Association for Public Policy Analysis & Management

The overuse of prescription opioids has been declared an epidemic by the Centers for Disease Control (CDC). One potential tool to address overuse of opioids is the design of prescription drug plan formularies. This design can take on three primary aspects: 1) coverage of opioids and their alternatives; 2) when covered, the amount of cost sharing charged by the plan; and 3) the use of utilization management tools, such as prior authorization, in an attempt to manage and control utilization of these drugs. Our paper examines the effect of these three aspects of Medicare Part D formulary benefit design on the use and misuse of prescription opioids by disabled Medicare beneficiaries.

We use Medicare prescription drug claims data from 2010 to 2012 for all Medicare beneficiaries eligible by reason of disability and living in California and Texas. We also use the formulary files for each plan to construct plan-level measures of opioid coverage, tier placement, and use of utilization management tools. Finally, we merge the Part D claims data with medical claims in order to control for other variation in utilization due to differences in health status.

We assess three measures of utilization: any utilization, the number of 30-day normalized fills in a given year, and the TROUP score, which measures the likelihood a patient misused the opioid during the given year. Our independent variables include: opioid coverage (whether or not a plan covered the opioid, percent of opioids covered); the amount a beneficiary had to pay in cost sharing for the opioid; and the percent of opioids for the plan that had utilization management tools applied. For models looking at any utilization, we employ a logistic regression approach with fixed effects at the plan level. For the number of fills and the misuse measure, we use a count data model with fixed effects.

Nearly 75% of disabled Medicare beneficiaries in our data were also covered by Medicaid at some point during the three years, which means their cost sharing levels were relatively low and did not vary across different plans. We therefore created three groups: those who are always dually eligible; beneficiaries never dually eligible; and beneficiaries who are sometimes, but not always, dually eligible. We would expect beneficiaries who are never eligible for Medicaid to respond to cost sharing; those who are always eligible to solely respond to utilization management tools applied by the plan; and those whose Medicaid coverage changes to respond to shifting cost sharing over the time period covered by our data.

We find that beneficiaries are less likely to use or misuse prescription opioids when faced with higher cost sharing. We also find that utilization management tools reduce utilization, but the overall effects are difficult to discern given that plans define and apply utilization management tools differently and we are not able to measure these differences in our data.  Estimates of use and misuse are provided and compared to findings obtained from another disabled population: those receiving care through Workers Compensation.