Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

$17B Increase in Medicare Part D Prescription Drug Spending

While prescription drug spending under the Medicare Part D program rose significantly, the number of claims only increased by three percent.

By Jacqueline LaPointe

- Prescription drug spending under the Medicare Part D program increased by $17 billion between 2013 and 2014, representing a 17-percent increase, according to new CMS data.

Prescription drug spending under Medicare Part D increased by 17 percent from 2013 to 2014

While the federal reported a significant boost in prescription drug spending for all healthcare stakeholders in 2014, the total number of Part D prescription drug claims only increased by three percent.

As part of its effort to boost healthcare transparency, the federal agency recently released Part D prescription drug data for 2014, which contains information on over one million healthcare providers, who prescribed nearly $121 billion in prescription drugs under the Medicare program. The information was collected from Medicare Advantage Prescription drug plans and independent Prescription Drug Plans.

“With this data release, patients, researchers and providers can access valuable information about the Medicare prescription drug program,” said Niall Brennan, CMS Chief Data Officer, on the CMS website. “Today’s release joins a series of actions the Administration is taking to improve transparency around government data, including the cost of prescription drugs.”

Using the dataset, CMS reported that the ten prescriptions that generated the highest total costs were all brand name drugs. Sovaldi, which is used to treat hepatitis C, had the highest total drug costs at $3.1 billion.

However, Medicare, beneficiaries, and other third-parties paid more than $1 billion respectively for all of the top ten drugs by cost, such as Nexium (acid reflux medication), Crestor (cholesterol prescription), and Abilify (used to treat depression, bipolar disorder, schizophrenia, and Tourette syndrome).

CMS also found that the ten medications with the highest number of claims were all generic brands. Linsinopril, which is used to treat high cholesterol and heart failure, was the most commonly used medication in 2014.

Additionally, CMS used the 2014 dataset to discover growth and utilization trends for specific drugs. It revealed that Lantus Solostar and Lantus insulin products had the largest growth in total drug costs from 2013 to 2014 with growth rates of 47 percent and 32 percent, respectively.

In contrast, Advair Discus, an asthma medication, showed the lowest growth in total drug costs with only one percent.

The federal agency also reported trends by geographic region. The dataset showed that states in the South and Midwest had higher rates of antibiotic prescribing than the national average of 1.39 fills per Medicare beneficiary.

Furthermore, southern states tended to have higher rates of high-risk medication prescribing, which is a measure that determines how many persons aged 65 or older are prescribed specific medications that have been deemed to cause high-risk side effects and have safer drug choices. Southern states showed a range of 1.09 to 1.31 high-risk medication claims per elderly beneficiary, while the national average was 0.86.

The initial findings from the 2014 dataset are just the start for the federal agency. CMS intends for the recently released dataset to add to the 2013 information, which was released last year. By including more information, CMS aims to further analyze prescription drug cost and utilization trends, including provider prescribing habits, brand versus generic drug prescribing rates, and geographic differences in utilization and costs.

The dataset contains information by prescriber and drug, including total number of prescriptions that were dispensed (initial prescription and refills) and total drug cost. The costs reflect the amounts paid for by Medicare Part D plans, beneficiaries, other government subsidies, and third-party payers.

However, drug costs in the dataset do not account for any manufacturer rebates paid to Medicare Part D plan sponsors, including direct and indirect remuneration or point-of-sale rebates, CMS reported.

In addition, CMS noted that there are other limitations to the prescription drug data. The information does not reflect quality of care provided by individual providers, CMS stated. The data also only contains information from Medicare beneficiaries with Part D coverage, but providers generally treat other patients with different coverage, indicating the data cannot accurately reflect prescribing habits.

To view the complete prescriber dataset for 2014, click here.

Dig Deeper:

Why Healthcare Needs Value-Based Supply Chain Management

Accountable Care Organizations Responsible for Drug Spending


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