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Health Services Research & Development

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2005 HSR&D National Meeting Abstract

1071 — The Effect of a Medication Copayment Increase on Veterans with Schizophrenia

Author List:
Grazier KL (University of Michigan)
Valenstein M (SMITREC)
Lantz PM (University of Michigan)

VA outpatient pharmacy costs currently total $3 billion, increasing 19% annually. In 2002, Congress implemented the Veterans Health Care Act; the ‘Millennium Bill’ raised medication copayments from $2 to $7 for lower priority veterans. Patients with schizophrenia are a particularly vulnerable population, chronically ill and costly. 40% are antipsychotic non-adherent, substantially increasing their risk for psychiatric admission and relapse. Medication costs represent another adherence obstacle, further exacerbating this multifaceted problem. Prior research documents that copayments limit utilization, yet often fail to address many potential ramifications. The Health Belief Model and Donabedian’s concept of benefits equity frame this examination into policy effects stemming from higher copayments.

Using data from the National Psychosis Registry, this quasi-experimental study (20-months Pre and Post copayment increase) employed time series models to observe changes in prescriptions, health services utilization and pharmacy costs between veterans subject to copayments (N=40,654) and a natural control group of exempt individuals (N=39,983). Analyses adjusted for relevant patient characteristics.

As hypothesized, total prescriptions were constrained in the Copayment group following the medication cost increase, while Exempt veterans continued to expand utilization. More conspicuously, refills for psychiatric drugs dropped substantially, nearly 25 percent. While outpatient visits were unaffected, the risk for psychiatric admission and total inpatient days increased slightly, particularly 10-20 months Post policy change. Pharmacy costs were similarly affected; factoring in additional copayment revenue, the VA would realize a net revenue gain of >$13 million annually from this sub-population alone. Significant covariates for greater utilization included male gender, ethnicity, age, substance abuse, and medical comorbidities.

These results suggest the new policy successfully reduced utilization and costs as intended, with perhaps only minimal clinical consequences to date. However, higher inpatient utilization as a ramification of lower cost-related adherence is troubling within an already high-risk population, especially considering the tremendous reduction in psychiatric drugs.

Along with other healthcare systems, the VA attempts to balance budgetary concerns with quality care provision. Benefit changes for veterans with debilitating conditions (e.g. schizophrenia) should be implemented cautiously. This is particularly true within a system responsible for providing care to a rapidly aging population during ongoing Medicare prescription debates.

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