Medicare Part D Cost-Sharing and Treatment of Mental Disorders Among Disabled Dua

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DESCRIPTION (provided by applicant): Social Security Disability Income (SSDI) and Medicare are important social insurance programs for adults with severe and persistent mental illnesses. Mentally ill, disabled Medicare beneficiaries who are dually eligible for Medicaid are in poor health, have very low incomes, and high pharmacy utilization. When the Medicare drug benefit (Part D) was implemented in January 2006, 6 million dually eligible beneficiaries transitioned from Medicaid to Medicare drug coverage. Most dually eligible disabled beneficiaries were exposed to an increase in prescription drug cost-sharing following this change in financing. The cost-sharing increase was enacted in spite of a growing body of evidence showing that demand for maintenance medications to treat chronic conditions is highly sensitive to cost-sharing, and that reductions in medication use lead to increases in other health care utilization that offset much of the "savings" in pharmacy expenditures. We plan to study the effects of the Medicare Part D cost-sharing policy on treatment patterns and costs for dually eligible beneficiaries with mental disorders. The objectives of this study are to examine the impact of the increased co-payments on (1) prescription drug utilization and expenditure patterns, and (2) patterns in health service utilization and expenditures among dually eligible beneficiaries with mental disorders. We will use Part D's implementation as a natural experiment to study the effects of cost-sharing changes. We will employ a difference-in-differences methodology that relies on a unique administrative dataset from a health plan that contracts with both Medicare and Medicaid to provide health services to low-income populations. The long-term objective of the proposed work is to inform federal and state pharmaceutical cost-containment policies for low-income beneficiaries with mental disorders. Should we find that Part D prescription drug co-payments lead to treatment discontinuations or reduced refill adherence and increased services use, Medicare policy makers may choose to exempt certain drug classes or beneficiaries from co-payment policies. Relevance to public health. Prescription drugs are a critical component of evidence-based care for most mental disorders. The implementation of the new Medicare drug benefit represents a major change in the financing of prescription drugs for individuals with mental disorders who are dually eligible for Medicare and Medicaid. It is critical to understand the ways in which increased cost-sharing for beneficiaries transitioning from Medicaid to Medicare drug coverage will affect utilization of psychotropic and other prescription drugs as well as health outcomes.