Economic Evaluation of Limits to Access to Prescription Medication for the Elderly in the U.S. and Implications for the Elderly in Six Southern States with Three Common Illnesses

Prepared by

Dr. Tim Lynch

Director

Center for Economic Forecasting and Analysis

Health Care Finance Professor, Adjunct

Florida State University

Tallahassee, Florida

President

Econometrics Consultants, Inc.

August 1, 2002

I. Executive Summary

Seniors may be delaying treatment for conditions that are common among the elderly, resulting in expensive health consequences that may be prevented with medication at less cost. The lack of a Medicare prescription drug benefit may be contributing to the problem.

Depression, diabetes and osteoporosis are three of the most common, debilitating and expensive diseases of aging – significantly impacting seniors’ quality of life and driving up health care costs.

  • Depression affects 15 of every 100 adults over 65 in the U.S., more than six million Americans. When properly diagnosed and treated, 70-80% will recover and lead productive lives, but 15% of those with untreated depression ultimately commit suicide.
  • By age 75, one in five seniors have diabetes, affecting 17 million Americans. Diabetics are three times more likely than non-diabetics to require hospitalization.
  • Osteoporosis affects 25-28 million people in the U.S., and the lifetime risk is enormous – nearly one in two women and one in five men. Hip fractures alone amount to $10-$14 billion in health care expenditures.

A review of Medicare data in six states indicates that seniors may be delaying treatment for these illnesses until they are so acute they require expensive hospitalization. Each of these illnesses can be effectively treated with medication. Seniors who treat these illnesses early and consistently with medication therapy are far less likely to suffer the most acute effects of these diseases. In the case of each of these diseases, medication therapy is significantly less expensive than hospitalization and other acute-phase interventions. Studies show many seniors (one in four) fail to fill prescriptions because they lack prescription drug coverage. By treating these conditions early with medication therapy, millions of dollars in acute care inpatient hospitalizations can be saved.

A recent study highlights the reality that while 90% of Medicare clients annually require prescription medication, 77% require these medications on an ongoing basis. Meanwhile, almost a third of Medicare clients have no supplemental prescription medication coverage. These are the seniors (typically low income) who put off seeking early primary care for chronic illnesses that can be effectively managed by medication until they reach serious and often life-threatening levels. This circumstance most commonly results in seniors seeking hospitalization for chronic conditions that could have been treated earlier at a fraction of the hospitalization costs.

For example:

  • Medicare clients with no supplemental drug coverage each year order 32% fewer prescription medications (16 instead of 21) because of lack of access to a comprehensive national prescription medication program.
  • Approximately 20% of those below 150% of the poverty level without health care coverage purchase no prescription medications – irrespective of their needs – because they don’t have the resources.

This study examines the in-patient hospital costs associated with three illnesses common to seniors that usually can be prevented or managed with prescription medications: depression, diabetes and osteoporosis. The six states included in the study are Arizona, Arkansas, Georgia, Florida, Texas, and North Carolina.[1]

Summary of findings

Depression

Major depression is very common in seniors. So common, in fact, that the acute care hospital figures examined for this study significantly underestimate its prevalence and cost. This condition often is not diagnosed or coded (to protect privacy). Many studies show that depression can not only lead to hospitalization (often because of suicide risk), but also can prolong the hospitalization when it occurs concurrent with other medical conditions.

Since 70% of patients respond to medication therapy, it is reasonable to conclude that a large percentage of hospitalizations due directly to depression are preventable. In the case of depression, complicating medical illnesses have been shown to increase hospitalization (frequency and duration) and negatively impact the prognosis. As an example, patients with cardiovascular disease and depression have more cardiac events, require more procedures, and have a higher mortality than their non-depressed comparators. Undoubtedly a large fraction of these elders were those Medicare clients that did not have prescription drug coverage.

Findings

  • Medicare payment for acute care hospital treatment of 13,510 elders with depression cost Medicare $90 million in 2001 with a per-patient cost of $6,666.
  • If all 13,510 elders who were admitted to acute care hospitals in the six states examined had had adequate access to care and were treated with prescription medication at an average annual cost of $1,000 each for each person with the condition, the total drug cost would be $13.5 million annually. If just 70% were successfully treated with drug therapy alone, the potential Medicare savings would be $49.5 million annually.
  • Since these six states represent 20% of the U.S. population, these savings could conservatively amount to $247.5 million annually.

Diabetes

Diabetes (predominantly Type 2) is extremely common in the elderly. Hospitalization with diabetes is usually due to one of three reasons:

  • Uncontrolled diabetes manifesting itself as very high blood sugars (this would be a minority in this population as most Type 2 diabetics are not insulin dependent);
  • The microvascular complications of diabetes (renal disease, retinal disease and neuropathy); and,
  • Cardiovascular disease including coronary artery disease and peripheral vascular disease.

All three are amenable to prevention or treatment with pharmaceuticals. There are many pharmaceutical options that make it possible to achieve good blood sugar control in most diabetics. Control of the blood sugar has been shown to prevent or slow the progression of the microvascular complications in both Type 1 and 2 diabetes. The use of ACE inhibitors has also been demonstrated to halt or limit the condition.

