Association for Public Policy Analysis & Management

Many studies have sought to determine how patients alter their utilization of healthcare services in response to out-of-pocket costs. Empirical estimates in the early literature ranged from highly inelastic to elastic, thus providing mixed evidence. Given the changing policy environment and focus on patient cost-sharing in recent Medicaid waivers and state proposals (including in Virginia) the need to further study the effect of different cost-sharing policies on health care utilization remains. This study aims to identify the effects of cost-sharing on healthcare utilization for low-income families enrolled in a unique coverage program offered to the indigenous population at a large safety-net health care setting. The program, called Virginia Coordinated Care for the Uninsured (VCC), provides affordable health care for uninsured people living in the Greater Richmond Metro and the Tri-Cities areas. VCC, an indigent care program provides coordinated care to the eligible uninsured on the basis of financial screening and residence zip code. A number of elements in VCC mirror managed care plans; most notably a medical home, a network of providers, care managers, and the means for promoting and tracking continuity of care. Historically (2000-2011), the program served individuals under 200% FPL and transferred some costs to its members in the form of cost-sharing components based on financial screening of the enrollees. Thus, enrollees with family income below 100% FPL had no cost-sharing responsibilities and included more than two-thirds of the VCC members.  For patients between 101% and 200% FPL, cost sharing was based on a sliding scale that ranged from 5% to 70% copayments across all services (i.e. outpatient, emergency department (ED) and inpatient). The program’s features of breaks in copayments and the coverage eligibility tiers offer a unique opportunity to study the effect of cost-sharing on healthcare utilization patterns.

Using administrative enrollment and claims data for provider and hospital services, we will examine various measures of utilization such as number and type of outpatient visits, urgency of ED use and inpatient services for ambulatory-case sensitive conditions at the per member per year level and compare utilization patterns across the cost-sharing tiers. The study will contribute to the nascent literature on the impacts of childless adult coverage in several ways. First, assess the health seeking behaviors and take-up among uninsured individuals who are newly covered by a safety-net indigent program. Second, comparing utilization across cost-sharing levels we will estimate the effect of cost-sharing requirements in the low-income population. Third, the population enrolled in the program is low-income, uninsured, urban and chronically ill; which is a sizable segment of the uninsured population to enroll under the Medicaid expansions. Finally, as states consider strategies for identifying service delivery systems under Medicaid to improve care coordination, the findings from this study will provide evidence on access to care from a community-based program that uses managed care principles.