Capped Prescription Benefits and Medicare Managed Care

What is the impact of capped prescription drug benefits on the drug-taking behavior of beneficiaries ages 65 or older enrolled in Medicare HMO plans? The elderly represent only 12 percent of the population, yet they incur 35 to 40 percent of all prescription costs. The dichotomy between the high utilization of prescription drugs by the elderly and the absence of a prescription benefit under traditional Medicare has motivated enrollment in Medicare risk plans that offer a prescription benefit. However, a high percentage of these HMOs that offer prescription drug benefits cap them in order to protect against financial risk. Hypothesizing that individuals reaching the limit on their cap may opt not to purchase or take the prescribed amounts of medications, leading to increased health costs for preventable conditions, the researchers evaluated changes in the amount of the cap on compliance with and utilization of prescribed medications among Medicare risk HMO enrollees. They also examined the effect of reaching the cap on disenrollment from the plan. The objective of this study was to provide public policymakers and plan administrators with better information about the impact of limiting prescription drug benefits as they seek to contain costs without negatively affecting the quality of care.