Outline
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Sponsor acknowledgment: funding provided by The Commonwealth
Fund under grant Benchmarking the Quality of Medication Use
by Medicare Beneficiaries
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Motivation: need for new empirical models of medication demand
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Study objectives
Seattle, Washington
AcademyHealth June 27, 2006
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Data and study sample
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Measures
Bruce Stuart, Thomas Shaffer, Linda SimoniWastila, Ilene Zuckerman
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Statistical strategy
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Results
The Peter Lamy Center on Drug Therapy and Aging
University of Maryland Baltimore
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Discussion and study implications for policy
Drug Coverage, Disease Burden,
and the Intensity of Medication
Use among Medicare Beneficiaries
The Peter Lamy Center on
Drug Therapy and Aging
Motivation: Need for New Empirical Models of Demand
for Prescription Drugs by Medicare Beneficiaries
Traditional studies of demand for drugs by Medicare beneficiaries
Motivation: Need for New Empirical Models of Demand
for Prescription Drugs by Medicare Beneficiaries
Prescription coverage can induce 3 types of demand
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Most studies assume a linear demand response to price signals.
1. Increased intensity (better adherence /persistence) of drug use for
existing medication sensitive conditions (MSCs)
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Complements and substitutes for drug therapy are generally
acknowledged but not formally modeled
2. Increased “demand” for new MSCs
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Disease burden is considered an important demand shifter, but is
not assumed to directly impact price elasticity because..
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3. Demand for medications to treat the new MSCs
Why it matters
No explicit account is taken of changes in the marginal contribution
of drug therapy to health across the spectrum of disease
burden
The Peter Lamy Center on
Drug Therapy and Aging
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Traditional empirical models underestimate moral hazard because new MSC
effects (2 and 3 above) are co-varied out with risk adjustment
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Policy impact of giving beneficiaries drug coverage ignores potential increase in
cost for physician services (2 above)
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Cost impacts may vary depending on the relative distribution of disease burden
among those gaining coverage
The Peter Lamy Center on
Drug Therapy and Aging
Page 3
Study Objectives
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Page 2
Page 4
Data and Study Sample
Data
Estimate impact of prescription coverage on
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- prescription fills,
2002 MCBS Cost and Use files (N=12,697)
Study Sample
- MSCs
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- Medication intensity (prescription fills per MSC)
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Model without risk adjustment for comorbidities using stratification
by decile of total annual medical spending as a strategy to
minimize selection bias
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Compare results with models using risk adjustment for comorbidity
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Learn more about the differential effects of prescription coverage
along the continuum of disease burden
The Peter Lamy Center on
Drug Therapy and Aging
Inclusion criteria
- Community-dwelling (excludes institutional residents)
- Enrolled in Part A and B in January 2002 (excludes new enrollees)
- Fee-for service (excludes Medicare HMO enrollees due to lack of claims)
- Complete surveys (excludes respondents with missed survey rounds)
- Minimum of 1 medication sensitive condition (MSC)
•
Page 5
Final study sample: N=7,751
The Peter Lamy Center on
Drug Therapy and Aging
Page 6
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Measures
Statistical Strategy
Overall Burden of Illness
Descriptive charts
•
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Plot prevalence rates for common comorbidities by decile of medical
spending
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Plot unadjusted rates for RxHCCs, prescription fills, and Rx fills per
RxHCC by prescription coverage status and disease burden
Stratify study sample into 10 equal sized groups (deciles) by cumulative
spending for all medical services including drugs
Dependent Variables
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Counts of medication sensitive conditions (RxHCCs)
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Counts of prescription drug fills (PME events)
Regression analysis/plots of predicted values
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Prescription fills per RxHCC (medication intensity measure)
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OLS regression models for RxHCCs, Rx counts, Rx fills per RxHCC
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Output predicted values for RxHCCs, Rx counts, and Rx fills per RxHCC
for beneficiaries with and without drug coverage by decile of
disease burden
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Plot and compare the adjusted and unadjusted rates across the spectrum
of disease burden
Explanatory Variables
4 domains: (1) decile assignment, (2) demographics (age, sex, race, census
region), (3) economic variables (income, prescription coverage), (4)
health (self-reported, ADLs, BMI, any inpatient hospital, SNF, or
hospice stay, and home health visit, and denominator days)
The Peter Lamy Center on
Drug Therapy and Aging
The Peter Lamy Center on
Drug Therapy and Aging
Page 7
Figure 1. Prevalence of Selected Diseases among Medicare
Beneficiaries Stratified by Decile of Annual Medical Spending,
2002
Page 8
Figure 2a. Unadjusted Medication Sensitive Condition Counts
(RxHCCs) for Medicare Beneficiaries by Full or No Rx Coverage
Stratified by Spending Decile, 2002
70.0%
12.0
60.0%
10.0
40.0%
Number of Rx HCCs
Prevalen ce (% )
50.0%
30.0%
20.0%
8.0
6.0
4.0
10.0%
2.0
0.0%
1
2
3
4
5
6
7
8
9
10
Spending Decile
0.0
1
