Evaluation of the ESRD managed care demonstration operations

Individuals with end stage renal disease (ESRD), most of whom are insured by Medicare, are generally prohibited from enrolling in Medicare managed care plans (MCPs). CMS offered ESRD patients the opportunity to participate in an ESRD managed care demonstration mandated by Congress. The demonstration tested whether managed care systems would be of interest to ESRD patients and whether these approaches would be operationally feasible and efficient for treating ESRD patients. This article examines the structure, implementation, and operational outcomes of the three demonstration sites, focusing on: the structure of these managed care programs for ESRD patients, requirements needed to attract and enroll patients, and the challenges of introducing managed care programs in the ESRD arena.     

Patient selection in the ESRD managed care demonstration

The Centers for Medicare & Medicaid Service's (CMS') end stage renal disease (ESRD) managed care demonstration offered an opportunity to assess patient selection among a chronically ill and inherently costly population. Patient selection refers to the phenomenon whereby those Medicare beneficiaries who choose to enroll or stay in health maintenance organizations (HMOs) are, on average, younger, healthier, and less costly to treat than beneficiaries who remain in the traditional Medicare fee-for-service (FFS) sector. The results presented in this article show that enrollees into the demonstration were generally younger and healthier than a representative group of comparison patients from the same geographic areas.     

Risk-adjustment system for the Medicare capitated ESRD program

Medicare is the principal payer for medical services for those in the U.S. population suffering from end-stage renal disease (ESRD). By law, beneficiaries diagnosed with ESRD may not subsequently enroll in Medicare Advantage (MA) plans, however, the potential benefits of managed care for this population have stimulated interest in changing the law and developing demonstration plans. We describe a new risk-adjustment system developed for Medicare to pay for ESRD beneficiaries in managed care plans. The model improves on current payment methodology by adjusting payments for treatment status and comorbidities.     

Preventive Services in a Medicare Managed Care Environment

The results of a four year demonstration project of preventive services for Medicare managed care enrollees suggest that health promotion programs can impact health behaviors and outcomes. The study provided selected preventive services to 1,800 Medicare enrollees in a managed care environment. Participants were randomly assigned to control and experimental groups with the experimental group receiving an intervention service package and the control group usual care. The results included enhanced health behavior practices, lower depression, and higher immunization rates among those individuals in the experimental group. This study suggests that selected preventive services can be provided in a managed care environment to Medicare enrollees with likely positive health status and utilization outcomes.Graduate School of Public Health, College of Health and Human Services, San Diego State University, San Diego, CA 92182-4162     

Social Health Maintenance Organizations: assessing their initial experience.

The Social/Health Maintenance Organization (S/HMO) is a four-site national demonstration. This program combines Medicare Part A and B coverage, with various extended and chronic care benefits, into an integrated health plan. The provision of these services extends both the traditional roles of HMOs and that of long-term care community-service case management systems. During the initial 30 months of operation the four S/HMOs shared financial risk with the Health Care Financing Administration. This article reports on this developmental period. During this phase the S/HMOs had lower-than-expected enrollment levels due in part to market competition, underfunding of marketing efforts, the limited geographic area served, and an inability to differentiate the S/HMO product from that of other Medicare HMOs. The S/HMOs were allowed to conduct health screening of applicants prior to enrolling them. The number of nursing home-certifiable enrollees was controlled through this mechanism, but waiting lists were never very long. Persons joining S/HMOs and other Medicare HMOs during this period were generally aware of the alternatives available. S/HMO enrollees favored the more extensive benefits; HMO enrollees considerations of cost. The S/HMOs compare both newly formed HMOs and established HMOs. On the basis of administrator cost, it is more efficient to add chronic care benefits to an HMO than to add an HMO component to a community care provider. All plans had expenses greater than their revenues during the start-up period, but they were generally able to keep service expenditures within planned levels.     

What are Medicare managed care plans doing to measure and improve quality of care?

To explore managed care plans' efforts to assess and improve quality of care for Medicare beneficiaries, the authors surveyed managed care plans with risk contracts for Medicare beneficiaries in 20 large metropolitan areas in January 1998. The survey inquired about: (1) the health plans' efforts to assess and improve quality of care for specific underuse, overuse, and misuse problems; (2) how the health plans assessed functional status of enrollees, and (3) the quality improvement program they believed had the greatest impact on the health of enrollees. The managed care plans reported a heterogeneous mix of quality improvement activities ranging from poorly developed to very sophisticated. The vast majority of the more sophisticated programs addressed problems with underuse of services rather than overuse or misuse.     

Characteristics of health plans that treat psychiatric patients.

