The impact of Medicare Part D on hospitalization rates

Abstract

Objective: To determine whether the change in prescription drug insurance coverage associated with Medicare Part D reduced hospitalization rates for conditions sensitive to drug adherence.

Data sources/study setting: Hospital discharge data from 2005 to 2007 for 23 states, linked with state-level data on drug coverage.

Study design: We use a difference-in-difference-in-differences approach, comparing changes in the probability of hospitalization before and after the introduction of the Part D benefit in 2006, for individuals aged 65 and older (versus individuals aged 60-64) in states with low drug coverage in 2005 (versus those in states with high pre-Part D drug coverage).

Data collection/extraction methods: Hospitalization rates for selected ambulatory care sensitive conditions in 23 states were computed using data from the Census and Health Care Utilization Project. Drug coverage rates were computed using data from several sources.

Principal findings: For the conditions studied, our point estimates suggest that Part D reduced the overall rate of hospitalization by 20.5 per 10,000 (4.1 percent), representing approximately 42,000 admissions, about half of the reduction in admissions over our study period. Conclusions. The increase in drug coverage associated with Medicare Part D had positive effects on the health of elderly Americans, which reduced use of nondrug health care resources.

Figure 1

Prescription Drug Coverage Rates among Medicare Beneficiaries 2005 and 2006 The figure depicts the 2005 prescription drug coverage rate along the x-axis, and the 2006 coverage rate along the y-axis, for elderly individuals in each of the 23 states in our analysis sample.

Figure 2

Percentage Reduction in Hospitalization Rates Due to Coverage Change for Individuals Aged 65 and Older, 2007 The figure depicts the percentage reduction in the hospitalization rate, for individuals aged 65 and older in 2007. The percentage reduction is calculated as the difference in the predicted probability of hospitalization in 2007 assuming 2005 and 2007 coverage rates, respectively, divided by the predicted probability assuming 2005 coverage rates. The box for each condition represents the predicted percentage reduction, and the error bars represent the 95 percent confidence interval for each prediction.