Medicare Part D roulette: potential implications of random assignment and plan restrictions

Area of Science:

• Health Services Research
• Pharmaceutical Policy
• Health Economics

Background:

• Dual-eligible beneficiaries (Medicare/Medicaid) are randomly assigned to Part D benchmark plans without considering their drug needs.
• The impact of assignment to plans with inadequate formulary coverage on beneficiaries has been understudied.

Purpose of the Study:

• To analyze cost variations and drug use restrictions across California benchmark plans in 2010 for dual-eligible beneficiaries.
• To assess the financial implications of random assignment to Medicare Part D plans.

Main Methods:

• Examined 2010 California benchmark plans using Medicare website data for costs and restrictions.
• Collected de-identified beneficiary data and plan specifics for 113 low-income subsidy recipients.
• Calculated formulary matching rates and recorded out-of-pocket costs and utilization restrictions.

Main Results:

• Only 34% of auto-assigned beneficiaries received the lowest cost plan, risking significant avoidable expenses.
• Substantial variability existed in plan costs, formulary coverage, and utilization restrictions across benchmark plans.
• Beneficiaries faced a 66% likelihood of suboptimal plan assignment.

Conclusions:

• Random assignment frequently leads to sub-optimal Medicare Part D plans, resulting in avoidable out-of-pocket costs for beneficiaries.
• Alternative assignment strategies could lower costs for beneficiaries and Medicare.
• Improved assignment methods may also enhance medication compliance.