Navigate Up

UPMC/University of Pittsburgh Schools of the Health Sciences
For Journalists
Allison Hydzik
Manager
Telephone: 412-647-9975
Director
Telephone: 412-586-9777
Other Inquiries

Simple Change to Medicare Part D Would Yield $5 Billion in Savings, Pitt Public Health Finds

 
PITTSBURGH, June 2, 2014 – The federal government could save over $5 billion in the first year by changing the way the government assigns Part D plans for Medicare beneficiaries eligible for low-income subsidies, according to new research from the University of Pittsburgh Graduate School of Public Health.
 
The results of the study, funded by the National Institutes of Health (NIH) and the U.S. Department of Health and Human Services (HHS), will be published in the June issue of the journal Health Affairs.
 
Medicare Part D provides assistance to beneficiaries below 150 percent of the federal poverty level. In 2013, an estimated 10 million beneficiaries received subsidies, and 75 percent of the total Part D federal spending of $60 billion is for low-income enrollees.
 
Since 2006, the government has randomly assigned low-income enrollees to stand-alone Part D plans, based upon the region in which they live.
 
“Random assignment is suboptimal because beneficiaries often are assigned to plans either not covering or charging higher costs for their medications,” said Yuting Zhang, Ph.D., associate professor of health economics, Department of Health Policy and Management, Pitt Public Health, and the study’s lead author. “We found that most people are not in the least expensive plans that satisfy their medication needs.”
 
Dr. Zhang and her colleagues say an “intelligent reassignment” that matches beneficiaries to their medication needs would yield substantial savings.
 
Using real data from 2008 and 2009 for a 5 percent random sample of all Medicare beneficiaries who qualified for the low-income subsidy program, Dr. Zhang and her team simulated potential medication costs to the beneficiaries and the government under each alternative plan available in the region. They then compared the simulated costs with the actual costs of each plan. They found that if low-income enrollees were assigned to the least expensive plan instead of a random plan, the government and beneficiaries could save more than $5 billion in the first year.
 
In addition to the savings under the proposed change, beneficiaries would have fewer restrictions when filling their prescriptions. Some common restrictions used by Part D plans include quantity limits, prior authorization and step therapy.
 
The Pitt researchers noted that assigning beneficiaries to plans could be implemented relatively easily each year, with the largest savings in the first year but additional savings annually thereafter.
 
Additional authors on this study include Seo Hyon Baik, Ph.D., Pitt Public Health Pharmaceutical Economics Research Group, and Chao Zhou, Ph.D., formerly of Pitt Public Health.
 
The study was funded by the Agency for Healthcare Research and Quality R01HS018657 and the National Institute of Mental Health RC1MH088510 and R21MH100721.

©  UPMC | Affiliated with the University of Pittsburgh Schools of the Health Sciences
Supplemental content provided by A.D.A.M. Health Solutions. All rights reserved.

For help in finding a doctor or health service that suits your needs, call the UPMC Referral Service at 412-647-UPMC (8762) or 1-800-533-UPMC (8762). Select option 1.

UPMC is an equal opportunity employer. UPMC policy prohibits discrimination or harassment on the basis of race, color, religion, ancestry, national origin, age, sex, genetics, sexual orientation, marital status, familial status, disability, veteran status, or any other legally protected group status. Further, UPMC will continue to support and promote equal employment opportunity, human dignity, and racial, ethnic, and cultural diversity. This policy applies to admissions, employment, and access to and treatment in UPMC programs and activities. This commitment is made by UPMC in accordance with federal, state, and/or local laws and regulations.

Medical information made available on UPMC.com is not intended to be used as a substitute for professional medical advice, diagnosis, or treatment. You should not rely entirely on this information for your health care needs. Ask your own doctor or health care provider any specific medical questions that you have. Further, UPMC.com is not a tool to be used in the case of an emergency. If an emergency arises, you should seek appropriate emergency medical services.

For UPMC Mercy Patients: As a Catholic hospital, UPMC Mercy abides by the Ethical and Religious Directives for Catholic Health Care Services, as determined by the United States Conference of Catholic Bishops. As such, UPMC Mercy neither endorses nor provides medical practices and/or procedures that contradict the moral teachings of the Roman Catholic Church.

© UPMC
Pittsburgh, PA, USA UPMC.com