scholarly journals Part D Formulary and Benefit Design as a Risk-Steering Mechanism

2011 ◽  
Vol 101 (3) ◽  
pp. 382-386 ◽  
Author(s):  
Dana P Goldman ◽  
Geoffrey F Joyce ◽  
William B Vogt

Medicare Part D relies upon drug plan competition. Plans have enormous scope to design benefits and to set premiums, but they may not charge differential premiums based on risk. We use the formulary and benefit design of all Medicare prescription drug plans and pharmacy claims data to construct a simulation model of out-of-pocket drug spending. We use this simulation model to examine individual incentives in Medicare Part D for adverse selection. We find that high drug users have much stronger incentives to enroll in generous plans than do low users, thus there is significant scope for adverse selection.

2016 ◽  
Vol 8 (3) ◽  
pp. 165-195 ◽  
Author(s):  
Maria Polyakova

I take advantage of regulatory and pricing dynamics in Medicare Part D to explore interactions among adverse selection, inertia, and regulation. I first document novel evidence of adverse selection and switching frictions within Part D using detailed administrative data. I then estimate a contract choice and pricing model that quantifies the importance of inertia for risk sorting. I find that in Part D switching costs help sustain an adversely-selected equilibrium. I also estimate that active decision making in the existing policy environment could lead to a substantial gain in annual consumer surplus of on average $400–$600 per capita—20 percent to 30 percent of average annual spending. (JEL D82, G22, H51, I13, I18)


Medical Care ◽  
2017 ◽  
Vol 55 (1) ◽  
pp. 37-42 ◽  
Author(s):  
Gary J. Young ◽  
Nathaniel M. Rickles ◽  
Justin K. Benzer ◽  
Ankit Dangi

2017 ◽  
Vol 9 (1) ◽  
pp. 38-73 ◽  
Author(s):  
Colleen Carey

Subsidized health insurance markets use diagnosis-based risk adjustment to induce insurers to offer an equitable benefit to individuals of varying expected cost. I demonstrate that technological change after risk adjustment calibration—new drug entry and the onset of generic competition—made certain diagnoses profitable or unprofitable in Medicare Part D. I then exploit variation in diagnoses' profitability driven by technological change to show insurers designed more favorable benefits for drugs that treat profitable diagnoses as compared to unprofitable diagnoses. In the presence of technological change, risk adjustment may not fully neutralize insurers' incentives to select through benefit designs. (JEL G22, H51, I13, I18, L65, O33)


Healthcare ◽  
2021 ◽  
Vol 9 (8) ◽  
pp. 976
Author(s):  
Angshuman Gooptu ◽  
Michael Taitel ◽  
Neda Laiteerapong ◽  
Valerie G. Press

Importance: Medication non-adherence is highly costly and leads to worse disease control and outcomes. However, knowledge about medication adherence is often disconnected from prescribing decisions, and this disconnect may lead to inappropriate increases in medications and higher risks of adverse events. Objectives: To evaluate the association between medication non-adherence and the likelihood of increases in the intensity of medication regimens for two chronic conditions, hypertension and type 2 diabetes. Design: Cohort Study. Setting and Participants: This study used US national pharmacy claims data for Medicare Part D (ages ≥ 65) and commercial (ages 50–64) plans to evaluate medication adherence and its association with the likelihood of receiving an increase in medication intensity for patients with hypertension and/or oral diabetes medication fills. Patients had an index fill for hypertension (N = 2,536,638) and/or oral diabetes (N = 701,376) medications in January 2015. Medication fills in the follow-up period from August 2015 to December 2016 were assessed for increases in medication regimen intensity. Main Outcome(s) and Measure(s): The proportion of days covered (PDC) over 181 days was used as a measure for patient’s medication adherence before a medication addition, medication increase, or dosage increase. Differences in the likelihood of experiencing an escalation in medication intensity was considered between patients with a PDC < 80% vs. PDC ≥ 80%. Results: Among Medicare Part D and commercial plan patients filling hypertension and/or oral diabetes medications, non-adherent patients were significantly more likely to experience an intensification of their medication regimens (p < 0.001). Conclusions and Relevance: This study found a significant association between non-adherence to medications and a higher likelihood of patients experiencing potentially inappropriate increases in treatment intensity. Sharing of objective patient refill data between retail pharmacies and prescribers can enable prescribers to have more targeted discussions with patients about their adherence and overall treatment plan. Additionally, it can increase safe medication prescribing and plausibly reduce adverse drug events and healthcare costs while improving patient health outcomes.


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