Ischemic Heart Disease
Stroke
Pneumonia
Diabetes
Cancer
Arthritis/non-traumatic joint disorders
Peptic ulcer/dyspepsia
2
3
COPD/Asthma
Dementia incl Alzheimer's
Depression/other mood disorders
The Peter Lamy Center on
Drug Therapy and Aging
4
5
6
7
8
9
10
Spending Decile
Full RX Coverage
No RX Coverage
The Peter Lamy Center on
Drug Therapy and Aging
Page 9
Figure 2b. Adjusted Comorbidity Counts (RxHCCs) for Medicare
Beneficiaries by Full or No Rx Coverage Stratified by Spending
Decile, 2002
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Figure 3a. Unadjusted Prescription Drug Fills for Medicare
Beneficiaries with Full Year or No Rx Coverage Stratified by
Spending Decile, 2002
12.0
60.0
10.0
50.0
8.0
Prescription Drug Fills
Num ber of Rx HCCs
•
6.0
4.0
2.0
40.0
30.0
20.0
10.0
0.0
0.0
1
2
3
4
Full Rx coverage
5
6
7
8
9
1
10
No Rx coverage
The Peter Lamy Center on
Drug Therapy and Aging
2
3
4
5
Full RX Coverage
Page 11
6
7
8
9
10
No RX Coverage
The Peter Lamy Center on
Drug Therapy and Aging
Page 12
2
Figure 3b. Adjusted Prescription Drug Fills for Medicare
Beneficiaries with Full Year or No Rx Coverage Stratified by
Spending Decile, 2002
Figure 4a. Unadjusted Prescription Drug Fills Per RxHCC for
Medicare Beneficiaries with Full Year and No Rx Coverage
Stratified by Spending Decile, 2002
9.0
60.0
8.0
Prescription Drug Fills per Rx HCC
Prescription Drug Fills
50.0
40.0
30.0
20.0
7.0
6.0
5.0
4.0
3.0
2.0
10.0
1.0
0.0
0.0
1
2
3
4
5
6
7
Full Rx coverage
8
9
10
1
2
3
4
5
Full RX Coverage
The Peter Lamy Center on
Drug Therapy and Aging
7
8
9
10
No RX Coverage
The Peter Lamy Center on
Drug Therapy and Aging
Page 13
Figure 4b. Adjusted Prescription Drug Fills Per RxHCC for Medicare
Beneficiaries with Full Year and No Rx Coverage Stratified by
Spending Decile, 2002
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Main Points
Medication Sensitive Conditions
9.00
•
8.00
Prescription Drug Fills per Rx HCC
6
Spending Decile
No Rx coverage
7.00
Beneficiaries with prescription coverage have small but significantly
higher MSC counts up through the 8th decile of total medical
spending
Prescription coverage effects
• Increasing disease burden is associated with a steady rise in drug use for both
6.00
those with and without coverage, and the differential increases with
disease burden
5.00
4.00
Medication intensity curve
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3.00
2.00
Distinct inverted “U” pattern in medication intensity for both those with and
without coverage
Higher overall intensity of drug treatment for those with coverage
implies that health spending for those individuals is more
heavily weighted toward drug therapy
• Medication intensity rises faster with disease burden among those with Rx
coverage, and falls less sharply after inflection point is reached
•
1.00
0.00
1
2
3
4
5
Full Rx coverage
6
7
8
9
10
No Rx Coverage
The Peter Lamy Center on
Drug Therapy and Aging
The Peter Lamy Center on
Drug Therapy and Aging
Page 15
How Much Difference Does it Make When Moral Hazard Effects
are Estimated Using the New Methodology?
Page 16
How to Interpret the Medication Intensity Curve?
Some Plausible Explanations
Rising segment (deciles 1-5)
Standard method using risk adjustment with RxHCCs (assumes difference in
MSCs between those with and without prescription coverage is due to selection)
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Estimated price elasticity of= -0.45
• Reflects beneficiary learning curve for effective drug use
• Addition of therapy or co-therapy for existing chronic conditions
• More physician contacts increase likelihood of optimal prescribing (surveillance
hypothesis)
Middle segment (deciles 4-6)
New method assuming difference in MSCs are due to prescription coverage
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Estimated price elasticity = -0.50 or about 11% higher
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Plus cost for physician services to treat new MSCs (about 4% more)
Falling segment (deciles 5-10)
• Beneficiary/physician perceptions that negative returns to drug therapy outweigh
positive returns
• Beneficiary lapses in medication management skills
• Beneficiaries place lower value on treatment effects when seriously ill
• Complex morbidity leads physicians to cut back treatment for specific conditions
(competing demands hypothesis)
So which method is correct?
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• Beneficiaries perceptions of positive returns from drug therapy balanced against
rising rates of adverse drug effects and difficulty in managing drug regimen
• Physicians balance benefits and harms from prescribed drug therapy
Two methods may bound the true value
The Peter Lamy Center on
Drug Therapy and Aging
Page 17
The Peter Lamy Center on
Drug Therapy and Aging
Page 18
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Other Analytic Considerations/ Study limitations
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Cross-sectional study design precludes causal inferences
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Cannot distinguish between patient and prescriber behavior
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Data may under-report true drug utilization
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RxHCC measures medication sensitive conditions but not severity
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Beneficiaries in the top deciles are more likely to be hospitalized and therefore
more likely to “collect” ICD-9 codes
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Some drugs are used to treat multiple conditions
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Stratification and limitation of sample to beneficiaries with at least 1 MSC
may not fully control for selection bias
The Peter Lamy Center on
Drug Therapy and Aging
Conclusions: Implications for Part D
• Part D is likely to lead to a small short-run bump in Part
B spending as those with newly minted drug coverage
begin to seek treatment for formerly untreated MSCs
• Major increase in drug use among Part D enrollees with
no former drug coverage, with largest increases among
those at the upper end of the disease spectrum
• Overall rise in medication intensity with bigger increases
at the upper end of the disease spectrum
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The Peter Lamy Center on
Drug Therapy and Aging
Page 20
Thank You!
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