Nationally representative data regarding the organizational, financial, and procedural features of health plans in which psychiatric patients receive treatment indicate that fewer privately insured, Medicaid, and Medicare managed care enrollees receive care from a psychiatrist than is true for "nonmanaged" enrollees. Financial considerations were reported to adversely affect treatment for one-third of all patients. Although utilization management techniques and financial/resource constraints commonly applied to patients in both managed and nonmanaged plans, performance-based incentives were rare in nonmanaged plans. The traditional health plan categories provide limited information to identify salient plan characteristics and guide policy decisions regarding the provision of care.     

Does managed health care reduce health care disparities between minorities and Whites?

This paper investigates whether managed care ameliorates or aggravates ethnic and racial health care disparities in Medicare. First, we analyze the choice of type of insurance made by Medicare enrollees to see if minorities are more likely to choose the managed care alternative. Second, we study the differential effect of managed care on disparities using several measures of access, use and cost of services. Both analyses are conducted on two independent data sets, the Medicare Current Beneficiary Survey and the National Health Interview Survey. We conclude that relative to Whites, minorities are at least as well off -- in terms of benefits and costs -- in Medicare managed care as in Medicare traditional indemnity plans.     

The effects of Medicare Health Management Organizations on hospital operating profit in Florida.

Between 1992 and 1997, the number of members enrolled in Medicare Health Management Organizations (HMOs) nationwide in the USA more than doubled. During this period, managed care organizations wielded considerable influence over the health care of a large segment of the Medicare population in Florida. This study examined the impact on operational profit of 148 short-term, acute-care Florida hospitals in this period from Medicare HMO patients, as part of a hospital's payer mix. Three measures of hospital profitability were used: operating profit per actual bed, total operating profit with no adjustment for bed size, and operating margins. The multivariate statistical model employed in this study was a linear mixed model with an autoregressive order one (AR[1]) parametric structure on the covariance matrix. The results of the study indicate that Florida hospitals experienced greater profit pressures from Medicare HMO inpatients than from traditional Medicare inpatients. Further, these hospitals could have experienced positive profit effects with greater traditional Medicare participation and negative financial effects with greater Medicare HMO participation. Additionally, Medicare HMO patients appear to have been admitted to hospitals in worse health condition than those in traditional Medicare. Medicare HMO patients were more likely to have used emergency rooms as the source of admission than traditional Medicare patients. Also, Medicare HMO patients were more likely to have been admitted as emergent cases than traditional Medicare patients. Other research has shown that Medicare HMO patients, at the time of enrolment, are probably healthier than traditional Medicare enrollees, but here they appear to have been admitted to hospitals with higher levels of severity of illness. Explanations are offered for these findings.     

Medicare Managed Care Spillovers and Treatment Intensity

Evidence suggests that the share of Medicare managed care enrollees in a region affects the costs of treating traditional fee‐for‐service (FFS) Medicare beneficiaries; however, little is known about the mechanisms through which these ‘spillover effects’ operate. This paper examines the relationship between Medicare managed care penetration and treatment intensity for FFS enrollees hospitalized with a primary diagnosis of AMI. I find that increased Medicare managed care penetration is associated with a reduction in both the costs and the treatment intensity of FFS AMI patients. Specifically, as Medicare managed care penetration increases, FFS AMI patients are less likely to receive surgical reperfusion and mechanical ventilation and to experience an overall reduction in the number of inpatient procedures. Copyright © 2015 John Wiley & Sons, Ltd.     

Assessing Beneficiary Health Outcomes and Disease Management Initiatives in Medicare

Introduction: Provisions in the Balanced Budget Act of 1997 directed the US Centers for Medicare and Medicaid Services (CMS, formerly the Health Care Financing Administration) to begin focusing attention on the standardized measurement of health outcomes of Medicare beneficiaries as well as testing the effectiveness of various disease management interventions at improving these outcomes.The CMS, in collaboration with the US National Committee for Quality Assurance, developed the Medicare Health Outcomes Survey (HOS) as the first health outcomes measure from the patient’s perspective in Medicare managed care. This new source of data, using the Medical Outcomes Study Short Form 36-Item Health survey (SF-36®) as its core measure, provides valuable standardized health outcomes information about Medicare managed care enrollees in general and the chronically ill in particular. Study design: From May through July 1998, a longitudinal, self-administered survey which utilized the SF-36® (a health status measure which assesses both physical and mental functioning) was administered to 1000 randomly sampled Medicare beneficiaries who were continuously enrolled for a 6-month period in a Medicare managed care health plan. This cohort was re-surveyed from April though June of 2000. We analyzed data from the cohort I baseline and re-measurement analytic sample of 51 700 individuals. Results: Using the change in SF-36® physical component summary scores and mental component summary scores over a 2-year period, we demonstrated that the presence of chronic disease has a negative impact on both the physical and mental health functioning of Medicare managed care enrollees over time. With few exceptions, the negative effect of chronic disease on physical and mental health is found to be independent of gender, race, and socioeconomic status as measured by level of educational attainment. Differences in mean health status scores across levels of chronic conditions suggest that preventing the onset of disease is best for maintaining optimal health. Conclusions: Disease management interventions which are properly designed and implemented have been shown to measurably improve patient outcomes by providing high quality, cost-effective care. Recognizing the need for standardized outcome measures and scientifically validated disease management interventions, the CMS has taken a leadership role by developing and implementing the Medicare HOS and disease management demonstration projects.     

