Importance: More than 1 in 5 disabled people with dual Medicare-Medicaid enrollment have schizophrenia or a bipolar disorder (ie, a serious mental illness). The effect of their transition from Medicaid drug coverage, which varies in generosity across states, to the Medicare Part D drug benefit is unknown. Many thousands make this transition annually.

Objectives: To determine the effect of transitioning from Medicaid drug benefits to Medicare Part D on medication use by patients with a serious mental illness and to determine the influence of Medicaid drug caps.

Design, setting, and participants: In time-series analysis of continuously enrolled patient cohorts (2004-2007), we estimated changes in medication use before and after transitioning to Part D, comparing states that capped monthly prescription fills with states with no prescription limits. We used Medicaid and Medicare claims from a 5% national sample of community-dwelling, nonelderly disabled dual enrollees with schizophrenia (n = 5554) or bipolar disorder (n = 3675).

Main outcomes and measures: Psychotropic treatments included antipsychotics for schizophrenia and antipsychotics, anticonvulsants, and lithium for bipolar disorder. We measured monthly rates of untreated illness, intensity of treatment, and overall prescription medication use.

Results: Prior to Part D, the prevalence of untreated illness among patients with a bipolar disorder was 30.0% in strict-cap states and 23.8% in no-cap states. In strict-cap states, the proportion of untreated patients decreased by 17.2% (relatively) 1 year after Part D, whereas there was no change in the proportion of untreated patients in no-cap states. For patients with schizophrenia, the untreated rate (20.6%) did not change in strict-cap states, yet it increased by 23.3% (from 11.6%) in no-cap states. Overall medication use increased substantially after Part D in strict-cap states: prescription fills were 35.5% higher among patients with a bipolar disorder and 17.7% higher than predicted among schizophrenic patients; overall use in no-cap states was unchanged in both cohorts.

Conclusions and relevance: The effects of transitioning from Medicaid to Medicare Part D on essential treatment of serious mental illness vary by state. Transition to Part D in states with strict drug benefit limits may reduce rates of untreated illness among patients with bipolar disorders, who have high levels of overall medication use. Access to antipsychotic treatment may decrease after Part D for patients with a serious mental illness living in states with relatively generous uncapped Medicaid coverage.