Impact of Restrictive State Policies
on Utilization and Expenditures in
the Medicaid Program
Roberto Vargas, MD, MPH1,2
Carole Gresenz, PhD2
Jessie Riposo, MS2
Jeannette Rogowski, PhD3
José Escarce, MD, PhD1,2
1.Division of General Internal Medicine and Health Services Research, David Geffen
School of Medicine at UCLA
2.RAND Health
3.University of Medicine and Dentistry New Jersey, School of Public Health
Background

For state Medicaid programs, the Deficit
Reduction Act eliminated

Need to offer all benefits to all enrollees

Requirement of states to get federal waivers
before limiting benefits or imposing co-pays
and cost sharing

Mandatory periods of public comment prior to
implementing such changes
Restrictive Policies and Medicaid

Restrictive drug policies have been
associated with lower rates of prescription
filling and more intensive use of acute care,
nursing homes and higher overall costs

Cost sharing and limits on physician visits in
Medicaid have varying effects on physician
visits rates but no significant impact on
overall costs.
Aims

To examine the effects of restrictive policies
on use of care by a nationally representative
sample of Medicaid enrollees over a six-year
period
Data Sources

State Medicaid Summaries from 1997-2002

Summaries of state plan benefits including
scope of medical care (Limits on visits and
services and co-pays)

The Medical Expenditure Panel Survey
(MEPS), 1997-2002
Study Sample

Adults 18-64 with at least one full calendar
year of data in MEPS

We excluded:

Patients who were pregnant

Had additional forms of insurance

Were enrolled inn Managed care or HMO’s
Study Design

Cross sectional, yearly analytic files of respondents

Multivariate regression models and simulations

Estimate the impact of state policy variation

Controlling for individual characteristics, health
care market factors, and community contextual
factors
Outcomes


Utilization:

Outpatient office-based physician visits

Outpatient office visits (non-physician and physician)

Emergency room visits

Inpatient acute care hospital admissions
Expenditures:

Prescription drug expenditures

Total healthcare expenditures excluding vision and
dental services
Key Independent Variables:
Medicaid Restrictive Policies

Any physician visit co-pay

Any emergency room visit co-pay

Any prescription drug co-pay

Inpatient admission co-pay for stay of greater
than $21

Any inpatient co-pay charged daily

Office-based physician visit limit

Less than or equal to three prescription limit per
month
Analysis


Regression Models:

Office-based visits: Negative binomial model

Any emergency room: Logit model

Any inpatient night: Logit model

Expenditures: selected Two-part models
Simulations:

We simulated values for the utilization and
expenditures weighted for the MEPS sampling design
Descriptive Data:
Individual Characteristics
Individual-Level Variables
Female
64%
Non- Hispanic Black
28%
Hispanic
21%
Other Non-White
5%
Non-Hispanic White
46%
SSI Recipient
41%
Income<poverty
59%
Less than high school
48%
Descriptive Data:
Outcomes
Utilization and Expenditures
Mean (Std Err)/
%
# Office-based physician visits
5.70 (0.33)
# Total office-based visits
Any emergency room visit %
8.03 (0.69)
24%
Any inpatient admission %
14%
Prescription expenditures
$1098.28 (56.92)
Total medical expenditures
$4575.92 (320.53)
Descriptive Data:
Restrictive Medicaid Policies
Policy
1997
Any Physician Visit Co pay
18
Limit on number of Physician Visits
17
Any Emergency Room Co pay
4
Prescription Co pay
29
Limit on number of prescriptions per month
11
Inpatient Admissions Co pay
14
Inpatient Daily Co pay
5
Regression Results

Visit limit policies had no significant impact on
visits that included non-physician care,
emergency room visits, or inpatient hospital stays

Limiting prescriptions to three per month had no
significant effect on any of our utilization or
expenditure measures

Per day inpatient co-pay was not associated with
hospitalization rates or expenditures
Regression Results

Co-pays for physician visits

Lower Any ER visit rate (20% compared to
25%; p<0.10)

Higher rates of inpatient hospitalization (18%
compared to 13%; p<0.05)

Higher average total expenditures ($5,431
compared to $4,271; p<0.05)
Regression Results

Inpatient admission co-pays of greater than $21


Fewer Admissions (9% compared to 15%;
p<0.10)
ER visit co-pays

Lower total expenditures ($3,719 compared to
$4,665; p<0.01)
Regression Results

Prescription drug co-pays:


