No. 26: Increased Ambulatory Care Copayments and Hospitalizations Among the Elderly

Amal N. Trivedi, Husein Moloo and Vincent Mor. The New England Journal of Medicine 362(4): 320-328, 2010.


User fees, extra charges, copayments and the like, resembling zombies which refuse to die, continually re-emerge as tools meant to curb unnecessary care, raise more revenue or, simply, make “consumers” more conscious of their health care transactions. Regardless of any worthiness of these objectives, the adverse consequences of cost-sharing mechanisms have long been known, but prompt an occasional reminder. This month’s e-Rounds examines recent research on copayments for the elderly in ambulatory care settings, taking into account both cost and health consequences.

Economic theory and empirical evidence demonstrate that patients will use fewer health services when they have to pay more for them. Increase the copayment and reduce the visits. The problem is, and for many reasons, patients may be indiscriminately deterred from both unnecessary care and necessary care. In some cases, delaying care may actually increase cost or worsen health outcomes. Delay in early interventions that might have been delivered in outpatient settings may, instead, result in more acute, and more costly inpatient care later on. To examine this issue, this study evaluated the effect of increasing copayments for ambulatory care on the use of acute care in hospitals, in a large nationally representative cohort of Medicare patients enrolled in managed-care plans.


Individual-level health care data and monthly information on benefits and cost-sharing were obtained from the Centers for Medicare and Medicaid Services for the years 2001-2006, including 172 Medicare plans with at least one year of Medicare participation. An analytic model was constructed to estimate the mean within-plan effect of increased copayments for ambulatory care. In the study period, 18 plans raised copayments for ambulatory care (cases) and were matched to 18 plans which did not (controls), based on census region, model type, and tax status. The final analytic sample included 1,522,067 observations in 899,060 enrollees between 2001 and 2006. Comparisons were made of annual in-patient admissions, annual in-patient days, and probability of using in-patient care. Mental health cases were excluded. Analysis was restricted to enrollees of at least nine months, who did not die during the year before the copayments increased. National trends in the Medicare managed-care program were also assessed for all plans with two or more years of participation in Medicare. This analysis was used to show any similarities in the trends and utilization between the national sample and controls.


Enrollees in plans which raised copayments were more likely to be black, of lower socioeconomic status and lesser educational attainment. Copayments increased by 95% for primary care visits and 74% for specialist visits, amounting to actual increases of $5-10 and $5-15 for primary care and specialty visits, respectively. In these plans, annual ambulatory visits decreased by 19.8 per 100 enrollees. As compared to controls, plans which increased co-payments had significant increases in annual in-patient days, annual patient admissions, and the probability of any use of in-patient care. The effects of increased cost-sharing on utilization of ambulatory care were accentuated in those with low income and poor education, as well as for diabetes, hypertension and myocardial infarction.


Enrollees were not randomly assigned. Hence, the enrollees in plans subjected to increased copayments may have been inherently different and more likely to require hospitalization. No information was collected on diagnoses, procedures, or actual costs. Moreover, the study selected a small number of plans over a short duration, and results may have been different with a larger cohort over a longer period.


Medicare plans that increased copayments had the expected reduction in the number of out-patient visits, but this was offset by an increase in hospital admissions, hospital days, and proportion of enrollees using in-patient care. The authors estimated that for every 100 elderly patients experiencing the cost-sharing increases, there were 20 fewer ambulatory visits but, at the same time, two additional hospital admissions and 13 additional in-patient days, in the year following the increase. Even assuming a maximum number of ambulatory visits at twice the cost and a minimal number of in-patient admissions, additional expenditures for hospital care potentially exceeded any savings from co-payment increases by a factor of nearly two.

The same adverse consequences from cost-sharing approaches have been previously shown in different settings and manners. Notwithstanding limitations, this study is well done and the findings are worrisome if cost-sharing is erroneously being promoted as a cost saving measure. It is readily apparent that even small increases in copayments deter some patients from seeking timely medical attention and, in the long run, some patients experience poorer health at higher overall system costs. This is precisely opposite to what cost-sharing approaches attempt to achieve. This new evidence adds to the body of literature that argues against patient cost-sharing at the point of service as a mechanism for controlling health care system costs.

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