Report to the President: Prescription Drug Coverage, Spending, Utilization, and Prices.. Endnotes

04/01/2000

1 - Access to Medicaid drug coverage by Medicare beneficiaries will be discussed below.

2 - Medicare+Choice plans are not literally supplemental plans but serve as an alternative to the traditional Medicare fee-for-service program and typically include supplemental benefits.

3 - Congressional Research Service, Health Insurance and the Uninsured: Background Data and Analysis, Washington, 1988.

4 - Mercer/Foster Higgins. National Survey of Employer-Sponsored Health Plans, 1999. These results are based on a survey of employers with 500 or more employees.

5 - “Brand-name” drugs are those sold by the manufacturer that initially developed them or by another manufacturer with a license from the initial developer. “Generic” drugs are those sold by other manufacturers after the patent protection for a brand-name drug has expired; they are similarly formulated and have biologic effects equivalent to those of a brand-name drug. Copayments may also vary depending on whether the drug is on the PBMs preferred list or formulary. According to the Mercer/Foster Higgins survey, in 1999, 32 percent of large employers raised one or more cost-sharing components to their benefit plans.

6 - For more information on the role of PBMs see Anna Cook, et al. The Role of PBMs in Managing Drug Costs: Implications for a Medicare Drug Benefit. Report prepared for the Kaiser Family Foundation, January 2000.

7 - Kaiser Family Foundation and Health Research and Educational Trust (HRET), Employer Health Benefits: 1999 Annual Survey. Kaiser-HRET estimates that 34 percent of employees were in carve-outs in 1999.

8 - Testimony of Jeff Sanders, Pharmaceutical Care Management Association, before the Senate Finance Committee, 1999.

9 - Kaiser /HRET. For this survey, large employers are defined as those employing 200 or more workers.

10 - Mercer/Foster Higgins.

11 - Kaiser/HRET.

12 - Mercer/Foster Higgins.

13 - Kaiser/HRET.

14 - Mercer/Foster Higgins.

15 - Kaiser/HRET.

16 - In results using the MCBS in this report, all beneficiaries in Medicare+Choice plans are classed in the Medicare+Choice category even though some have supplemental coverage paid for by their former employer.

17 - Mercer/Foster Higgins.

18 - Hewitt Associates, Retiree Health Coverage: Recent Trends and Employer Perspectives on Future Benefits, Kaiser Family Foundation, Oct. 1999.

19 - Insurers may offer a high deductible version of Plan J which generally has lower premiums than the regular Plan J. Under this high-deductible option, the purchaser pays $1,530 out-of-pocket per year before the plan pays anything. The purchaser must still meet a $250 deductible on prescription drugs before drug coverage begins.

20 - Rice et al. found that 15 percent of nonstandardized policies sold in a sample of six states in 1994 included prescription drug benefits. There is no data on the value of these benefits. “The Impact of Policy Standardization on the Medigap Market,” Inquiry, 1997.

21 - Federal law permits insurers in Minnesota, Massachusetts, and Wisconsin to offer different state- regulated Medigap policies. Wisconsin law requires Medicare Supplement policies to contain a catastrophic prescription drug benefit. This benefit must cover at least 80% of the charges for outpatient prescription drugs after the purchaser meets a drug deductible of no more than $6,250 per calendar year.

22 - Medigap carriers must also offer open enrollment to beneficiaries who have lost supplemental coverage as a result of the termination of a Medicare risk HMO contract, or in certain other circumstances. However, they are not required to offer one of the plans with drug coverage during this special open enrollment period.

23 - HHS analysis.

24 - MCBS.

25 - HCFA(now known as CMS) analysis of Medicare Compare. MCBS data capture information on drug coverage in 1996 for enrollees of Medicare managed care plans who have employer-sponsored drug coverage through the Medicare contracting organization as well as information on beneficiaries whose source of drug coverage is a ”high option” plan offered by a Medicare contracting organization (today’s M+C organization). HCFA(now known as CMS) administrative files, used for the 1999 analysis, do not include information on whether beneficiaries obtain drug coverage by selecting high option plans rather than as part of the basic benefit package. This understates the overall proportion of beneficiaries with drug coverage in M+C plans.

