The New Medicare Part D Prescription Drug Benefit: An Estimation of Its Effect on Prescription Drug Costs in a Medicare Population with Atrial Fibrillation

In 2006, Medicare patients were given the opportunity to purchase insurance coverage for prescription drugs under Medicare Part D (enacted as the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA)).1,2 Given that many seniors, more than 25% according to some studies, previously lacked drug coverage,3 the new benefit promised to provide urgently needed relief for many Medicare beneficiaries. When enacted in 2003, the legislation envisioned a standard set of benefits provided by private insurance companies. Under the standard benefit, patients would pay the first $250 of drug expenses, with this expenditure serving as a deductible. Of the next $2,000 of patient drug costs (up to a patient outlay of $2,250), Medicare would cover 75% (or $1,500), leaving the patient to pay 25% ($500) as coinsurance. At this point, a beneficiary would encounter the “doughnut hole” gap in coverage; there would be no coverage between total outlays of $2,250 and $5,100. After incurring more than $5,100 in total drug costs, a patient would have 95% of their costs covered by Medicare and would pay 5% as coinsurance (Table 1). To enroll in the plan, patients would pay a monthly premium, which at the time of the bill’s passage in 2003 was estimated to be approximately $35 per month. In 2005, the Centers for Medicare and Medicaid Services (CMS) estimated that the premium would be $32 per month, or $384 annually. Therefore, under the standard Part D benefit, a patient would pay $3,600 ($250 deductible plus $500 coinsurance plus $2,850 in the doughnut hole) of drug costs up to $5,100, for a total of $3,984 including the annual premium of $384.2 Table 1 Structure of the Medicare Standard Benefit and the AARP UnitedHealth Group Medicare Prescription Drug Plan* As an incentive to develop enhanced benefits for participants, a variety of differently structured plans have been offered, each with a unique premium structure, deductible policy, formulary, and method of entering and exiting the coverage gap, or doughnut hole.4–6 There are four basic plan structures: a standard benefit, based on the original legislation; actuarily equivalent plans, which adhere to the standard benefit with respect to deductibles and the doughnut hole but offer enhanced cost sharing; basic alternative plans, in which deductibles and cost sharing are altered; and enhanced alternative plans, which exceed the defined standard benefit.7 The economic benefits of offering these private plans have been estimated based on hypothetical patients.1,8 In this study, we report the estimated benefit one private plan would have in a prospectively identified cohort of actual patients with the predefined cardiovascular diagnosis of atrial fibrillation (AF). The prevalence of this condition increases with age, and it is estimated that 7.5 million Americans will have AF by 2020.9–12 For the purposes of the analysis, the 2006 version of the basic alternative plan endorsed by the AARP and administered by UnitedHealth Group was used. As of September 2006, 3.4 million people were enrolled in this plan, which was available in all 50 states and had the leading market share, with 21% of total enrollees.8