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Date
Jun
06
2006

The Impact of Cost-Sharing and Benefit Reductions in the Oregon Health Plan

Presenter:

Neal Wallace

Authors:

Neal Wallace, Kenneth McConnell, Charles Gallia

Chair: Richard Scheffler; Discussant: Tim Brown Tue June 6, 2006 10:45-12:15 Room 235

Rationale: In response to state budget shortfalls in 2003, the Oregon Health Plan imposed cost-sharing and eliminated some benefits for adult beneficiaries who were not part of the categorically eligible Medicaid population. Co-payments were imposed for inpatient care; emergency department use; hospital, clinic and individual practitioner ambulatory care; lab and x-ray services; and, prescription drugs. Coverage of specialty outpatient treatment for mental health and substance abuse, durable medical equipment and general medical supplies, eye care and dental services were eliminated. Limited experience and empirical evidence exists to assess the impact of these types of benefit changes on low-income individuals.

Objectives: This study estimates the impact of cost-sharing and benefit reductions on average monthly expenditures and rates of utilization per beneficiary, as well as average expenditures per service user, in total and by service type (inpatient, hospital outpatient, ambulatory professional, lab & radiology, emergency department and pharmaceuticals).

Methodology: The study uses a quasi-experimental design with a non-equivalent comparison group. Policy effects are identified as the difference in difference between non-categorically eligible adults affected by the policy change (known as “Standard” beneficiaries) and TANF eligible adults before and after policy implementation. FFS claims, MCO encounter data and monthly enrollment data for Oregon Health Plan beneficiaries were the primary data sources. Only services covered pre- and post- policy were analyzed. Expenditures per claim/encounter were calculated at the average “full” FFS payment rate during the study period (i.e. without reductions for co-pays, third party reimbursement or other adjustments). Individuals were included in the study sample if they were from 18-64 years old; had at least 6 months enrollment in each of two 12-month periods before and after the policy; and had at least 3 months enrollment in each of the two 6-month periods within the pre- and post-policy study periods. This yielded a study sample of 15,200 Standard and 7,540 TANF eligible subjects. Subjects were grouped into 94 primary care service areas (PCSAs). Average monthly expenditures, average expenditures per month with service use, and the average percentage of beneficiaries using service per month were calculated for the two eligibility groups, four 6-month study periods and 94 PCSAs yielding 752 aggregate observations. Fixed effects estimation is used to identify policy impacts. Expenditure changes are reported as percentage change from pre-policy levels.

Results: Average expenditures per beneficiary increased by 16% after cost-sharing and benefit reductions were imposed relative to the TANF control group. This was driven almost entirely by relative increases in inpatient care expenditures. Relative levels of expenditure were not different from the TANF controls for any of the other service categories. Use of ambulatory professional and lab/radiology services did decrease for the policy-affected group but expenditures per user rose at an equal rate.

Conclusions: The imposition of cost-sharing and benefit reductions for low-income adults in the Oregon Health Plan were found to raise expenditures per beneficiary and potentially shift treatment from ambulatory to inpatient settings. Expenditure increases were shared among consumers, providers and the state of Oregon due to the cost-sharing provisions.

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