How price responsive is the demand for specialty care?

OBJECTIVES: Outpatient visit co-payments have increased in recent years. We estimate the patient response to a price change for specialty care, based on a co-payment increase from $15 to $50 per visit for veterans with hypertension. DESIGN, SETTING, AND PATIENTS: A retrospective cohort of veterans required to pay co-payments was compared with veterans exempt from co-payments whose nonequivalence was reduced via propensity score matching. Specialty care expenditures in 2000-2003 were estimated via a two-part mixed model to account for the correlation of the use and level outcomes over time, and results from this correlated two-part model were compared with an uncorrelated two-part model and a correlated random intercept two-part mixed model. RESULTS: A $35 specialty visit co-payment increase had no impact on the likelihood of seeking specialty care but induced lower specialty expenditures over time among users who were required to pay co-payments. The log ratio of price responsiveness (semi-elasticity) for specialty care increased from -0.25 to -0.31 after the co-payment increase. Estimates were similar across the three models. CONCLUSION: A significant increase in specialty visit co-payments reduced specialty expenditures among patients obtaining medications at the Veterans Affairs medical centers. Longitudinal expenditure analysis may be improved using recent advances in two-part model methods.