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Beware the Doughnut Hole


Judy Zerzan, MD, MPH, was at a loss. A Health and Aging Policy Fellow and hospitalist at the University of Colorado Denver, Dr. Zerzan was examining a Medicare patient who was admitted to the hospital with an apparent urinary tract infection. But the same patient had been released from the hospital only five days earlier with an antibiotic prescription to treat an oddly similar infection.

The confusion only increased when lab cultures revealed an E. coli infection. It should have been sensitive to most antibiotics, especially to the brand-name moxifloxacin the patient said she had been taking since her last hospital stay.

Several days into the patient’s rehospitalization, a medical student finally cracked the case. “The medical student went in and started talking to her some more and learned that she didn’t fill the prescription because under her [insurance] plan, it was going to be something like $50, and she felt like she couldn’t afford it,” Dr. Zerzan recalls. “She felt really embarrassed about it, so she didn’t want to tell us that she didn’t fill it.”

The medical team sent the woman home with a $4 generic prescription. “She was much relieved,” Dr. Zerzan says. More importantly, the patient did not return to the hospital for a third stay.

Hospitalists might not see a $46 difference in drug pricing as a core consideration of patient care. But with many seniors enrolled in Medicare Part D’s prescription drug plan falling through holes in the partially privatized safety net, many agree that far more must be done to ensure that financial stress doesn’t lead to medical misfortune.

“It is an ethical issue,” says Stephen Soumerai, ScD, director of the Drug Policy Research Program and a professor in the Department of Ambulatory Care and Prevention at Harvard University. “ … It’s easy to target those people who are the most vulnerable in our society and, therefore, it is an opportunity to try to find ways for them to lower their problems of economic access to medicine.”

Soumerai calls cost-related medication nonadherence a matter of distributive justice. In a study published last year in the Journal of the American Medical Association, he and 10 co-authors found that even after enrolling in Medicare Part D, the sickest beneficiaries were just as likely to skip medications they couldn’t afford.1

Medicare Part D:

The Basics

Medicare Part D took effect in January 2006 as a partially privatized system for providing prescription drug coverage to Medicare beneficiaries. Most plans include a gap in coverage, or “doughnut hole,” that begins after the insurer and beneficiary have spent a specified amount for covered drugs (no more than $2,700 in 2009). While in the gap, the beneficiary must pay all drug costs—as much as $4,350—before “catastrophic” insurance coverage begins. Those expenses are in addition to the plan’s monthly premium; initial insurance copays can vary based on a cost “tier” assigned to each drug.—BN

Identify the Coverage Gap

Medicare’s prescription drug plan, initiated in 2006, has provided coverage for many beneficiaries who previously went without. But it has been widely criticized as unnecessarily confusing by both doctors and patients—and particularly expensive for beneficiaries unlucky enough to fall into its notorious gap in coverage, dubbed the “doughnut hole” (see “Medicare Part D: The Basics,” right).

That economic burden can be exacerbated by medical illiteracy, ignorance, and misinformation. Recent Consumer Reports polls suggest as few as 4% of patients discuss drug prices with their doctors; almost half of Americans have reservations or misgivings about lower-cost generic drugs.

As focal points in the coordination of patient care, hospitalists are better positioned than most to help steer the most vulnerable away from the douhgnut hole while helping hospitals equitably distribute limited resources. But hospitalists often are completely unaware of a patient’s plight. “My research interest is prescription drug coverage, so I think I’m more keyed into it, but certainly even I don’t generally think about, when discharging a patient, if something is going to be on their Part D formulary or not, or what sort of prior-authorization hoops their primary-care doc may have to go through,” Dr. Zerzan says. “And I think that’s generally true of my colleagues as well.”

With tight schedules, a limited personal history with patients, disparities in local resources, and a litany of cost-control measures established by insurers, even hospitalists in the know concede that helping Medicare patients manage drug costs can be an exercise in frustration. As a result, patients are often left with medications that require higher cost-sharing or aren’t even on a plan’s formulary, forcing them to pay out-of-pocket for a prescription. Adding insult to injury, any money spent on a medication not covered by a Part D plan doesn’t count toward getting a patient out of the doughnut hole.