Findings

  • Approximately $197 million in Medicare spending for diabetes was expended among 30,501 elders in 2001 in acute care hospital settings across the six states.
  • Of those treated, 23,670 had conditions that were minor, moderate or not rated; spending for these cases was $119.4 million or $5,043 per patient.
  • Assuming only half of these hospitalizations could be prevented with early detection, intervention and treatment with prescription drugs (based on an estimated per-person medication cost of $441 per year), the total cost for medication alone would be $10.4 million. That means the potential annual Medicare savings would be $49.2 million.
  • Since these six states represent 20% of the U.S. population, the total savings could amount to $246 million annually.
Osteoporosis

Osteoporosis is one of the most common, largely preventable diseases of aging. Researchers indicate a variety of agents have been shown effective in preventing or treating osteoporosis and preventing fractures. These include bisphosphonates, hormone replacement therapy, and raloxifene. Early detection, treatment with prescription medication and other outpatient care is effective in reducing the severity, cost and complications of osteoporosis.

Findings

  • In total, Medicare expended $11.4 million in treating 1,386 osteoporosis patients over the six states examined in acute care hospitals in 2001.
  • Approximately $5.3 million of this Medicare spending was for treating the 767 cases that were classified as minor or moderate or unclassified cases of osteoporosis. If we assume just these 767 cases were diagnosed early and properly treated with effective prescription medication (at an estimated per-person medication cost of $1,500 annually), the total costs for medication would be $1.15 million annually. The potential six-state Medicare savings alone would be $4.1 million annually.
  • Since these six states represent 20% of the U.S. population, these savings could amount to $20.5 million annually.

Conclusion

The potential aggregate savings that could incur from expanding prescription medication coverage to Medicare elders for the three chronic medical conditions across the six states studied is $102.8 million. Nationally these estimates for these three chronic conditions alone could sum to $514 million. The potential nationwide savings from expanding access to prescription medications go well beyond these estimates if this analysis were expanded to a larger number of conditions.

Increased access to prescription medications would improve the quality of life of our elders, reduce long-term acute care hospital costs, and ultimately save millions through the broader use of medications that can stabilize conditions and help seniors avoid high-cost acute care and hospitalizations.

II. Introduction

The leading edge of the post WW II baby boom generation is rapidly approaching retirement age and soon will swell the ranks of the elderly and make that group the most rapidly growing segment of the U.S. population. Almost 60 years after the end of WW II, the U.S. and the other parts of the developed world are aging rapidly. At the turn of the 21st century, Florida’s elderly constituted 18.5% of the population. Between 2003 and 2006 the nations of Italy, Japan, Germany and Italy will match this profile with the UK, France and Canada close behind.[2] The U.S. population will pass this 18.5% elderly benchmark in 2023 and, shortly thereafter, one in four people across the U.S. (and the developed world) will be 65 or older, up from one in seven today. In 1995, elders outnumbered college-age youth by two to one. By 2040, elders will dominate those youth by four to one.[3]

Access to better public health care services, newer technologies, increased safety across our culture, greater awareness of the importance of exercise and proper nutrition, and new and improved medication all are contributing to a much higher quality of life and an associated extension of the average life expectancy among the elderly in the U.S. (and other parts of the world). While a child born in the U.S. as recently as 1929 could only expect to live 57.1 years, the average age has been extended by almost 20 years to 76.7 for a child born in 2000.[4]

Availability of newer medications could have a dramatic effect on the quality and length of life of a number of our seniors and result in considerable cost savings at the same time. This study will examine the acute care inpatient hospitalization frequency, length-of-stay, and Medicare costs of treatment and condition severity for three chronic conditions typically affecting the elderly: diabetes, depression and osteoporosis. These are but a few of the numerous chronic illnesses that can and should be treated in a primary care setting with proper prescription medication, but are often left untreated by a number of elders in the U.S. due to limited resources and the lack of a prescription drug benefit.

The study will estimate a range of potential Medicare cost savings if prescription medications were available in these states, and the greater savings possible if care was rendered in a primary care setting with appropriate drug therapy rather than an acute care hospital setting.

III. Overview

REVIEW OF MEDICARE CLIENT COSTS, LENGTH OF STAY, SEVERITY OF ILLNESS, AND FREQUENCY OF HOSPITALIZATION FOR THREE CONDITIONS TREATABLE IN A PRIMARY CARE SETTING WITH PRESCRIPTION MEDICATION: A PROFILE OF SIX STATES

One method researchers use to assess the potential effects of providing broader access to prescription medication is an evaluation of the costs of public and private health care expenditures for services that should be dealt with in a primary care setting, but instead is treated in acute care sites at a considerably higher cost.[5] This study will evaluate the likely impact on acute care hospital Medicare costs if seniors had broader access to medications used to treat three common, chronic ailments.

