WEDNESDAY, Jan. 27, 2010 (HealthDay News) -- Boosting co-pays for doctor visits and other outpatient care reduces seniors' use of those services, but it also may have the unintended consequence of sharply increasing hospitalizations, a new study suggests.
That money-saving strategy could end up inflating overall health-care spending and put vulnerable elderly at risk of skimping on needed care, the study authors suggest in a paper published in the Jan. 28 issue of the New England Journal of Medicine.
"From our perspective, it looks like increasing ambulatory-care co-payments for elderly patients is a counterproductive cost-containment strategy," said study author Dr. Amal N. Trivedi, an assistant professor of community health at the Alpert Medical School of Brown University in Providence, R.I. "It's a lose-lose proposition for most health plans because our study suggests it results in more health-care spending, and it's likely to harm the health of enrollees."
The study, involving nearly 900,000 seniors in 36 Medicare managed-care plans, is one of the first large, national examinations of the consequences of raising seniors' co-payments for outpatient services, the authors said.
The new findings are consistent with research on cost-sharing for prescription drugs, which shows that failing to consider the value of the medication or a person's medical and economic status can harm health, the research team noted.
Marsha Gold, a senior fellow at Mathematica Policy Research Inc. in Washington, D.C., said the effect on inpatient care shown in the study "seems a little high." But she agreed that appropriate use of health-care services is always a concern as cost-sharing goes up.
"When you're putting cost-sharing requirements on patients, you need to be aware of the different kinds of effects that it can have, both positive and negative," she said.
From a sample of 172 Medicare managed-care plans, Trivedi and colleagues identified 18 plans that raised outpatient co-payments between December 2001 and January 2006. Eighteen plans that made no changes in co-payments served as controls.
In Medicare plans that raised co-payments, the average amount seniors had to shell out nearly doubled, to $14.38 from $7.38 for primary care and to $22.05 from $12.66 for specialty care. In control plans, the average co-payment for primary and specialty care held steady at $8.33 and $11.38, respectively.
Medicare managed-care plans that increased co-payments had 19.8 fewer annual outpatient visits per 100 enrollees in the year after the increase, compared with plans that made no changes.
However, plans that hiked co-payments also had 2.2 additional annual hospital admissions and 13.4 more annual inpatient days per 100 enrollees, and the percentage of hospitalized enrolled increased by 0.7 percentage points.
Use of inpatient care was even greater for low-income and little-educated enrollees, blacks and seniors with hypertension, diabetes or a history of heart attack.
Trivedi said the concern is that people with these medical conditions may not be properly managed if higher co-payments are discouraging them from obtaining treatment in the outpatient setting.
"Our study suggests that health plans should refrain from increasing co-payments among the elderly and perhaps give some serious thought to reducing them, particularly for enrollees with chronic disease and low income," he said.
The authors estimate that a Medicare plan might save $7,150 per 100 enrollees in the short-term by boosting outpatient co-payments, but inpatient spending would swell by $24,000 per 100 enrollees in the year after the co-payment increase.
Gold urges seniors to get help understanding the various Medicare options available to them and weighing their total financial risk, including the premium and out-of-pocket cost-sharing. "It's worth stepping back and looking at the big picture," she said.
Learn more about Medicare's health plan options at Medicare.gov.