Measuring adverse selection in managed health care

Health plans paid by capitation have an incentive to distort the quality of services they offer to attract profitable and to deter unprofitable enrollees. We characterize plans' rationing as a "shadow price" on access to various areas of care and show how the profit maximizing shadow price depends on the dispersion in health costs, individuals' forecasts of their health costs, the correlation between use in different illness categories, and the risk adjustment system used for payment. These factors are combined in an empirically implementable index that can be used to identify the services that will be most distorted by selection incentives.     

Impact of the 1115 behavioral health Medicaid waiver on adult Medicaid beneficiaries in New York State

ObjectiveTo evaluate the impact of the Health and Recovery Plan (HARP), a capitated special needs Medicaid managed care product that fully integrates physical and behavioral health delivery systems in New York State.Data Sources2013‐2019 claims and encounters data on continuously enrolled individuals from the New York State Medicaid data system.Study DesignWe used a difference‐in‐difference approach with inverse probability of exposure weights to compare service use outcomes in individuals enrolled in the HARP versus HARP eligible comparison group in two regions, New York City (NYC) pre‐ (2013‐2015) versus post‐ (2016‐2018) intervention periods, and rest of the state (ROS) pre‐ (2014‐2016) versus post‐ (2017‐2019) intervention periods.Data Collection/Extraction MethodsNot applicable.Principal FindingsHARPs were associated with a relative decrease in all‐cause (RR = 0.78, 95% CI 0.68‐0.90), behavioral health‐related (RR = 0.76, 95% CI 0.60‐0.96), and nonbehavioral‐related (RR = 0.87, 95% CI 0.78‐0.97) stays in the NYC region. In the ROS region, HARPs were associated with a relative decrease in all‐cause (RR = 0.87, 95% CI 0.80‐0.94) and behavioral health‐related (RR = 0.80, 95% CI 0.70‐0.91) stays. Regarding outpatient visits, the HARPs benefit package were associated with a relative increase in behavioral health (RR = 1.21, 95% CI 1.13‐1.28) and nonbehavioral health (RR = 1.08, 95% CI 1.01‐1.15) clinic visits in the NYC region. In the ROS region, the HARPs were associated with relative increases in behavioral health (RR = 1.47, 95% CI 1.32‐1.64) and nonbehavioral health (RR = 1.17, 95% CI 1.11‐1.25) clinic visits.ConclusionsCompared to patients with similar clinical needs, HARPs were associated with a relative increase in services used and led to a better engagement in the HARPs group regardless of the overall decline in services used pre‐ to postperiod.     

Premium subsidies for health insurance: excessive coverage vs. adverse selection

The tax subsidy for employment-related health insurance can lead to excessive coverage and excessive spending on medical care. Yet, the potential also exists for adverse selection to result in the opposite problem-insufficient coverage and underconsumption of medical care. This paper uses the model of Rothschild and Stiglitz (R-S) to show that a simple linear premium subsidy can correct market failure due to adverse selection. The optimal linear subsidy balances welfare losses from excessive coverage against welfare gains from reduced adverse selection. Indeed, a capped premium subsidy may mitigate adverse selection without creating incentives for excessive coverage.     

Plan characteristics and SSI enrollees' access to and quality of care in four TennCare MCOs

OBJECTIVE: To assess hypotheses about which managed care organization (MCO) characteristics affect access to care and quality of care--including access to specialists, providers' knowledge about disability, and coordination of care--for people with disabilities. DATA SOURCES/STUDY SETTING: Survey of blind/disabled Supplemental Security Income (SSI) enrollees in four MCOs serving TennCare, Tennessee's Medicaid managed care program, in Memphis, conducted from 1998 through spring 1999. STUDY DESIGN: We compared enrollee reports of access and quality across the four MCOs using regression methods, and we use case study methods to assess whether patterns both within and across MCOs are consistent with the hypotheses. DATA COLLECTION: We conducted computer-assisted telephone surveys and used regression analysis to compare access and quality controlling for enrollee characteristics. PRINCIPAL FINDINGS: Although the four MCOs' characteristics varied, access to providers, coordination of care, and access to some services were generally similar across MCOs. Enrollees in one plan, the only MCO with a larger provider network and that paid physicians on a fee-for-service basis, reported their providers were more knowledgeable, and they had more secondary preventive care visits. Differences found in access to specialists and delays in approving care appear to be unrelated to characteristics reported by the MCOs, but instead may be related to how tightly utilization is reviewed. CONCLUSIONS: Plan networks, financial incentives, utilization management methods, and state requirements are important areas for further study, and, in the meantime, ongoing monitoring of SSI enrollees in each MCO may be important for detecting problems and successes.     

