Cost sharing and the demand for health services in a regulated market

This paper measures consumer responsiveness to cost sharing in healthcare using a regression discontinuity design. I use a novel and detailed claims-level dataset from the Colombian healthcare market, where the government exogenously determines a tier system for coinsurance rates and copays based on the enrollee's monthly income. I find that patients exposed to higher coinsurance rates demand fewer services relative to patients facing lower cost sharing. This reduction holds for both discretionary and preventive services. Lower utilization translates into lower costs, despite evidence that patients facing higher prices do not substitute away from more expensive providers.

Did adolescents in Norway respond to the elimination of copayments for general practitioner services?

Copayments for primary care services may lead to decreased access to and underconsumption of necessary health care for vulnerable patient groups, such as adolescents. In Norway, in 2010, adolescents aged 12 to 15 years were exempted from copayments for general practitioner (GP) services, and the aim of this study is to estimate whether being exempted from copayments led to increases in GP visits. We apply the synthetic control method using the elastic net regression as a data-driven approach to construct a relevant counterfactual from our pool of age groups not affected by the reform. Data on the number of GP consultations for males and females from 2006 to 2013 is obtained from the Norwegian Health Economics Administration. Our findings suggest that exempting adolescents from copayments increased the number of per person GP consultations by 22.1% among females and 13.8% among males. This indicates that adolescents between the ages of 12 and 15 were sensitive to copayments before the reform and females more so than males.

Impact of Medicaid prescription copayments on use of antipsychotics and other medications in patients with schizophrenia

OBJECTIVE

To assess the impact of Medicaid prescription copayment policies on anti-psychotic and other medication use among patients with schizophrenia.

METHOD

The study sample included fee-for-service adult Medicaid patients with schizophrenia. Medicaid claims records from 2003-2005 from 42 states and D.C. were linked with county-level data from the Area Resource File and findings from a state Medicaid policy survey. Patient-level fixed-effects regression models examined the impact of increases in generic copayments and generic/brand copayment differentials on monthly use of anti-psychotic (overall and by generic/brand status) and other non-antipsychotic medications. Medications for hypertension, hyperlipidemia, and diabetes in sub-groups of patients with these comorbidities were also examined.

RESULTS

Prescription copayment changes had a statistically significant but small impact on anti-psychotic use. For instance, for every $1 increase in the minimum or generic copayment per prescription, there was a reduction of 1.4 anti-psychotic drug fills per 100 patient months (relative reduction = 1.9%). The generic/brand copayment differential increases also had a minimal impact in changing utilization of first-generation (generic) and second-generation (brand) anti-psychotics. Effects of copayment changes on non-anti-psychotic medication use were substantially higher; for each $1 generic copayment increase, there was a reduction of 23 non-anti-psychotic drug fills per 100 patient months (relative reduction = 10.1%). Similarly, for each $1 increase in the generic/brand copayment differential, there was a reduction of 15 non-anti-psychotic drug fills (relative reduction = 5.6%). Reductions in the number of prescriptions filled for antidiabetics, antihypertensives, and lipid-lowering agents were 4-11-fold higher than corresponding reductions for anti-psychotics.

LIMITATIONS

Because federal law requires pharmacists to fill medications for Medicaid patients regardless of the ability to pay, these results may under-estimate the true impact of copayment increases.

CONCLUSIONS

Medicaid prescription copayment increases resulted in only a minimal decline in anti-psychotic medication use, but much larger reductions in use of other medications, particularly cardiometabolic medications.

Impact of hospital-acquired conditions on financial liabilities for Medicare patients

BACKGROUND

Hospital-acquired conditions (HACs) can increase the financial liabilities faced by patients when the HACs require additional treatment both in the hospital and in subsequent health care encounters. This article estimates incremental effects of 6 HACs on Medicare beneficiary financial liabilities.

METHODS

Descriptive and multivariate analyses were used to examine the differences in beneficiary liability between care episodes with and without HACs. Episodes included the index hospitalization in which the HAC occurred and all inpatient, outpatient, and physician claims within 90 days of index hospital discharge. Medicare fee-for-service patients discharged from a hospital in fiscal year (FY) 2009 or FY 2010 with severe pressure ulcer, fracture, catheter-associated urinary tract infection, vascular catheter-associated infection, surgical site infection, or deep vein thrombosis or pulmonary embolism after certain orthopedic procedures were matched by diagnosis, sex, race, and age to with patients without HACs.

RESULTS

Medicare patients were liable for an additional $20.5 million per year across the HAC episodes compared with what they would have owed without the HACs. Beneficiaries with HACs were also more likely to exhaust their Part A days in the index hospitalization.

CONCLUSIONS

HACs create significant financial burden for Medicare beneficiaries. The incremental financial liabilities are concentrated in the episode of care after the index hospitalization with the HAC. Policies and programs that reduce HAC incidence will improve Medicare beneficiaries' physical and financial health.

