Assessing the Impact of Transfer of Pharmacy Services for Dual Eligible Beneficiaries to Medicare Part D

Lead researcher:
Project funded:
September 2006
Project completed:
October 2008
With the implementation of the Medicare prescription drug benefit (Part D) in January 2006, full-benefit dual eligible beneficiaries no longer have their prescription medications paid for by Medicaid but are instead enrolled in a Medicare Part D prescription drug plan (PDP). This project will focus in the implementation of the new Part D benefit for those dually eligible for Medicare and Medicaid. The project is a joint undertaking with the RUPRI Center, taking advantage of the unique data sets held at each center, the analytical and programming resources of both centers, and the ability to conduct qualitative analysis in multiple states efficiently.

The transfer of pharmacy services for dual-eligible beneficiaries from Medicaid to Medicare affects both rural beneficiaries and rural pharmacies, in both the short run and the long term. Auto-assignment of beneficiaries may be particularly problematic for rural dual-eligibles whose choice of pharmacy is already limited. Dual-eligibles may be assigned to a PDP with whom their local independent pharmacy does not participate, leading to undue travel burden and loss of a professional who understands their health care needs. In addition, auto-assignment has implications for rural pharmacy providers, who are more likely to be independent retailers. The burden of participation in Part D is greater for independent pharmacies that do not have the infrastructure support available to retail chain affiliates. PDPs may also restrict the pharmacies with which they will contract to those with which they can easily contract through chain affiliation. Independent pharmacies rely heavily on insurance payments to support their businesses and are less likely to be able to offset their pharmacy costs with high volume and high profit health and beauty aids. For the independent pharmacy, loss of business from dual-eligibles might result in decreased revenue and threaten their existence, even though they are an important part of the health care infrastructure in rural areas and integral to the health care of older Americans who live there.

Our research will approach this topic from the perspectives of beneficiaries and rural independent pharmacies. The project has two parts. In the first part we will be using national data bases (from CMS regarding enrollment and plan offerings, from the RUPRI Center regarding characteristics of counties and markets, from the RUPRI Center for the location of independent pharmacies, and from the North Carolina Rural Health Research & Policy Analysis Center for pharmacy participation in PDPs) to assess participation of pharmacies in PDPs in which rural beneficiaries have enrolled, and the impact of the new program as related to pharmacy closure. In the second part we will be completing a qualitative study of the impacts of Part D by interviewing independent pharmacists, state Medicaid agency staff, and state pharmacy association staff in four states in four different PDP regions: Missouri, Nebraska, South Carolina and North Carolina. We will produce two Policy Briefs, one focused on pharmacy participation in PDPs and one that describes access to services issues for rural beneficiaries.