Medicaid, hospital financial stress, and the incidence of adverse medical events for children

Objective

To assess the association between Medicaid-induced financial stress of a hospital and the probability of an adverse medical event for a pediatric discharge.

Data Sources

Secondary data from the Nationwide Inpatient Sample, Agency for Healthcare Research and Quality''s Healthcare Cost and Utilization Project, and the American Hospital Association''s Annual Survey of Hospitals. Study examines 985,896 pediatric discharges (children age 0–17), from 1,050 community hospitals in 26 states (representing 63 percent of the U.S. Medicaid population) between 2005 and 2007.

Study Design

We estimate the probability of an adverse event, controlling for patient, hospital, and state characteristics, using an aggregated, composite measure to overcome rarity of individual events.

Principal Findings

Children in hospitals with relatively high proportions of pediatric discharges that are more reliant on Medicaid reimbursement are more likely than children in other hospitals (odds ratio = 1.62) to experience an adverse event. Medicaid pediatric inpatients are more likely than privately insured patients (odds ratio = 1.10) to experience an adverse event.

Conclusions

Hospital reliance on comparatively low Medicaid reimbursement may contribute to the problem of adverse medical events for hospitalized children. Policies to reduce adverse events should account for differences in underlying, contributing factors of these events.     

The Transition from Medicaid Fee-for-Service to Managed Care Among Private Practitioners in New York City: Effect on Immunization and Screening Rates

Objectives: This study examined the association between participation in Medicaid managed care and up-to-date coverage for childhood immunizations and screenings among private practice physicians serving New York City's poorest neighborhoods. Method: A random sample of 2174 children 3–35 months of age was drawn from 60 physician practices in 1995, and a cross-sectional analysis was used to compare up-to-date status for immunizations, and lead and anemia screening tests, for children cared for by managed care and nonmanaged care physicians. In 1996, an independent sample of 2380 children from the same practices was used to compare up-to-date status for individual children enrolled in Medicaid managed care and children predominantly enrolled in traditional fee-for-service Medicaid. Information from physician interviews augmented chart review data. Chi-square analysis and logistic regression were used. Results: Physicians who participate in Medicaid managed care and those who do not had equal up-to-date coverage for immunizations (41.0 vs. 36.9%, p = .527), and lead (46.8 vs. 38.7%, p = .199) and anemia screening (63.2 vs. 56.5%, p = .272). Measures of the process of care were also similar for the two groups of physicians. Children themselves enrolled in Medicaid managed care appeared significantly more likely to be up-to-date than their nonmanaged care counterparts for immunizations (OR = 1.53, p = .027) and anemia screening (OR = 2.95, p = .000). Conclusions: Participation in managed care does not seem to change physicians' overall preventive care practice behavior. Available data did not reveal major differences in demographics or health status between individual children enrolled in managed care and those not enrolled. That children enrolled in managed care were better immunized and screened than those in fee-for-service Medicaid suggests that physicians receiving compensation under two payment systems may treat children differently depending on each child's mode of reimbursement.     

Commercial managed care plans leaving the Medicaid Managed Care Program in New York State: Impact on quality and access

To develop sufficient managed care capacity to accomplish the goal of transitioning Medicaid recipients into managed care, state policymakers have relied on commercial health maintenance organizations to open their panels of providers to the Medicaid population. However, while commercial health maintenance organization involvement in Medicaid managed care was high initially, since 1996 New York State has had 14 commercial plans leave the New York State Medicaid Managed Care Program. It has been speculated that the exodus of these commercial plans would have a negative impact on Medicaid enrolleeś access and quality of care. This paper attempts to evaluate the impact of this departure from the perspective of quality and access measures and plan audit performance. Univariate and multivariate analyses were performed to evaluation the effect of commercial managed care plans leaving the Medicaid program. The overall performance of plans that remained in the program was compared to that of the plans that chose to leave for the two time periods 1996–1997 and 1998–2000. Access to care, quality of care, and annual audit performance data were analyzed. The departure of commercial health plans from the New York State Medicaid Managed Care Program has not had a statistically significant negative effect on the quality of care provided to Medicaid recipients as evaluated by standardized performance measures. In addition, there were no instances when there was a negative impact of the exit of the commercial plans on access to care. Managed care plans that chose to remain in Medicaid passed the Quality Assurance Reporting Requirements audit at a significantly (P<.01) higher rate than plans that chose to leave.     

