Changing Medicare Part D could save $5B

Medicare could save billions of dollars if the program stopped randomly assigning certain members into a Part D plan, according to a new study published this month in the journal Health Affairs.

Analyzing a sample of Medicare drug claims data from 2008 to 2009, the study authors determined if Medicare used "intelligent reassignment" to place low-income members into a Part D plan instead of random assignment, the program could have saved $5 billion in 2009 alone. That's because the Center for Medicare & Medicaid Services covers copays for many low-income Medicare members.

What's more, implementing intelligent reassignment would have decreased the amount of prescriptions that needed utilization review from 29 percent to 20 percent, and the proportion of prescriptions with quantity limits from 27 percent to 19 percent, the study found.

"We found that most people are not in the least expensive plans that satisfy their medical needs," Yuting Zhang, the lead author of the study and an associate professor of health economics at the University of Pittsburgh, told Kaiser Health News.

Since CMS assigns low-income members and new enrollees who haven't indicated a preferred plan to stand-alone Part D plans, it has the opportunity to assess individuals' unique needs to provide them with the most appropriate coverage option available.

Zhang believes it wouldn't be hard to implement intelligent reassignment of beneficiaries, particularly since she and her co-authors used the approach in their analysis. CMS has "much better data than we do," she told KHN. "And they're already doing the assignment."

However, making such a change would require Congress to make a law amendment, KHN noted.

To learn more:
- here's the Health Affairs study abstract
- read the Kaiser Health News article