- Although cost-sharing saves Medicare money on pharmaceutical expenses, these savings are likely negated by low medication adherence and eventual health complications, found a new study published in the American Journal of Managed Care.
High chronic disease management costs (reaching nearly $245 billion in 2012) prompted Medicare to introduce cost-sharing protocol. In pharmaceuticals specifically, these measures asked patients to assume more financial responsibility for their medications.
However, evidence shows that Medicare’s cost-saving efforts may have been counterproductive.
Several studies have suggested that diabetes patients with private or employer-sponsored who face high cost-sharing responsibilities have lower medication adherence. This can lead to deteriorating health in the long-run, potentially increasing overall medical spending.
“Although cost sharing may reduce overall pharmacy spending, it could also have consequences for patient health and result in unintended increases in nonpharmacy healthcare spending, thereby offsetting the savings on pharmaceuticals,” the researchers pointed out.
This was also the case for Medicare beneficiaries with type 2 diabetes, the research team found. In an analysis of Medicare claims data for 12,305 patients over the age of 65, the researchers noted that lower out-of-pocket costs correlated with high medication adherence. Patients who stayed adherent to their medications were less likely to experience long-term health complications.
Overall, pharmacy spending was 59 percent higher for patients in the highest medication adherence cohort. Patients with high medication adherence saw pharmacy spending of $4,839 annually compared to $3,046 for patients with low adherence.
However, overall medical spending was higher for patients with low adherence. The most adherent patients had 49 percent lower total spending. This suggests that pharmaceuticals accounted for only a small fraction of total medical costs, and that other areas – office visits, emergency department visits – accounted for more medical spending.
“For Medicare patients with type 2 diabetes, lower adherence is related to increased spending in general,” the researchers said. “Increased spending may be the result of poorer outcomes, increased comorbidities, and a need for additional treatment, as medication adherence has been significantly associated with improved health status, fewer complications, and less medical resource utilization in patients with T2D.”
These findings also show that the larger patient investment in their medications was tied to lower spending overall. As noted above, the patients with the highest medication adherence could afford their medications because they typically saw lower out-of-pocket medication costs.
These findings have policy implications, the research team asserted. While Medicare does see pharmacy cost reductions by implementing cost-sharing techniques, cost-sharing may still be counterproductive.
When patients have higher out-of-pocket costs due to cost-sharing, they are less likely to remain adherent to their medications. The resulting medical complications end up costing Medicare more than it is slated to save, the researchers explained.
“If this cost-sharing trend continues, adherence may fall and any savings on pharmacy spending could be offset by increased medical spending,” the research team concluded. “Recent proposals to limit annual out-of-pocket spending for Medicare beneficiaries would reduce the financial burden on high-spend Medicare beneficiaries with T2D, potentially improving medication adherence and health outcomes.”
A March 2017 JAMA study corroborates these findings. In an assessment of over 25,000 women with breast cancer who are taking hormone supplements, the research team found that better access to Medicare Part D subsidies could improve medication adherence because it would make treatments more affordable.
Medication costs for unsubsidized patients ranged from $106 to $183, whereas costs for patients receiving the Medicare Part D subsidy averaged at $10.
These findings suggested that policymakers re-examine how they award Medicare Part D subsidies, ensuring that all patients who need assistance receive it.
“Legislative and advocacy efforts should focus on lowering out-of-pocket costs,” the JAMA researchers concluded. “Given the high costs of oral oncologic and supportive medications, the impact on disparities of other initiatives to reduce out-of-pocket costs deserves urgent study.”