Table 1. Medications Matter: Part D Beneficiaries Could Save More Than $1,100 Annually with More Prudent Use of Generic Medications click for large version

click for large version

The Extra Mile

Jocelyne Watrous, a Medicare beneficiary consultant at the Willimantic, Conn.-based Center for Medicare Advocacy, says drug affordability while in the doughnut hole is a hardship for many. But so are specialty drug copays that range from 25% to 33% of the total price (see Table 1, below). For expensive prescriptions, Watrous says, hospitalists can get the name of a patient’s Part D formulary from the membership card and check for restrictions, such as prior authorization, quantity limits, or step therapy. “This is a terrible burden to place on physicians and their staffs, but nothing is worse than having the patient come back to the hospital via the ER because they could not get the drug prescribed by their doctor,” she says. “Best to square it all away before discharge, if possible.”

Brandon Koretz, MD, an associate clinical professor of geriatric medicine at the University of California at Los Angeles, says keeping track of differences among the dozens of Part D plans isn’t feasible. “Oftentimes, what happens is, you find yourself writing a prescription for what you think is a reasonable and cost-effective treatment, only to find out that drug A is not on insurance company B’s formulary, but drug C is,” Dr. Koretz says.

And if doctors are confused by the array of Part D formularies, hospitalists wonder, how can geriatric patients be expected to navigate the system, especially given the not-insignificant number with cognitive impairments?

Bill Vaughan, a health policy analyst for Consumers Union in Washington, D.C., compares the consumer paralysis created by the proliferation of prescription drug plans to walking by a store display featuring 20 brands of jam. “You’re kind of awed by it, but you don’t buy anything because you’re kind of intimidated,” he says. Only instead of 20 varieties, the typical local government agency offered 48 competing Part D plans in November 2006, with some boasting more than 70. In a new study sponsored by the Henry J. Kaiser Family Foundation, Massachusetts Institute of Technology economist Jonathan Gruber found that when seniors made a decision, only 6% to 9% chose the least expensive plan, while the remaining seniors paid an extra $360 to $520 annually (

All too often, economic problems are simply transferred to other providers. Nursing home pharmacists have complained to Dr. Zerzan about doctors switching seniors’ medications to hospital formulary drugs that aren’t covered under Part D, requiring pharmacists to switch the drugs back again. “From their standpoint, it takes a ton of work because hospitalists don’t know what’s on their formulary,” she says.

Miscommunication can wreak havoc in other ways. Dr. Zerzan recalls how her parents were hosting her grandmother in Oregon when she fell and broke her pelvis. At the hospital, she arrived with two overlapping medication lists from her primary-care physician, cardiologist, and rheumatologist in California. The lists contained several combination pills that essentially duplicated her cholesterol and blood pressure medications. Instead of conducting a medication review, the hospital left the lists intact and added its own, sending her grandmother home with a “fistful of prescriptions.” Unsurprisingly, her blood pressure dipped dangerously. “She actually ended up going back into the hospital briefly to sort out her medications because it was such a mess,” Dr. Zerzan says.

Policy Recommendations

Medicare critics have been outspoken about the complexity of the government’s prescription drug benefit for seniors ever since its January 2006 launch. Here are a few ideas for improvement:

  • Require insurers to offer just two or three Part D plans to reduce the number of choices available;
  • Require insurers to establish yearly contracts with drug companies to prevent unexpected mid-year jumps in drug costs after beneficiaries are locked into a plan;
  • Establish quality measures plans must meet to participate in Part D;
  • Create a list of drugs that should be covered, no matter the formulary, to help doctors and patients sort out those that could be prescribed for many ailments;
  • Seek rebates from Part D plans that have an insufficient percentage of drugs that can be substituted for lower-cost alternatives;
  • Speed up incentives for e-prescribing and a comprehensive electronic database to improve efficiency and reduce medication errors;
  • Allow drug reimportation to reduce healthcare costs; and
  • Create a pathway for FDA approval of generic biologics.—BN

Two-Way Conversation

Hospitalists generally don’t have the benefit of a longstanding relationship with their patients, says Ashley Beard, MD, PhD, a pharmaceutical policy research fellow in the Department of Ambulatory Care and Prevention at Harvard University. “And they’re dealing with people who are at their most vulnerable and least able to communicate effectively about what is going on in their lives.”