Lower expenditures ($4,145 compared to $5,088;
p<0.05)
Prescription drug co-pays:

Significantly lower average number of physician
office-based visits (5.58 compared to 6.70;
p<0.05)
Conclusions

Some co-pays were associated with lower
expenditures and utilization

Visit limit policies, no significant impact on either
outcomes of interest

Certain restrictive policies are associated with
unintended consequences such as the association
of physician visit co-pays with higher
hospitalization rates and costs
Implications

Efforts to reduce costs through restrictive policies
have varying effects on utilization and
expenditures

As states consider greater use of restrictive policies
there is a need to monitor the impact of restrictive
policies for unintended consequences
Supplemental Slides
Results
Any Prescription
Drug Expenditure
(Spec 1)
Mean SE
1109.85 (53.88)
1158.08 (59.87)
Simulation Physician Office- Physician and NonSimulation Variable
Value
Based Visits Physician Visits
Any ER Visit
Mean Std Err Mean Std Err Mean Std Err
Any Office-Based Doctors Visit Limit 0
6.29
(0.37) 8.59
(0.62)
0.23
(0.02)
1
6.00
(0.48) 8.35
(0.84)
0.24
(0.02)
Any Inpatient
Hospital Night
Mean Std Err
0.15
(0.01)
0.13
(0.01)
Any Physician Visit Co pay
0
1
6.08
6.38
(0.36)
(0.59)
8.68
8.07
(0.68)
(0.84)
0.25*
0.20*
(0.02)
(0.02)
0.13**
0.18**
(0.01) 1115.04 (49.85) 4270.69** (267.43)
(0.02) 1152.68 (87.88) 5430.74** (546.01)
Any ER visit Co pay
0
1
6.24
4.88
(0.34)
(0.71)
8.52
7.94
(0.62)
(1.39)
0.23
0.24
(0.01)
(0.05)
0.14
0.14
(0.01) 1120.45 (39.32) 4664.96*
(0.01) 1254.47 (146.76) 3718.50*
Any Prescription Co pay
0
1
6.70**
5.58**
(0.47)
(0.37)
8.75
8.18
(0.75)
(0.69)
0.22
0.25
(0.02)
(0.02)
0.15
0.14
(0.01) 1108.34 (57.79) 5087.92** (397.68)
(0.01) 1151.77 (62.87) 4144.60** (303.82)
Limit of Three Rx per Month
0
1
6.15
7.15
(0.33)
(1.47)
8.51
7.56
(0.61)
(1.53)
0.23
0.29
(0.01)
(0.09)
0.14
0.15
(0.01) 1126.5 (37.46) 4589.28
(0.05) 1364.48 (432.14) 5565.32
(256.60)
(2042.71)
Any Inpatient Admission Co pay
greater than $21 Per Stay
0
1
-
0.15*
0.09
(0.01)
(0.02)
(261.84)
(726.14)
*p<0.10; **p<0.05
-
-
-
Any Expenditure
(Spec 1)
Mean
SE
4367.27 (314.30)
4953.56 (472.73)
4671.56
3778.01
(255.82)
(686.33)
States Level Restrictive Policies
Policy Level Variables
1997
1998
1999
Any Physician Visit Co pay
18
18
18
17
17
19
Limit on number of Physician
Visits
17
17
17
17
17
17
Physician Visit and Co pay
Restriction
7
7
7
8
7
7
*Data missing for one state
2000 2001
*
2002
State Level ER Restrictive Policies
Policy Level Variables
1997
1998
1999
2000
*
2001
2002
Any Emergency Room Co pay
4
4
4
4
4
4
Limit on number of Emergency
Room Visits
4
4
4
4
4
4
Emergency Room Co pay and Visit
Restriction
1
1
1
1
1
1
*Data missing for one state
State Level Inpatient Admission Policies
Policy Level Variables
1997
1998
1999
2000
*
2001
2002
Inpatient Admissions Co pay
14
16
16
15
15
15
Inpatient Daily Co pay
5
5
5
5
5
5
Inpatient Stay Limit
12
12
12
12
10
10
*Data missing for one state
State Level Prescription Drug Policies
Policy Level Variables
1997
1998
1999
Prescription Co pay
29
29
30
31
30
31
Limit on number of
prescriptions per month
11
12
12
12
10
10
Both Rx Co pay and limit
5
6
6
7
5
5
*Data missing for one state
2000* 2001
2002