EFFECT OF MEDICAID DRUG COPAYMENTS ON OUTCOMES AND COSTS

University Of Minnesota Twin Cities, Minneapolis MN

Investigators

Abstract

Do prescription drug copayments actually lead to higher health services utilization and costs for Medicaid beneficiaries? Prescription drug expenditures in state Medicaid programs have risen at rates far in excess of inflation during the past decade. Instituting copayments for prescription drugs has been a cost-containment strategy implemented by states, and studies suggest that beneficiary cost sharing has led to a decrease in prescription drug utilization. What is less clear is the effect of copayments on utilization of other "substitute" medical services, such as hospitalization, outpatient and physician services, and long-term care. It is also unclear if states are really saving money because the additional cost to Medicaid for these substitute medical services may exceed the drug cost savings from copayments. This study is designed to answer the following questions: * What is the impact of a drug copayment on prescription drug utilization for persons enrolled in Medicaid? * What is the association between a copayment for prescription drugs and the utilization of other medical services by Medicaid beneficiaries? * Are prescription drug copayments related to a net cost savings for a state's Medicaid program? This study will use two years of administrative data from the Health Care Financing Administration'S (HCFA's) State Medicaid Research Files and Medicare Files to evaluate the impact of drug copayments on Missouri and Minnesota Medicaid beneficiaries with congestive heart failure. Multivariate analytic techniques will be used to analyze the variation in drug and other health services utilization and expenditures. The study findings will help states assess the costs and benefits of a drug copayment policy in their Medicaid programs.