Drug benefit plans under managed care: to what extent do older subscribers selecting less drug coverage put themselves at increased financial risk?

Many health maintenance organizations (HMOs) have implemented programs that limit drug benefit coverage for Medicare beneficiaries. A retrospective study was conducted among Medicare beneficiaries enrolled in the Fallon Community Health Plan to evaluate the implications of the implementation of an HMO program that allowed Medicare beneficiaries to choose between three drug benefit plans: full drug coverage, a drug benefit plan with a maximum of $1,000 in coverage, or no drug benefit. The mean costs of prescription drugs and other healthcare services were calculated and compared for 14,762 patients enrolled in the three pharmacy benefit plans during the 6-month period before and the 12-month period after January 1, 1994, the date of benefit selection. Prescription drug utilization and associated costs were greatest among those members selecting full drug coverage, followed by those with a $1,000 maximum coverage benefit, followed by those selecting no drug coverage (P <.001). The proportion of patients that reached or exceeded $2,000 in prescription drug costs during the 12-month period was determined to evaluate the frequency of patients incurring potentially catastrophic drug expenditures if they were not enrolled in a full drug-coverage plan. Only 21 members (0.5%) with the $1,000 maximum drug benefit reached or exceeded this $2,000 threshold; only one member in the no drug coverage group exceeded this level. A relatively small percentage of patients had drug expenditures that exceeded what was allowed under the drug benefit plan selected. The vast majority of older people choosing less-comprehensive drug benefit plans appeared to make appropriate choices of plans based upon past utilization of prescription and other medical services.