26 - HCFA(now known as CMS) analysis.

27 - HCFA(now known as CMS), Medicare+Choice: Changes for the Year 2000, 1999.

28 - The discussion here omits a variety of other special population groups defined in law and accounting for very small numbers of participants.

29 - MCBS.

30 - One reason is that states cannot receive Medicaid rebates on drugs provided through HMOs.

31 - National Pharmaceutical Council. Pharmaceutical Benefits under State Medical Assistance Programs, December 1998.

32 - National Conference of State Legislatures, news release, March 10, 2000.

33 - This count does not include disease-specific programs that may provide some assistance with drug costs, such as the AIDS drug assistance programs funded by the Ryan White CARE Act.

34 - Direct communication, PhRMA.

35 - IMS Health. Integrated Share of Voice Report. (It should be noted that the MCBS and MEPS data on utilization and spending to be presented in Chapter 2 exclude samples or other free medications.)

36 - Stuart, Bruce, Dennis Shea, and Becky Briesacher, Prescription Drug Costs for Medicare Beneficiaries: Coverage and Health Status Matter, New York, Commonwealth Fund, Issue Brief, January 2000.

37 - Note that the sample for Table 1-2 is somewhat different from the Table 1-1. Numbers for Table 1-2 are derived from an MCBS sample of persons enrolled in Medicare for the entire year and thus excludes decedents and new Medicare entrants.

38 - These data are based on a beneficiary’s source of coverage in December. The proportions would probably vary somewhat if a different month were used as the basis for comparison.

39 - Bruce Stuart, et al., “Dynamics in Prescription Coverage of Medicare Beneficiaries: Finders, Losers, Switchers,” Commonwealth Fund Issue Brief, forthcoming.

40 - Income includes that of the beneficiary and a spouse, if any, not that of other family or household members.

41 - Note sample size for part-year coverage is based on an MCBS sample of persons enrolled in Medicare for the entire year and thus excludes decedents and new Medicare entrants. Bruce Stuart, University of Maryland, direct communication.

42 - Stuart et al.

43 - J. Feder and J. Lambrew, “Why Medicare Matters to People Who Need Long-Term Care,” Health Care Financing Review, (Winter 1996): 99-112.

44 - The conditions were heart problems, cancer, arthritis, lung disease, mental disorders, Alzheimer’s, diabetes, hypertension, bone disease, and stroke.

45 - Stuart et al.

46 - Individuals who had drug coverage at any time during the year are classified as covered in this survey.

47 - The differences between “poor” and “fair,” “very good” and “good,” and “very good” and “fair” are statistically significant; those between “excellent” and the other groups are not.

48 - Because of changes in the methodology used by MCBS to measure drug coverage, figures from 1992 - 1994 are not fully comparable with data collected in 1995 and 1996.

49 - Current Population Survey data on general insurance coverage are available. However, the CPS is not a reliable source for estimating supplementary coverage of Medicare beneficiaries, because it does not separately identify Medicare HMO enrollees. Some may report themselves as having Medicare only, others as having private nongroup coverage. Between 1996 and 1998, the CPS shows the share of beneficiaries with employer coverage and with Medicaid remaining approximately the same. It shows a sharp decline in other private coverage; nearly 1.6 million fewer beneficiaries reported this coverage in 1998 than in 1996. But there is no way of knowing how much of the change is related to actual loss of coverage, shifts to HMO enrollment, or simply changes in how respondents reported their coverage.

50 - Testimony before the House Commerce Subcommittee on Health and Environment, “Seniors’ Access to Affordable Prescription Drugs: Models for Reform,” February 16, 2000. For a fuller analysis of factors that might lead to declining coverage, see the White House report, Disturbing Truths and Dangerous Trends: The Facts about Medicare Beneficiaries and Prescription Drug Coverage, July 1999.

51 - The Census Department advises that Medicaid coverage is underreported in the CPS compared with enrollment and participation data from the HCFA(now known as CMS). Changes in Medicaid coverage estimates from one year to the next should be viewed with caution.

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