Impact Of Decreasing Copayments OnMedication AdherenceWithin A Disease Management Environment Value-based cost sharing can increase patients ’ adherence to important medications

This paper estimates the effects of a large employer’s value-based insurance initiative designed to improve adherence to recommended treatment regimens. The intervention reduced copayments for five chronic medication classes in the context of a disease management (DM) program. Compared to a control employer that used the same DM program, adherence to medications in the value-based intervention increased for four of five medication classes, reducing nonadherence by 7–14 percent. The results demonstrate the potential for copayment reductions for highly valued services to increase medication adherence above the effects of existing DM programs. [Health Affairs 27, no. 1 (2008): 103–112; 10.1377/hlthaff.27.1.103] I n 2 0 0 2 p i t n e y b o w e s r e d u c e d c o pay m e n t r at e s for several classes of prescription drugs that are important in the treatment of chronic disease. This intervention represents an early example of a Value-Based Insurance Design (VBID) because it connects patients’ cost sharing to the value of health care services. This initiative received considerable attention in the employer and policy communities. Although Pitney Bowes reported favorable clinical results and cost D r u g C o p a y s H E A L T H A F F A I R S ~ V o l u m e 2 7 , N u m b e r 1 1 0 3 DOI 10.1377/hlthaff.27.1.103 ©2008 Project HOPE–The People-to-People Health Foundation, Inc. Michael Chernew (chernew@hcp.med.harvard.edu) is a professor of health care policy at Harvard Medical School in Boston, Massachusetts. Mayur Shah is director, Health Economics, at ActiveHealth Management in New York City; Arnold Wegh is a SAS programmer/informatics analyst there; Stephen Rosenberg is senior vice president, Outcomes Research; and Iver Juster is senior vice president, Health Informatics. Allison Rosen is an assistant professor of internal medicine and of health management and policy at the University of Michigan and a staff physician at the Ann Arbor Veterans Affairs Medical Center. Michael Sokol is medical director, Health Management Innovations (HMI), at GlaxoSmithKline in Montvale, New Jersey. Kristina Yu-Isenberg is senior manager, HMI, at GlaxoSmithKline in Research Triangle Park, North Carolina. Mark Fendrick is a professor in the Department of Health Management and Policy, School of Public Health, University of Michigan. savings, the analysis was conducted without an external control, and it is unclear whether or not the experience is replicable in other settings. In this paper we evaluate a similar VBID initiative undertaken by a different employer. In addition to providing insight regarding the generalizability of the Pitney Bowes results, we make two contributions to the literature on the effects of copayments on utilization. First, the body of evidence on the effects of raising copays does not take into account other concurrently implemented interventions that could have either a direct or an indirect effect on medication adherence. For example, many employers and health plans have adopted disease management (DM) programs designed to improve patients’ compliance with recommended treatments. The presence of these programs, which are typically unobserved in copay studies, may confound existing studies if adoption of DM is related to copay changes. Relative to other literature that examines copay rate changes, the presence of a common DM program across treatment and control firms in this study allows us to better control the information environment. We cannot predict how DM will affect the impact of copay changes because DM programs influence which patients are not complying with treatment regimens at baseline and because DM programs change patients’ awareness, which could influence their response to copays. Moreover, because we do not observe the prevalence of DM in other studies of copay effects, we cannot ascertain how controlling for DM will influence findings. Nevertheless, given the popularity of these programs and their potential to confound the results from other copay studies, it is important to assess the responsiveness of adherence to copay changes, controlling for the presence of DM programs. A second contribution of this work is to examine the effects of copayment rates in a setting in which copays are reduced, as opposed to increased. The literature examining the effects of copay changes on utilization is very large and has been summarized elsewhere. Most of the literature either compares adherence across firms with different copay rates or examines the effects of copay increases. However, because of concerns about the adverse clinical effects of high copayment rates, several large employers have reduced these rates for selected high-value services, and there has been limited evaluation of these copay declines. There are several reasons why we might expect the impact of copay-lowering schemes to differ from copay-raising initiatives. Specifically, with the latter, employees are losing something by being forced to pay more. With the former, they are being given something (lower copays). Although neoclassical economics might suggest similar but opposite effects associated with increases versus decreases in copay rates, considerable research in behavioral economics suggests that the results might not be symmetrical because of employee anchor points and, perhaps, endowment effects. 1 0 4 J a n u a r y / F e b r u a r y 2 0 0 8 B e n e f i t D e s i g n