Mental health in the Medicare Part D drug benefit: a new regulatory model?

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 represents the most significant expansion of Medicare benefits since the program's inception and has important implications for mental health. Medicare will become a major payer for psychotropic medications through the new prescription drug benefit. The structure of the drug benefit's delivery system creates incentives for plans to underprovide medications, like psychotropic drugs, that are used persistently and are associated with high expected costs. Regulators have put policies in place to counteract these incentives. This paper examines these strategies' likely success and suggests additional approaches to be considered.