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Medicare Part D Beneficiaries Spend More on Medication Than They Should

A new analysis out of The University of Pittsburgh’s Graduate School of Public Health found Medicare Part D beneficiaries overpay for their drugs by hundreds of dollars.

Researchers found that only 5.2 percent of beneficiaries choose the cheapest plan and recipients on average pay $368 more than they would have if they had chosen the cheapest plan in their region.

Researcher Yuting Zhang, a health economics professor and Director of the Pharmaceutical Economics Research Group at Pitt said it is often because seniors find it difficult to select the ideal drug prescription plan for their medical needs. Recipients often pay more attention to plan premiums than to their own out of pocket expenses. That issue has not changed since an analysis done in 2006, when the program started, found that beneficiaries used the same type of criteria when choosing a plan.

The report suggests that beneficiaries need more targeted assistance from the government to help them choose the most cost-efficient plans that would still cover their medication needs.

The analysis was published in October’s issue of Health Affairs.

The Medicare Part D drug benefit program began in 2006 to subsidize the costs of prescription drugs for Medicare beneficiaries.

“It relies on a private market and gives beneficiaries lots of options to chose from,” said Zhang.

There are nearly 2000 stand-alone Part D plans in the US, divided into 34 regions, with an average of 50 plans available per region.

In 2011, the Part D program cost the federal government $65.8 billion dollars according to the Congressional Budget Office. Under the program different private providers compete for beneficiaries – similar to the way the individual state Health Exchange programs will work under The Affordable Care Act.

The researchers on the study said the new exchanges could provide active assistance to beneficiaries such as screening plans to ensure they meet quality standards and limiting the number of plan choices.