Breaking the Bank: Three Financing Models for Addressing the Drug Innovation Cost Crisis

BACKGROUND

The introduction of innovative specialty pharmaceuticals with high prices has renewed efforts by public and private healthcare payers to constrain their utilization, increase patient cost-sharing, and compel government intervention on pricing. These efforts, although rational for individual payers, have the potential to undermine the public health impact and overall economic value of these innovations for society. The emerging archetypal example is the outcry over the cost of sofosbuvir, a drug proved to cure hepatitis C infection at a cost of $84,000 per person for a course of treatment (or $1000 per tablet). This represents a radical medical breakthrough for public health, with great promise for the long-term costs associated with this disease, but with major short-term cost implications for the budgets of healthcare payers.

OBJECTIVES

To propose potential financing models to provide a workable and lasting solution that directly addresses the misalignment of incentives between healthcare payers confronted with the high upfront costs of innovative specialty drugs and the rest of the US healthcare system, and to articulate these in the context of the historic struggle over paying for innovation.

DISCUSSION

We describe 3 innovative financing models to manage expensive specialty drugs that will significantly reduce the direct, immediate cost burden of these drugs to public and private healthcare payers. The 3 financing models include high-cost drug mortgages, high-cost drugs reinsurance, and high-cost drug patient rebates. These models have been proved successful in other areas and should be adopted into healthcare to mitigate the high-cost of specialty drugs. We discuss the distribution of this burden over time and across the healthcare system, and we match the financial burden of medical innovations to the healthcare stakeholders who capture their overall value. All 3 models work within or replicate the current healthcare marketplace mechanisms for distributing immediate high-cost events across multiple at-risk stakeholders, and/or encouraging active participation by patients as consumers.

CONCLUSION

The adoption of these 3 models for the financing of high-cost drugs would ameliorate decades-long economic conflict in the healthcare system over the value of, and financial responsibility for, drug innovation.

Management of newer medications for attention-deficit/hyperactivity disorder in commercial health plans

PURPOSE

In the United States, many individuals with attention-deficit/hyperactivity disorder (ADHD) pay for their medications using private health insurance coverage. As in other drug classes, private insurers are actively seeking to influence use and costs, particularly for newer and costlier medications. The approaches that insurers use may have important effects on patients' access to medications. This article examines approaches (eg, copayments, prior authorization, and step therapy) that commercial health plans are using to manage newer medications used to treat ADHD and changes in approaches since 2003.

METHODS

Data are from a nationally representative survey of commercial health plans in 60 market areas regarding alcohol, drug abuse, and mental health services in 2010. Responses were obtained from 389 plans (89% response rate), reporting on 925 insurance products. For each of 6 branded ADHD medications, respondents were asked whether the plan covered the medication and, if so, on what copayment tier each medication was placed and whether it was subject to prior authorization or step therapy. Measures of management approach were constructed for each medication and for the group of medications. Bivariate and multivariate analyses were used to test for association of the management approach with various health plan characteristics.

FINDINGS

There was considerable variation across these 6 medications in how tightly they were managed by health plans, with newer medications being subject to more stringent management. The proportion of insurance products relying solely on copayment tiering to manage new ADHD medications appears to have decreased since 2003. Less than half of insurance products (43%) managed these 6 medications solely by use of tier 3 or 4 placement, and most of the remainder (48%) used other restrictions (with or without tier 3 or 4 placement). The average insurance product restricted access to at least 3 of the 6 brand-only medications examined, whether through copayment tier placement or other approaches. More ADHD medications were left unrestricted in health maintenance organization products than in preferred provider organization ones, products with internal or hybrid-internal contracts for behavioral health, those not contracting with pharmacy benefits managers, and those with for-profit ownership.

IMPLICATIONS

Many plans have supplemented copayment tiering with other approaches, such as prior authorization and step therapy, to influence use and decrease costs. It may be that plans have found copayments to be less effective in redirecting use in this medication class. The effect on clinical outcomes was not examined in this study but should be prioritized using other data sources.

Trends in patient cost sharing for clinical services used as quality indicators

BACKGROUND

Patient copayments for all medical services have increased dramatically. There are few data available regarding how copayments have changed for services commonly considered to be quality indicators.

OBJECTIVE

Describe the relative change in copayments for services used as quality indicators and interventions subject to programs to control utilization.

DESIGN

A large claims database was used to assess copayment changes from 2001 to 2006 for selected drug and non-drug services in patient cohorts with specific chronic diseases.

SUBJECTS

Approximately 5 million commercially-insured individuals enrolled in a variety of fee-for-service and capitated health plans.

MEASUREMENTS

Copayment trends were calculated as the change in the average amount paid per unit service from 2001 to 2006.

RESULTS

Out-of-pocket payments for services targeted by quality improvement initiatives increased substantially [>50%] and in a similar magnitude to interventions subject to programs to control their use. For prescription drugs, the trend was driven more by copayment increases for branded medications [$10 per prescription] than for generic drugs [$2 per prescription]. Copayments for non-drug preventive services rose modestly.

CONCLUSIONS

Benefit designers should consider reversing the trend of copayment increases for services considered to be indicators of high quality care.