1 Mapping Enrollment Behaviors in Medicare Prescription Drug Coverage * AcademyHealth June 25, 2006 Beth Simon 1, Ph.D., Christopher Koepke 1, Ph.D., Barbara Allen, MPA, David Newman 2, Ph.D., Andrea Hassol 2, MSPH 1 Centers for Medicare & Medicaid Services; 2 Abt Associates Inc. * With the assistance of Abt Associates staff.

2 Background - 1 The Medicare Modernization Act (MMA) provides seniors and people with disabilities prescription drug coverage beginning January 1, 2006 For the first time ever, 43 million Medicare beneficiaries are now eligible to receive optional prescription drug coverage Additional assistance available for beneficiaries with low income and assets Beneficiaries have a choice of drug plans offered by private companies approved by Medicare

3 Background - 2 Drug coverage can be through a comprehensive healthcare plan (i.e., Medicare Advantage, HMO, PPO) or through Original Medicare Original Medicare drug plans are referred to as PDPs and coverage through comprehensive plans are MA-PDs Standard coverage Monthly premium Deductible ($250/year) Cost sharing/coverage gap/catastrophic coverage Penalty for not joining by May 15, 2006

4 Background - 3 There are many standalone PDPs and MA-PDs to choose from in each state (min: 27, max, 52, mean=43) Plans differ in coverage, quantity limits, prior authorization, out of pocket costs, formularies, premiums, deductibles, etc.

5 Purpose of the Study Beneficiaries choose whether to enroll in a Medicare prescription drug plan and then must select among various drug plans that may vary by cost, coverage, and other features (mail order, co-branding) This study investigates how beneficiaries background, decision making style, and behaviors led to enrollment or non-enrollment in Medicare prescription drug coverage Research findings will inform education and outreach efforts about the Medicare prescription drug benefit

6 Research Questions What are beneficiaries decision making behaviors? Does beneficiaries personal decision making style influence enrollment behaviors? How do beneficiaries background characteristics influence decision making behaviors and enrollment decision?

7 Sample - 1 Fifty in-person interviews conducted in 5 cities Round 1: Boston, MA; Phoenix, AZ, Knoxville, TN (total n=17) January, 2006 Round 2: Atlanta, GA; San Antonio, TX (total n=33) April/May 2006 Telephone panel (n=20) of Medicare beneficiaries (1/06-5/06)

8 Sample – 2 Interviewees met the following recruitment criteria: Medicare beneficiary, 65+ No existing prescription drug coverage through VA, current/former employer Not a member of an HMO (Medicare Advantage plan) No Medicaid Mix of race/ethnicity, education, gender, income (+/- $30,000) Enrollment status: mix of already or plan to enroll; not enrolled and dont plan to; undecided

9 Beneficiary Comments -1 I could go for 9 years and not worry about it, especially if my health doesnt change. If costs increased, Id still come out ahead. Thats the whole thing…It doesnt make sense to shell out money for something I dont need. Theres no sense to take out the insurance, unless I start taking something else on a regular basis.

10 Data Collection - 1 Prior to interview, respondents completed inventory to measure decision making style (maximizer vs. satisficer from Barry Schwartz The Paradox of Choice: Why More is Less, 2004) Demographic data collected from screener and during interview (race/ethnicity, education, income, age, marital status, current/change in health status, number of Rx drugs currently on)

11 Guide to semi-structured interview designed to elicit Respondents initial predisposition toward enrollment and how they learned about about the drug program Attitudes toward drug coverage and enrollment over time Sequential behaviors (e.g., talking with others, reading drug plan materials, comparing plans, etc.) regarding enrollment decision making Predicted future behaviors regarding enrollment (i.e, what are perceived next steps among those planning to enroll?; how will undecided make a decision?; among those not planning to enroll, do they perceive anything that might change their mind?) Data Collection - 2

12 Preliminary Observations -1 Observations from the Interviews Beneficiaries had access to information from the news and from prescription drug plans – often lots Beneficiaries also read marketing materials from drug plans – and seemed to have access to/read this more than materials from Medicare There was heavy reliance on the AARP as an information source

13 Beneficiary Comments - 2 What is a formulary? …This is one of the most frustrating experiences Ive ever had. I think about those who are less educated and not as well read as I am. It is a nightmare.….I feel that Ive hit a lot of dead ends. I am highly frustrated about receiving information.

14 Preliminary Observations – 2 Observations from the Interviews Having someone who was able to assist appeared to be very important Family and friends appeared to play a larger role than doctors and pharmacists Beneficiaries were not particularly worried about paying for prescription drugs, even if they currently took medications Most were aware of the May 15 th deadline for enrollment and many were aware of a penalty for not joining by that time

15 Beneficiary Comments - 3 Theres so much reading to do. Looking into drug plans involved a ton of research. Im going to have to narrow it down. Its not too hard to pick out a program thatll fit you now but I got to be careful that that program can be expanded b/c you dont know what youll be on.

16 Statistical Results - 1 Aspects of the qualitative interviews were coded. We have coded whether: the beneficiary was predisposed to joining a PDP or not, the actions they took to gather information, the intensity of those actions, how they enrolled (self or other) motivators to join demographics

17 Preliminary Findings on Beneficiaries Predisposed to Joining Compared with others, those who recall being likely to join when they first learned about Medicare prescription drug coverage were: More likely to read information from drug plans More likely to call various drug plans for information More likely to call Medicare More likely to have someone help them compare costs/formularies More likely to view drug coverage as insurance against high costs; cost savings More likely to report losing an insurance/discount program they currently have More likely to ultimately enroll

18 Beneficiary Comments - 4 On the enrollment penalty I almost feel that I have to. They say if you dont sign up now, before May, you will be penalized…Its a scary thing. It bothers me. [If there is a penalty] I guess I will enroll and pay accordingly. …theres a lot of pressure from everything you read, the penalty hanging over your head…[the message that] you really ought to do this because you never know.

19 Next Steps Investigate relationships between decision making styles (i.e., satisficer and maximizer) and enrollment behaviors Perform cluster analysis Future decision making – who does what next year Impact of health status, prescription drug need, and worry on decision making

20 Contact: Beth Simon, CMS (410) Questions/Comments?