Effect of rising copays in Medicare managed care plans

A new study on rising copays in Medicare managed care plans has found that the result seems to show that patients end up making fewer outpatient appointments and more often end up in the hospital and for a long stay. More info in the Boston.com article below

Rising copays for elderly patients linked to more time in the hospital
Boston.com Article, Posted by Elizabeth Cooney January 27, 2010 06:10 PM

Faced with rising copayments, elderly people visited their doctors less but ended up in the hospital more often and for longer stays, according to a new study assessing the impact of cost-sharing both on patients’ health and their health plans’ bottom line.

Writing in this week’s New England Journal of Medicine, lead author Dr. Amal Trivedi and his colleagues from Alpert Medical School of Brown University describe their analysis of nearly 900,000 people over 65 who were enrolled in 36 Medicare managed care plans from 2001 through 2006. Half the plans bumped up copays for outpatient care, nearly doubling the cost of primary care visits to an average of $14.38, and increasing the cost of specialty care visits by 74 percent, to an average of $22.05. Prescription drug coverage did not change. In the other 18 health plans, copays stayed the same, at an average $8.33 and $11.38.

Over the six years, outpatient visits increased among both groups, but the increase was smaller in the group with copayment hikes. Hospital admissions and days in the hospital rose significantly for patients with copay increases. The authors estimate that for every 100 elderly patients whose copays increased, there would be 20 fewer outpatient visits but two more hospital admissions and about 13 additional days in the hospital in one year compared to before the change. While copays would generate an extra $7,150 in revenue for every 100 patients, the authors calculate it would cost the plans an additional $24,000 in hospital costs in one year.

“Elderly patients did cut back on outpatient visits, but were much more likely to require expensive acute hospital care,” Trivedi said in an interview. A general internist at the Providence VA Medical Center, he said chronic conditions such as high blood pressure and diabetes that are common among the elderly require consistent, continuing care to avoid serious complications.
“The main policy implication from our study is that increasing outpatient copayments among the elderly is probably a lose-lose proposition for most Medicare health plans in that it’s likely to increase total health care spending and adversely impact health for elderly pats,” he said.

Dating back to the 1970s, there has been a general consensus that asking patients to pay more for their doctors’ visits will cut down on costs without harming health. But the influential Rand study that was the foundation for this assumption did not include elderly patients, Trivedi and his co-authors point out.

“It excluded the elderly, an important group to study because they use more health services, they have worse health, they spend more out of pocket on health care, and they generally have lower fixed income so they may be a lot more sensitive to the increase in copayments,” Trivedi said. “That’s what motivated our study.”

Dr. Steffie Woolhandler, a Cambridge Health Alliance internist and Harvard Medical School professor, noted that many elderly people in the study left their Medicare managed care plans when copays went up. She was not involved in the study.

“The health plans ended up with a healthier group of patients by and large, and even so, among the people who remained there was an increase in the numbers of hospitalizations,” she said. “The sickest patients feel they have to go back to traditional Medicare where taxpayers pay for sickest group of patients.”

Both Trivedi and Woolhandler said the study has implications for the current debate about overhauling the US health care system.

“Increasing copayments for elderly enrollees is likely to be a self-defeating cost-containment strategy and I think Medicare plans should seriously consider reducing the required copayment to see an outpatient physicians, particularly for elderly enrollees with low income and chronic disease,” Trivedi said.

Woolhandler said current cost-sharing models are flawed.

“A lot of the coverage under the Democrats’ bill and the new coverage in Massachusetts came with high copays and deductibles,” she said. “I think this is relevant to the policy debate. High copays and high deductibles are really bad for the health of chronically ill people.”

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