During the last several years there has been a rapid increase in the use of patient-level payment limits (""""""""caps"""""""") to reduce costs for some outpatient health services in Medicaid. Very little information exists on the impact of these policies on the health status of specific sub-populations (e.g., the poor, the aged, and chronically-ill), and on the use of more intensive forms of inpatient and institutional care. Previous research by the project team showed that a prescription- drug payment cap markedly reduced utilization of several essential medications in Medicaid among a sample of 965 non- institutionalized and chronically ill patients in New Hampshire. This project will use time-series and survival analyses of 48 months of Medicaid claims data to measure patient-specific effects of the outpatient drug cap policy on physician visit rates, hospital admissions, institutionalization and deaths among 2000 chronically ill New Hampshire Medicaid recipients taking multiple medications. A comparison population of approximately 20,000 identically defined patients in New Jersey Medicaid, a state with no such caps, will be followed over the same time period. Raw data files currently in the possession of the investigators contain information on eligibility, demographics, medication use, physician visits, hospital admissions, and long-term care for the total Medicaid populations of both states from 1980-1983. Cohorts of pre-cap users of eight broad categories of essential drugs (e.g., cardiovascular and anti-diabetic medications) will be identified; analyses of unintended outcomes will be based on NJ vs. NH cohort comparisons, as well as intra-state comparisons of individuals with large reductions versus no reductions in drug use. Cost as well as health service utilization outcomes will be analyzed using actual reimbursement data. This research should provide valuable information on clinical and economic outcomes of patient-level reimbursement caps on outpatient care among high-risk populations. Findings will be relevant to future policy decisions whose goal is to contain health care costs without sacrificing quality of care.