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Summary of Remarks
Richard G. Stefanacci, D.O., M.G.H., M.B.A.
Founding Executive Director, USP Health Policy Institute; Associate Professor of Health Policy
"Geriatric Policy and Medicine"
September 6, 2006
As part of the Medicare Modernization Act (MMA), a prescription drug benefit known as Medicare Part D took effect January 1st of this year to increase access to prescription drugs. What are the implications of introducing Medicare Part D, and how does it fit into the so-called iron triangle of health policy (access, quality, and cost)?
Medicare Part D requires individuals to actively opt-in to the program requiring time and paperwork. The decision to make Part D an opt-in program comes with consequences. The government may save money because some will choose not to enroll because of the hassle. However, these individuals may not gain access to prescription drugs that could possibly prevent more serious health problems in the future.
In a rush to implement Medicare Part D, ten classes of drugs were. These classes include benzodiazopenes (BDP), weight reduction, cough and cold, over-the-counter, and cosmetic drugs. Originally, the government expected to save $8.1 billion by excluding BDPs, but the exclusion is actually costing the government $24 billion as prescribers switch to drugs that are covered under Part D. Besides access and cost, quality is also affected. BDPs cannot simply be stopped or patients can experience withdrawal and other side effects.
The issue of moral hazard also comes into play regarding Part D. As drugs become more accessible and available, people tend to use more of them, especially if there is little or no cost to the individual. This can also be seen at the care-giving level. In New York, for example, nursing homes were paid a daily capitated fee per patient per day to cover everything including medications. Anything beyond the fee had to be covered by the nursing home so the facilities tended to watch costs very carefully and only prescribe medications that were absolutely necessary. Now under Part D, the facility is no longer responsible for the costs of medication, resulting in an increase in the number of prescriptions.
The implementation of Medicare Part D is an important step in updating Medicare. However, the implications of the program are far-reaching, and its broader effects must be considered by policy analysts.
Nicole Proviano
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