Featured Research

from universities, journals, and other organizations

Simple change to Medicare Part D would yield $5 billion in savings

Date:
June 2, 2014
Source:
University of Pittsburgh Schools of the Health Sciences
Summary:
The federal government could save over $5 billion in the first year by changing the way it assigns Part D plans for Medicare beneficiaries eligible for low-income subsidies, according to experts. Medicare Part D provides assistance to beneficiaries below 150 percent of the federal poverty level. In 2013, an estimated 10 million beneficiaries received subsidies, and 75 percent of the total Part D federal spending of $60 billion is for low-income enrollees.

The federal government could save over $5 billion in the first year by changing the way the government assigns Part D plans for Medicare beneficiaries eligible for low-income subsidies, according to new research from the University of Pittsburgh Graduate School of Public Health.

The results of the study, funded by the National Institutes of Health (NIH) and the U.S. Department of Health and Human Services (HHS), will be published in the June issue of the journal Health Affairs.

Medicare Part D provides assistance to beneficiaries below 150 percent of the federal poverty level. In 2013, an estimated 10 million beneficiaries received subsidies, and 75 percent of the total Part D federal spending of $60 billion is for low-income enrollees. Since 2006, the government has randomly assigned low-income enrollees to stand-alone Part D plans, based upon the region in which they live.

"Random assignment is suboptimal because beneficiaries often are assigned to plans either not covering or charging higher costs for their medications," said Yuting Zhang, Ph.D., associate professor of health economics, Department of Health Policy and Management, Pitt Public Health, and the study's lead author. "We found that most people are not in the least expensive plans that satisfy their medication needs."

Dr. Zhang and her colleagues say an "intelligent reassignment" that matches beneficiaries to their medication needs would yield substantial savings.

Using real data from 2008 and 2009 for a 5 percent random sample of all Medicare beneficiaries who qualified for the low-income subsidy program, Dr. Zhang and her team simulated potential medication costs to the beneficiaries and the government under each alternative plan available in the region. They then compared the simulated costs with the actual costs of each plan. They found that if low-income enrollees were assigned to the least expensive plan instead of a random plan, the government and beneficiaries could save more than $5 billion in the first year.

In addition to the savings under the proposed change, beneficiaries would have fewer restrictions when filling their prescriptions. Some common restrictions used by Part D plans include quantity limits, prior authorization and step therapy.

The Pitt researchers noted that assigning beneficiaries to plans could be implemented relatively easily each year, with the largest savings in the first year but additional savings annually thereafter.


Story Source:

The above story is based on materials provided by University of Pittsburgh Schools of the Health Sciences. Note: Materials may be edited for content and length.


Journal Reference:

  1. Y. Zhang, C. Zhou, S. H. Baik. A Simple Change To The Medicare Part D Low-Income Subsidy Program Could Save $5 Billion. Health Affairs, 2014; 33 (6): 940 DOI: 10.1377/hlthaff.2013.1083

Cite This Page:

University of Pittsburgh Schools of the Health Sciences. "Simple change to Medicare Part D would yield $5 billion in savings." ScienceDaily. ScienceDaily, 2 June 2014. <www.sciencedaily.com/releases/2014/06/140602162648.htm>.
University of Pittsburgh Schools of the Health Sciences. (2014, June 2). Simple change to Medicare Part D would yield $5 billion in savings. ScienceDaily. Retrieved September 23, 2014 from www.sciencedaily.com/releases/2014/06/140602162648.htm
University of Pittsburgh Schools of the Health Sciences. "Simple change to Medicare Part D would yield $5 billion in savings." ScienceDaily. www.sciencedaily.com/releases/2014/06/140602162648.htm (accessed September 23, 2014).

Share This



More Health & Medicine News

Tuesday, September 23, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Liberia Pleads for Help to Fight Ebola

Liberia Pleads for Help to Fight Ebola

AP (Sep. 22, 2014) Liberia's finance minister is urging the international community to quickly follow through on pledges of cash to battle Ebola. Bodies are piling up in the capital Monrovia as the nation awaits more help. (Sept. 22) Video provided by AP
Powered by NewsLook.com
Ebola Doctor Says Border Controls Critical

Ebola Doctor Says Border Controls Critical

AP (Sep. 22, 2014) A Florida doctor who helped fight the expanding Ebola outbreak in West Africa says the disease can be stopped, but only if nations quickly step up their response and make border control a priority. (Sept. 22) Video provided by AP
Powered by NewsLook.com
Global Ebola Aid Increasing But Critics Say It's Late

Global Ebola Aid Increasing But Critics Say It's Late

Newsy (Sep. 21, 2014) More than 100 tons of medical supplies were sent to West Africa on Saturday, but aid workers say the global response is still sluggish. Video provided by Newsy
Powered by NewsLook.com
Sierra Leone in Lockdown to Control Ebola

Sierra Leone in Lockdown to Control Ebola

AP (Sep. 21, 2014) Sierra Leone residents remained in lockdown on Saturday as part of a massive effort to confine millions of people to their homes in a bid to stem the biggest Ebola outbreak in history. (Sept. 20) Video provided by AP
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:

Strange & Offbeat Stories


Health & Medicine

Mind & Brain

Living & Well

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins