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Policy Perspectives |

Exhaustion of Drug Benefits and Disenrollment of Medicare Beneficiaries From Managed Care Organizations

Thomas S. Rector, PhD
JAMA. 2000;283(16):2163-2167. doi:10.1001/jama.283.16.2163.
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Context Many Medicare beneficiaries enroll in managed care health plans to obtain outpatient drug benefits. Increasing pharmaceutical utilization and costs and decreasing drug benefits increase the likelihood that medication use by such enrollees will exceed drug benefits, which may lead to health plan disenrollment.

Objective To test the hypothesis that exhaustion of managed care drug benefits by Medicare beneficiaries is associated with disenrollment from the health plan.

Design Retrospective cohort study followed up for 1 year (1998) using an enrollment/claims database.

Setting Four geographically diverse network-model health plans that had annual drug benefits of $300, $500, $600, or $1000.

Participants A total of 61,412 elderly Medicare beneficiaries.

Main Outcome Measure Voluntary disenrollment from health plans by members who did or did not exhaust their drug benefits.

Results The likelihood of exhausting 1998 drug benefits ranged from 17% to 25% across health plans (P<.001). The relative hazards of disenrollment from the 4 plans when drug benefits had been exhausted were 2.5 (95% confidence interval [CI], 2.3-2.8), 1.9 (95% CI, 1.7-2.1), 2.7 (95% CI, 2.0-3.6), and 2.1 (95% CI, 1.9-2.4). Statistical adjustments for age, sex, prior enrollment, hospital admissions, physician visits, and county of residence did not alter these estimates.

Conclusions Exhaustion of drug benefits was associated with a significant increase in the likelihood of disenrollment of Medicare beneficiaries. This finding arouses concern that Medicare beneficiaries must change plans to have financial access to medications, which can lead to discontinuity in care and diversion of resources from care to administrative matters. Policymakers should strive to avoid fragmented systems of providing drug benefits.

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Figure 2. Disenrollment Stratified by Time to Drug Benefit Exhaustion
Graphic Jump Location
For all health plans, the solid line represents members who did not exhaust their 1998 drug benefits. Other strata indicate members who exhausted their drug benefits during 1998. Significant differences (P<.001 by the log-rank test) existed across strata for all plans.
Figure 1. Time to Exhaustion of Drug Benefits
Graphic Jump Location
Significant differences (P<.001 by the log-rank test) across health plans were found. The 3-month point represents the cumulative probability of exhausting drug benefits during the first 3 months, which was less than 0.5% in all plans. See Table 1 for a summary of each plan's drug benefit and the number of Medicare beneficiaries who were followed up.



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