The effect of Medicaid prescription drug copayment policy on health outcomes and expenditures in a dually enrolled dialysis population

Prescription drug expenditures in state Medicaid programs have risen at rates far exceeding inflation during the past decade. Instituting copayments for Medicaid prescription drugs has been a cost-containment strategy implemented by states, and studies have shown that beneficiary cost sharing has led to a decrease in prescription drug utilization. What is unclear is the effect of copayments on utilization and expenditures for other medical services, particularly for patients with chronic illness. Failure to fill drug prescriptions due to copayments may lead to acute health incidents that require subsequent hospitalization, which is free to the beneficiary but less cost-effective than drug therapy. This dissertation examines the relationship between Medicaid drug copayment policy and resource utilization, mortality, and medical expenditures in patients with end-stage renal disease (ESRD).The sample includes 13,756 dialysis patients from 30 states who were continuously dually enrolled in fee-for-service Medicare and Medicaid during 1995. Demographic data were drawn from the Medicare Enrollment Database and the ESRD Patient Profile utilization data came from Medicare claims. Of the 13,756 patients, 1,251 resided in states with a sliding scale for prescription drug copayments (e.g., Contrary to expectations, regression results showed that patients living in states with sliding scale drug copayments had fewer hospital days, lower inpatient expenditures, and lower total Medicare expenditures than patients who did not face drug copayments. Flat rate copayments were negatively associated with hospital stays and hospital days. Copayment policy was not significantly related to ER visits or mortality. Illness severity measures, demographic characteristics, and other Medicaid program characteristics such as prescription limits and closed formularies were strong predictors of resource utilization and medical expenditures.The data failed to support the study hypothesis that Medicaid prescription drug cost sharing has a deleterious effect on persons with chronic illness. There is no evidence that nominal cost sharing for prescription drugs leads to higher resource utilization, mortality, or medical expenditures in low-income dialysis patients.