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The Role of Medicare's Inpatient CostSharing in Medicaid Entry

Objective: To isolate the effect of greater inpatient costsharing on Medicaid entry among Medicare beneficiaries.

Data Sources: Medicare administrative data (years 2007–2010) were linked to nursing home assessments and arealevel socioeconomic indicators.

Study Design: Medicare beneficiaries who are readmitted to a hospital must pay an additional deductible ($1,100 in 2010) if their readmission occurs more than 59 days following discharge. In a regression discontinuity analysis, we take advantage of this Medicare benefit feature to test whether beneficiaries with greater costsharing have higher rates of Medicaid enrollment.

Data Extraction Methods: We identified 221,248 Medicare beneficiaries with an initial hospital stay and a readmission 53–59 days later (no deductible) or 60–66 days later (charged a deductible).

Principal Findings: Among beneficiaries in lowsocioeconomic areas with two hospitalizations, those readmitted 60–66 days after discharge were 21 percent more likely to join Medicaid compared with those readmitted 53–59 days following their initial hospitalization (absolute difference in adjusted risk of Medicaid entry: 3.7 percent vs. 3.1 percent, p = .01).

Conclusions: Increasing Medicare costsharing requirements may promote Medicaid enrollment among lowincome beneficiaries. Potential savings from an increased costsharing in the Medicare program may be offset by increased Medicaid participation.

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