2011. Agency for Healthcare Research and Quality, Rockville, MD.