Context Annual dollar limits, or "caps," on drug benefits are common in Medicare
managed care (Medicare + Choice) and have been part of several proposals for
a national Medicare drug benefit.
Objectives To determine how cap levels affect the percentage of patients exceeding
the cap and their out-of-pocket drug costs and to identify the medications
that contribute most to prescription costs.
Design and Setting Cross-sectional analysis of 2001 pharmacy claims data from a large Medicare
+ Choice plan in a mature market with caps of $750 to $2000 per year applied
to the plan's share of prescription costs.
Participants Patients who filled at least 1 prescription in 2001 (n = 438 802).
Main Outcome Measures Percentages of patients exceeding caps, identified from prescription
claims; out-of-pocket patient costs before exceeding caps, calculated from
patients' co-payments; and out-of-pocket patient costs after exceeding caps,
estimated from total prescription costs before exceeding the cap. Each unique
drug was ranked by total expenditures, which included spending by patients
who exceeded caps and by the plan for that drug.
Results A total of 22%, 14%, and 4% of Medicare patients exceeded caps of $750,
$1000, and $2000, respectively. Across caps, patients faced a potential 2-
to 3-fold increase in median out-of-pocket costs after exceeding caps ($179-$305/mo)
to continue the same prescription use as before exceeding caps ($79-$100/mo).
For patients who exceeded a cap of $750, yearly out-of-pocket drug costs ranged
from $564 to $4201 (5th-95th percentiles). Fifteen of the 20 medications with
the highest total prescription expenditures for patients who exceeded the
cap were for chronic conditions. Seven had lower-cost generic versions or
a generic medication available in the same treatment class.
Conclusions At lower caps, a substantial proportion of Medicare patients exceeded
their annual drug benefit. To continue the same medication use as before exceeding
caps, these patients faced potentially high increases in out-of-pocket costs
for medications used primarily to treat chronic conditions. Generic options
were not available for many of these drugs.