Cost-sharing and prior authorization effects on Medicaid services in California: Part II: The providers' reactions.

Providers for California's Medical program were interviewed to determine their reaction to the copayment experiment. Private physicians, pharmacists, and nursing homes routinely collected the copayments and though it was not a particular hardship on the patients. Hospital outpatient departments often did not collect. Physicians both in hospitals and in private practice generally did not know which patients were copayers and hence copayment had no effect on their practice. Pharmacists reported some delay and some selectivity on the part of patients in the filling of their prescriptions. All providers felt as much more harassment and interference from the concurrent prior authorization requirements. This effect may have swamped copayment effects.

Cost-sharing and prior authorization effects on Medicaid services in California: part I. The beneficiaries' reactions.

In January 1972, California initiated a cost-sharing "experiment" as a means of containing rising costs of the Medicaid program. Beneficiaries who had some personal assets were required to pay a token amount for each doctor visit or prescription. This was expected to deter unnecessary services without affecting really needed care. An interview survey was made of beneficiaries continuously in copayment status throughout the 18 months of the experiment. Most beneficiaries had poor knowledge of the program, and tended to confuse copayment with the concurrent constraint of prior authorization for certain classes of service. The beneficiaries reported that the copayment was almost always collected, and most thought it had not affected their health care, but a significant 17 per cent throught it had reduced the care available to them, and these 17 per cent were for the most part in households with high medical need.

Copayments for ambulatory care: penny-wise and pound-foolish.

The California "copayment experiment" imposed a charge of $1 on certain Medicaid beneficiaries for the first two visits to a doctor and 50 cents for the first two drug prescriptions each month, effective January 1, 1972. Data on utilization rates were gathered for six months before this date and for 12 months after it. While other administrative requirements, like prior authorization of certain services, doubtless also played a part, it was found that, following the start of copayment, utilization of ambulatory doctor's office visits and other services associated with them showed a decline, relative to that of the non-copayment cohort. After a brief lag, however, hospitalization rates in the copay cohort rose to levels higher than those of the non-copayment cohort-more than offsetting the savings to the state from the reduction of ambulatory service use rates. Due presumably to the neglect of early medical care because of the inhibiting effect of the copayments, these higher use rates of costly hospitalizations suggest that financial deterrents on access to ambulatory service by poor people are penny-wise and pound-foolish, not to mention their effects on health and well-being.