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Health Services Research & Development

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2006 HSR&D National Meeting Abstract

1052 — The VA Donut Hole: Lower Drug Co-Pays Through Medicare for Many Veterans Living Near Poverty

Author List:
Rupper RW (Salt Lake IDEAS Center and GRECC)
Bair BD (Salt Lake GRECC)

Veterans with incomes near the federal poverty level (FPL) can receive a co-payment waiver for medications received through VHA. Medicare Part D also provides for reduced pharmacy co-payments for individuals with low assets and incomes below 150% of the FPL. We sought to determine how these different thresholds and benefits would affect pharmacy co-payment expenses for low-income veterans.

We reviewed all available income and asset tests performed at the Salt Lake City VA in FY 2005, and estimated the number of individuals, age 65 and above, who meet eligibility for Medicare Part D low-income assistance. Using VA pharmacy utilization data, we conducted sensitivity analysis to estimate the cost difference in co-payments during FY 2005 for elderly veterans eligible for assistance through Medicare but not through the VA.

Of elderly veterans with current means tests, 4,127 qualify for low-income assistance through Medicare Part D. Of these, 2515 (61%) are not eligible for a waiver of VA co-payments. From this group, we identified 1,558 veterans who qualify for full premium waiver and lower co-payments using Medicare Part D coverage. Of these, 907 veterans filled prescriptions at the VA in FY 2005, with an average of 70 prescription fills per patient. Depending on refill intervals and use of generic medications, this translates into an average difference of $139 to $455 dollars per year (or 1% to 3% of total income) in co-payment expenses for medications received through the VA.

A substantial number of veterans living near poverty are eligible for co-payment reduction through Medicare Part D, but subject to full co-payments at the VA. Based on prior usage, many of these veterans would experience lower out-of-pocket pharmacy expenses using Medicare Part D.

Reduced out-of-pocket expenditures create an incentive for some veterans living near poverty to obtain Medicare Part D coverage for medications. This study demonstrates that currently available data can identify veterans who may require additional review and advisement to make an individually optimal decision. The future effects on VA enrollment and pharmacy costs, and the overall cost to the Federal government are important topics for additional research.

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