OBJECTIVES To deter non-essential visits and encourage initial contact in primary care, Taiwan's National Health Insurance's (NHI) implemented a differential co-payment policy on July 15, 2005. A previous study has examined the impact of this policy on medical utilization and total cost to NHI using a regional reimbursement dataset. This study aimed to explore the impact of this policy on outpatient co-payment and prescription patterns across different co-payment groups and tiers of medical facilities. METHODS A segmented time-series analysis on regional weekly outpatient medical claims (January 2004 to July 2006). Outcome variables for co-payment and prescription patterns were stratified by tiers of medical facilities and co-payment groups. Analysis used the auto-regressive integrated moving-average model in STATA 9.0. RESULTS Despite the decrease in outpatient visits, the overall co-payment to patients increased by 1.2% after policy implementation and also increased in most medical facilities (4.8% to 17.9%). Number of general prescriptions decreased across different medical facilities; the average cost and duration per general prescription decreased in medical centers and regional hospitals. The number of continuous prescriptions did not change, except for non-significant decreases in medical centers and regional hospitals. There was an increase in the number of continuous prescriptions dispensed in pharmacies (7.0%). CONCLUSIONS The police significantly increased patients' out-of-pocket payment for outpatient visits. In response to the policy, physicians might prescribe more expensive drugs and extend prescription duration to help patients get the most benefit from the co-payment, and physician in medical centers are more likely to prescribe continuous prescriptions for patients with stable chronic diseases. Further research needs to identify vulnerable subgroups in obtaining necessary treatment, and to explore the impacts of cost-saving strategies on patients' quality of medical care.