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

04/01/2000

Both the MCBS and the MEPS household survey asked participants if they had prescription drug coverage. MEPS had a second source of information: for respondents who named the pharmacies they used and gave interviewers permission to contact the pharmacy (the pharmacy follow-back), it was possible to determine the sources of payment for prescriptions filled at participating pharmacies. Sometimes, when an individual reported that he or she did not have drug coverage, it was nevertheless found through the pharmacy component that an insurer or public program had in fact paid for one or more prescriptions. In this case, the person was deemed to have drug coverage through the source of payment for the prescription.

MCBS did not collect information from pharmacies, but did collect information from respondents about each of the prescriptions they received during the year and the sources of payment for those prescriptions. If an individual reported no drug coverage but nevertheless reported a third-party payment for a prescription, the individual was assigned to drug coverage. However, because MCBS relied almost entirely on respondents’ own reports,1 it found fewer such people with coverage than MEPS found through its separate pharmacy component.

A second key difference between MEPS and MCBS is in the treatment of Medicaid beneficiaries and Medicare HMO enrollees. Some Medicaid beneficiaries are QMBs and SLMBs without a drug benefit, and not all Medicare HMOs provide drug coverage. MEPS is not able to distinguish whether Medicare HMO enrollees or Medicaid recipients have coverage; all of these beneficiaries are deemed to have coverage in MEPS. For these populations, MCBS distinguishes among those who did and did not have a drug benefit. In the future, it may be possible to use Medicare administrative data on health plan enrollment to determine drug coverage among Medicare HMO enrollees surveyed in the MEPS.

Finally, MCBS uses a consistency edit that treats as noncovered those beneficiaries who reported having drug coverage but paid more than $250 out of pocket for drugs and reported no insurance payment, while MEPS leaves these beneficiaries in the covered category.

Table B-1 shows the proportion of Medicare beneficiaries with different types of drug coverage for at least one month as estimated by MEPS and MCBS. The MEPS numbers have been adjusted to account for the difference between MEPS and MCBS in the treatment of Medicaid recipients and Medicare HMO enrollees, and to account for the consistency edit that MCBS uses and MEPS does not use.2 The adjustments are: a .8% percent reduction from employer and a .3% reduction from nongroup for the “consistency edit” and a .6% reduction in Medicare Risk HMO and a 1.4% reduction in Medicaid to account for the proportion of beneficiaries in those categories who lack drug coverage. The lower bound of the 95% confidence interval for the adjusted MEPS estimate is 71.6 percent of beneficiaries with coverage. The upper bound of the MCBS estimate is 69.7 percent. A statistically significant difference, therefore, remains between the MCBS estimate and the adjusted MEPS estimate.

Table B-1. Comparison of Sources of Coverage Estimates for MEPS and MCBS
  MEPS MCBS
Employer 33% 32.3%
Private nongroup and other private 13.2% 11.3%
Medicare risk HMO 10.4% 10.0%
Medicaid 10.9% 11.8%
Veterans and other 6.1% 3.3%
     
Total with coverage for at least one
month during 1996
73.6% 68.8%
     
None 26.4% 31.2%
     
Total 100.0% 100.0%

Note: Percents may not add to 100 because of rounding.

Source: Center for Cost and Financing Studies, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 and Health Care Financing Adminstration, Medicare Current Beneficiary Survey, 1996.

Much of the remaining difference is due to the larger number of beneficiaries who failed to report coverage but were identified as covered by MEPS through the pharmacy follow-back. Most of the beneficiaries assigned to the covered category in this way were classified as either having private nongroup insurance or as being covered through the Veterans Administration.

As was noted in chapter 1, the VA does not actually provide insurance. It supplies prescription drugs directly, at no cost or nominal cost, to qualifying veterans whose prescriptions are written by VA physicians and filled at VA pharmacies. While this benefit is undoubtedly an important source of financial assistance for those who receive it, it cannot be described as insurance in the same sense as other forms of drug coverage. However, it is counted as coverage for the purposes of this study. Private nongroup coverage is insurance, but it is the least generous and the most costly to beneficiaries of the major types of coverage. Moreover, it is the least stable: as table 1-2 indicated, beneficiaries with this type of coverage are the most likely to be without protection at some time during the year.

In summary, after correction for the likely overstatement of Medicare HMO and Medicaid drug coverage in MEPS, there remains a small but statistically significant difference in the MEPS and MCBS estimates of the extent of drug coverage in the Medicare population. Much of the difference is attributable to estimates for types of coverage that may not be meaningful or stable. The MCBS data are used in this report because they allow a closer look at the characteristics of the covered and noncovered populations and at trends over time.

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