The analysis in this section of the report completes a case study of 2001 Medicare recipient hospitalization frequency, total Medicare expenditures and lengths-of-stay for three categories of chronic illness (diabetes, osteoporosis and depression) that are often treatable in a primary care setting with significant success by using prescription medications early in the illness. Osteoporosis, diabetes and depression are three of the most common, debilitating and expensive diseases of aging, significantly impacting seniors’ quality of life and driving up health care costs.

Each of these illnesses is effectively treated with medication. Seniors who treat these illnesses early and consistently with medication therapy are far less likely to suffer the most acute effects of these diseases. In the case of each of these diseases, medication therapy is significantly less expensive than hospitalization and other acute-phase interventions. Studies show many seniors (one in four) fail to fill prescriptions because they lack prescription drug coverage[6].

A range of alternate scenarios and possible cost savings are then evaluated assuming all seniors had access through a national prescription drug benefit plan to these medications in a primary care setting. This analysis will selectively evaluate these three conditions, drawing upon data from six states. But the results may be applied to other disease states and extrapolated, producing a much higher level of savings.

The six states examined are Arizona, Arkansas, Florida, Georgia, North Carolina and Texas. The three illnesses traditionally treated in primary care settings with significant success if proper prescription medication is provided include depression, osteoporosis and diabetes. Each condition is classified by level of severity. The definition of severity is provided in the Appendix (Section Five).

The first part of this section will profile the nature, frequency and national costs associated with osteoporosis, diabetes and depression. The next section will quantify the frequency, length of stay, charges and final Medicare cost to treat these conditions in seniors across each state from the most recent Medicare data for calendar year 2001. No exact estimate of the number of Medicare hospital patients evaluated in this study can be made to determine how many of these clients did not have access to prescription medication coverage. However, earlier research[7] indicates that almost a third of Medicare clients have no drug coverage and these are the very clients most likely to not seek medication early in a chronic illness. Without the resources to access prescription medications, patients (particularly low-income patients) with these chronic conditions deteriorate, leading to serious and often life threatening complications that lead to hospitalization. At this point, the cost of treatment of these chronic conditions is a factor of four to 12 times higher than comparable primary care settings if treated early in a primary care setting with appropriate prescription medication.[8]

The last part of the analysis will blend together these data and the literature review to estimate the range of savings possible if the Medicare clients had secured appropriate prescription medication early enough in a primary care setting.

IV. Data and Analysis

Depression

Incidence

In any given one-year period, 9.5% of the population, or about 18.8 million American adults, suffer from a depressive illness. The economic cost of this disorder is high, but the cost in human suffering cannot be estimated. Depressive illnesses often interfere with normal functioning and cause pain and suffering not only to those who have a disorder, but also to those who care about them. Serious depression can destroy family life as well as the life of the ill person. But much of this suffering is unnecessary. [9]

Although depression is a treatable disease, about 80% of episodes of depression are not diagnosed and treated.[10] Most people with a depressive illness do not seek treatment, although the great majority – even those whose depression is extremely severe – can be helped. Newer medications help restore 70%-80% of patients to normal functioning. In contrast, 15% of those with untreated depression ultimately commit suicide. Many studies show that depression can not only lead to hospitalization (often because of suicide risk) but also can prolong the hospitalization when it occurs concurrent with other medical conditions.[11]

According to the National Institute of Health the term depression has been variably used to describe a symptom, a syndrome, or a disease:

“…depression is used in the broad sense to describe a syndrome that includes a constellation of physiological, affective, and cognitive manifestations. As listed in the current American Psychiatric Association Diagnostic and Statistical Manual (DSM-IIIR), criteria for the diagnosis of depression include: (1) changes in appetite and weight; (2) disturbed sleep; (3) motor agitation or retardation; (4) fatigue and loss of energy; (5) depressed or irritable mood; (6) loss of interest or pleasure in usual activities; (7) feelings of worthlessness, self-reproach, excessive guilt; (8) suicidal thinking or attempts; and (9) difficulty with thinking or concentration. Depression may range in severity from mild symptoms to more severe forms that include delusional thinking, excessive somatic concern, and suicidal ideation, over longer periods of time. The DSM-IIIR requires the presence of at least five of the symptoms listed above for a diagnosis of major depressive episode. Concurrent medical conditions are frequently present in elderly persons and should not preclude a diagnosis of depression.”[12]

Major depression is manifested by a combination of symptoms (see symptom list) that interfere with the ability to work, study, sleep, eat, and enjoy once pleasurable activities. Such a disabling episode of depression may occur only once but more commonly occurs several times in a lifetime.[13]

Depression in the aging and the aged is a major public health problem. It causes suffering to many who go undiagnosed, and it burdens families and institutions providing care for the elderly by disabling those who might otherwise be able-bodied. What makes depression in the elderly so insidious is that neither the victim nor the health care provider may recognize its symptoms in the context of the multiple physical problems of many elderly people. Depressed mood, the typical signature of depression, may be less prominent than other depressive symptoms such as loss of appetite, sleeplessness, anergia, and loss of interest and enjoyment of the normal pursuits of life. There is a wide spectrum of depressive symptomatology as well as types of available therapies.