Medicare HMOs: the experience of older African Americans and whites

This exploratory study of 205 older adults with chronic illness, of whom 55 enrolled in Medicare HMOs, examined the characteristics of those who enrolled, their experiences with managed care, and the differences between African Americans and whites in these domains. HMO enrollees were more likely to report their finances as inadequate; to have a high school education or less; and to have higher levels of social support. No significant differences by race were found in enrollment or in factors related to enrollment. Enrollees joined because of low premiums, enhanced HMO benefits, and pressure from employers providing retiree health benefits. The majority of enrollees reported positive experiences, however, more whites than African Americans reported negative experiences.     

Low-income Californians' experiences with health insurance and managed care.

California is rapidly implementing mandatory managed care for most of its Medicaid (Medi-Cal) beneficiaries. To assess the impact of this delivery system change, the authors analyzed a 1996 statewide population-based random-sample telephone survey of 3,563 adults between the ages of 18 and 64. Respondents with Medi-Cal managed care and Medi-Cal fee-for-service rated access to care and quality of care significantly higher than uninsured respondents yet lower than low-income privately insured individuals. While the authors did not find a difference in health care access and quality among Medi-Cal managed care enrollees compared with Medi-Cal fee-for-service enrollees, they also did not find that managed care provided any observed advantages to Medi-Cal recipients.     

Making capitated Medicare work for women: policy and research challenges.

Growth in capitated Medicare has special ramifications for older women who comprise the majority of Medicare beneficiaries. Older women are more likely than men to have chronic conditions that lead to illness and disability, and they often have fewer financial and social resources to cope with these problems. Gender differences in health status have a number of important implications for the financing and delivery of care for older women under both traditional fee-for-service Medicare and capitation. The utilization of effective preventive interventions, new therapeutic interventions for the management of common chronic disorders, and more cost-effective models of chronic disease management could potentially extend the active life expectancy of older women. However, there are financial and delivery system barriers to achieving these objectives. Traditional FFS Medicare has gaps in coverage of care for chronic illness and disability that disproportionately impact women. Managed care potentially offers flexibility to allocate resources creatively, to develop new models of care, and offer enhanced benefits with lower out-of-pocket costs. However, challenges to realizing this potential under Medicare managed care with unique implications for older women include: possible gender bias in capitation payments, risk selection, inadequacy of risk adjustment models, benefit and market instability, and disenrollment patterns.     

Physician Financial Incentives in Managed Care

Patients with health insurance do not make the most cost conscious healthcare decisions since they bear only a fraction of the total cost of medical care. Managed care advocates point to financial incentives as a way to reduce wasteful resource use. However, physicians with managed care contracts feel financial pressures designed to reduce waste may also limit medically necessary services and adversely impact the quality of patient care. In light of a growing public and professional distrust of the motives behind offering financial incentives, the economic theory of agency is used to illustrate how financial contracts designed to reduce wasteful resource use influence physician behavior.A review of the literature was conducted to determine the effects of financial incentives on resource use, cost and the quality of medical care. The method used to undertake this literature review followed the approach set forth in the Cochrane Collaboration handbook. This review revealed that much of the empirical evidence on the effect of managed care on physician behavior compared the experiences of traditional indemnity plan enrollees with health maintenance organization enrollees.Published studies are outdated and are influenced by statistical problems including both patient and physician selection bias. With respect to the newer types of managed care organizations, there is a paucity of information on the effects of financial incentives on physician behavior. Despite the lack of empirical evidence, the perception remains that managed care financial incentives are perverse in that they induce physicians to take actions that compromise quality of care. To evaluate the legitimacy of these concerns, research on how physician contractual arrangements influence the cost and quality of care in the newer types of plans is needed. In the absence of such research, political rhetoric bent by anecdotal evidence will continue to influence public policy and undermine managed care.     

Including hospice in Medicare capitation payments: would it save money?

Hospice services received by Medicare risk-based health maintenance organization (HMO) enrollees are paid on a non-capitated basis, creating financial incentives for HMOs to encourage their terminally ill patients to elect hospice. Using Medicare administrative records for 1998, we found that hospice enrollment in the last month of life was significantly higher among HMO enrollees than among beneficiaries in fee-for-service (FFS). However, low mortality rates among HMO enrollees produced similar population-based rates of hospice use in the HMO and FFS sectors. Simulations showed that including hospice care under capitation payments in July 1998 would have produced very small savings for Medicare.