The virtual impossibility of knowing Part D formularies for every patient, she says, only increases the importance of effective bedside discussions and open-ended questions. “I think that communicating about costs really has been, and continues to be, a taboo subject in direct patient encounters, even though it is widely talked about in the research and popular press,” she says.

Likewise, hospitalists can intervene during transition planning, Dr. Beard says, when “the goal of the hospitalist is to stabilize the patient to be able to go out into the community and then have community follow-up care, preferably by a primary-care physician.” For people who don’t seek care regularly, she says, part of that stabilization can be a medication review that eliminates nonessential or harmful drugs and alleviates a patient’s financial burden.

Christine Lum Lung, MD, medical director of the independent Northern Colorado Hospitalists group, says a proactive discharge-planning department can be a huge help in coordinating such transitions of care. Her privately run group, affiliated with two private nonprofit hospitals in Loveland and Fort Collins, works closely with a “very active and involved” department that regularly meets with patients to assess financial issues. “Then they will approach us oftentimes with any concerns or issues with the discharge plan and medication,” she says.

Technology to the Rescue?

  •—Produced by Consumer Reports, the free Best Buy Drugs program translates scientific reports from the Drug Effectiveness Review Project into consumer-friendly guides that compare name-brand drugs with their generic counterparts.
  •—Epocrates—free medical software that can be downloaded onto a PDA—allows doctors to input a patient’s Part D formulary and determine the coverage or restrictions of specific medications, as well as other pertinent information. Note that not all formularies participate.
  •—The nonprofit organization Families USA has compiled a number of primers, links, resources, and background information for its online Medicare Drug Coverage Center.

Real-Time Solutions

Patient advocates have proposed a combination of other incentives to encourage better coordination among healthcare providers, including penalties for preventable rehospitalizations and a faster rollout of e-prescribing and electronic databases. Many hospitalists are particularly enthusiastic about the potential of electronic health records to assist them and their patients, though researchers like Soumerai are far less convinced about the merits of such a billion-dollar investment.

In the meantime, Dr. Lum Lung points to other low-cost solutions. At every workstation, her hospitals have posted details of the $4-a-month generic prescription programs offered by retailers like Target and Walmart. “I think it is probably prudent for us to be cognizant of that for everybody,” she says, “regardless of their insurance or payor source.”

For a recently discharged patient, one hospital Dr. Lum Lung works with proactively asked a pharmacist to run a few antibiotics through the patient’s insurance formulary to help pick the most cost-effective one. If a patient can’t afford the drug, the discharge-planning department can look into local drug assistance programs or the hospital’s voucher system, which allows medications to be filled by an in-house pharmacy. “We don’t want to—especially right now—make somebody have to make a choice between making their mortgage or rent payment or paying for a very expensive medication,” she says.

With so much information coming at them at once, hospitalists say, patients may need to be monitored once they get home. And with limited medical resources, physicians must constantly ask themselves whether they’re using the most appropriate and least expensive medications for every patient. “The hospitalists, in particular, are the natural leaders for this kind of thinking,” Dr. Koretz says. “Thinking about medical problems not as isolated, patient-specific problems, but rather as problems of systems of care, and processes of care.” TH

Bryn Nelson is a freelance medical writer based in Seattle.


  1. Madden JM, Graves AJ, Zhang F, et al. Cost-related medication nonadherence and spending on basic needs following implementation of Medicare Part D. JAMA. 2008;299(16):1922-1928.

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