This study projects how much Medicare beneficiaries who sign up for the standard Part D drug benefit in 2006 will pay in quarterly out-of-pocket payments through 2008. In the first year we estimate that about 38 percent of enrollees will hit the benefit's no-coverage zone, known as the "doughnut hole," and that 14 percent will exceed the catastrophic threshold. Because drug spending is highly persistent over time, beneficiaries who experience the biggest gaps in coverage are likely to do so year after year, with potentially serious financial consequences.

BACKGROUND: The prescribing of antipsychotic drugs has been increasing in nursing homes (NHs) since the availability of second-generation antipsychotic agents, also known as the atypicals, but there is little information on the appropriateness of such prescribing. METHODS: A retrospective analysis using the nationally representative data set of the Medicare Current Beneficiary Survey merged to Minimum Data Sets assessments, medication administration records, and Medicare claims. We identified a sample of 2.5 million Medicare beneficiaries in NHs during 2000-2001 (unweighted n = 1096) to assess prevalence of antipsychotic use, rates of adherence to NH prescribing guidelines, and changes in behavioral symptoms. RESULTS: Approximately 693 000 (unweighted n = 302), or 27.6%, of all Medicare beneficiaries in NHs received at least 1 prescription for antipsychotics during the study period: 20.3% received atypicals only; 3.7%, conventionals only; and 3.6%, both atypicals and conventionals. Less than half (41.8%) of treated residents received antipsychotic therapy in accordance with NH prescribing guidelines. One (23.4%) in 4 patients had no appropriate indication, 17.2% had daily doses exceeding recommended levels, and 17.6% had both inappropriate indications and high dosing. Patients receiving antipsychotic therapy within guidelines were no more likely to achieve stability or improvement in behavioral symptoms than were those taking antipsychotics outside the guidelines. CONCLUSIONS: This study detected the highest level of antipsychotic use in NHs in over a decade. Most atypicals were prescribed outside the prescribing guidelines and for doses and indications without strong clinical evidence. Failure to detect positive relationships between behavioral symptoms and antipsychotic therapy raises questions about the appropriateness of prescribing.

This article provides information on likely participation in the Medicare prescription drug plan and expected crowd-out. We use a microsimulation model based on data from the MCBS to estimate the costs and benefits of a Medicare drug plan, including the benefits from reductions in risk. The simulations are repeated using different combinations of benefits and subsidies. In addition, the simulations explore the effects of different behavioral parameters for moral hazard (the extent to which participants increase drug spending in response to reduced costs) and risk aversion (the extent to which participants would be willing to pay to avoid risk) to identify the impact of these factors on participation and crowd-out.

As Congress continues to debate whether and how to add prescription drug coverage to Medicare, beneficiaries with incomes near the poverty level are in danger of being overlooked. These vulnerable low-income individuals, sometimes labeled the “near poor,” have too much income or too many assets to qualify for public assistance, yet are still quite needy. As a result, they find themselves caught between public programs that are available for the poor and private coverage that is affordable for higher-income beneficiaries.