Use of intelligent assignment to Medicare Part D plans for people with schizophrenia could produce substantial savings.

Medicare insures about half of the people in the United States diagnosed with schizophrenia. More than 90 percent of these beneficiaries are eligible for a low-income subsidy for their Part D prescription drug benefit, and the great majority of them are randomly assigned to a stand-alone drug plan. We simulated savings from replacing random assignment with an "intelligent assignment" algorithm that would assign beneficiaries to the least expensive plan in 2010 based on their drug usage in the previous year. Doing so generated projected annual drug savings of $379 per dual-eligible (those enrolled in both Medicaid and Medicare) beneficiary with a low-income subsidy; $404 per non-dual eligible with the subsidy; and $604 per beneficiary for those without the subsidy who chose their own plans. This translates into savings of $466 per beneficiary with schizophrenia. Intelligent assignment could have saved about $150 million for Medicare and beneficiaries with schizophrenia combined in 2010. We recommend that Medicare use intelligent assignment as the default approach for all beneficiaries with schizophrenia who receive a low-income subsidy, and consider it as an option for all Part D beneficiaries, regardless of their income.