Effect of prescription benefit changes on medical care utilization in a Medicare HMO population

To examine the impact of 2 cost-containment efforts in prescription benefits in successive years that included changes in copayment and coverage levels, expanded generic coverage, and brand name prescription drug limit-of-coverage in a Medicare health maintenance organization (HMO). The benefit changes included moving to a drug benefit with increased total coverage and higher copayments in the first year (1998) and to one with brand name limit-of-coverage and unlimited generic availability in the second year (1999).

A repeated-measures analytical design with enrollee follow-up before and after introduction of the 2 policies.

A cohort of 2411 older adults continuously enrolled in a Medicare HMO since 1998 was followed up for 1 year pre-post for healthcare service utilization and costs; 259 patients enrolled since 1997 were available to test the effects of the first policy change.

Bivariate and multivariate analyses found a significant decrease of 27% in prescription costs, a 4% decrease in physician visits, and a 6% decrease in total costs associated with the change in prescription benefit in the second year (1999). The policy change in the first year (1998) resulted in a 29% increase in prescription costs and 38% increased total costs for the HMO.

Introduction of a prescription benefit that included substantial brand name limit-of-coverage and generic drug coverage expansion was associated with significantly reduced prescription costs. In addition, this change did not seem to increase nonprescription-related healthcare service use in the population.