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Report: Medicare Part D Prescription Drug Coverage Saved $1.5 Billion a Year in First 4 Years

Study also finds significant reductions in hospital admissions

A new study by the Johns Hopkins Bloomberg School of Public Health and the University of Illinois at Chicago finds that Medicare Part D prescription coverage significantly reduced hospital admissions and program expenditures totaling $1.5 billion annually.

In the largest impact analysis of Medicare Part D to date, researchers found that gaining prescription drug insurance through Medicare Part D reduced hospitalizations by 8%, decreased annual Medicare expenditures for hospitalization by 7%, and reduced hospital charges associated with hospitalization by 12% during the program’s first 4 years.

The study, published by the National Bureau of Economic Research, estimates that the aggregate savings from reduced hospital expenditures associated with expanded Medicare Part D prescription drug coverage totaled approximately $1.5 billion per year, or approximately 2.2% of the total $67.7 billion cost of Medicare Part D in 2011.

The study drew from a geographically diverse sample of fee-for-service Medicare beneficiaries — representing tens of millions of persons in each year from 2002 and 2009 — and analyzed admissions data for serious conditions, including congestive heart failure, stroke, and chronic obstructive pulmonary disease. The study also compared hospital admissions and inpatient spending before and after implementation of Medicare Part D for elderly individuals who were more or less likely to gain prescription drug insurance through Medicare Part D.

The expansion of prescription coverage under Medicare Part D in 2006 represented one of the most significant changes to the health care landscape since Medicare was introduced in 1966. In the span of several years, the number of elderly individuals (aged 65 years and older) with prescription coverage grew from 66% to 90% and extended to 11 million seniors. The Patient Protection and Affordable Care Act will expand the reach of the program by closing the gap in coverage known as the “donut hole.”

Source: EurekAlert; March 3, 2014.

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