Medicaid reimbursement,prenatal care and infant health

This paper evaluates the impact of state-level Medicaid reimbursement rates for obstetric care on prenatal care utilization across demographic groups. It also uses these rates as an instrumental variable to assess the importance of prenatal care on birth weight. The analysis is conducted using a unique dataset of Medicaid reimbursement rates and 2001–2010 Vital Statistics Natality data. Conditional on county fixed effects, the study finds a modest, but statistically significant positive relationship between Medicaid reimbursement rates and the number of prenatal visits obtained by pregnant women. Additionally, higher rates are associated with an increase in the probability of obtaining adequate care, as well as a reduction in the incidence of going without any prenatal care. However, the effect of an additional prenatal visit on birth weight is virtually zero for black disadvantaged mothers, while an additional visit yields a substantial increase in birth weight of over 20 g for white disadvantaged mothers.     

Medicaid Primary Care Physician Fees and the Use of Preventive Services among Medicaid Enrollees

Objective

The Patient Protection and Affordable Care Act (ACA) increases Medicaid physician fees for preventive care up to Medicare rates for 2013 and 2014. The purpose of this paper was to model the relationship between Medicaid preventive care payment rates and the use of U.S. Preventive Services Task Force (USPSTF)–recommended preventive care use among Medicaid enrollees.

Data Sources/Study Session

We used data from the 2003 and 2008 Medical Expenditure Panel Survey (MEPS), a national probability sample of the U.S. civilian, noninstitutionalized population, linked to Kaiser state Medicaid benefits data, including the state Medicaid-to-Medicare physician fee ratio in 2003 and 2008.

Study Design

Probit models were used to estimate the probability that eligible individuals received one of five USPSF-recommended preventive services. A difference-in-difference model was used to separate out the effect of changes in the Medicaid payment rate and other factors.

Data Collection/Extraction Methods

Data were linked using state identifiers.

Principal Findings

Although Medicaid enrollees had a lower rate of use of the five preventive services in univariate analysis, neither Medicaid enrollment nor changes in Medicaid payment rates had statistically significant effects on meeting screening recommendations for the five screenings. The results were robust to a number of different sensitivity tests. Individual and state characteristics were significant.

Conclusions

Our results suggest that although temporary changes in primary care provider payments for preventive services for Medicaid enrollees may have other desirable effects, they are unlikely to substantially increase the use of these selected USPSTF-recommended preventive care services among Medicaid enrollees.     

A tale of two cities? The heterogeneous impact of medicaid managed care

Evaluating Accountable Care Organizations is difficult because there is a great deal of heterogeneity in terms of their reimbursement incentives and other programmatic features. We examine how variation in reimbursement incentives and administration among two Medicaid managed care plans impacts utilization and spending. We use a quasi-experimental approach exploiting the timing and county-specific implementation of Medicaid managed care mandates in two contiguous regions of Kentucky. We find large differences in the relative success of each plan in reducing utilization and spending that are likely driven by important differences in plan design. The plan that capitated primary care physicians and contracted out many administrative responsibilities to an experienced managed care organization achieved significant reductions in outpatient and professional utilization. The plan that opted for a fee-for-service reimbursement scheme with a group withhold and handled administration internally saw a much more modest reduction in outpatient utilization and an increase in professional utilization.     

Endogenous information,adverse selection,and prevention: Implications for genetic testing policy

We examine public policy toward the use of genetic information by insurers. Individuals engage in unobservable primary prevention and have access to different prevention technologies. Thus, insurance markets are affected by moral hazard and adverse selection. Individuals can choose to take a genetic test to acquire information about their prevention technology. Information has positive decision-making value, that is, individuals may adjust their behavior based on the result of the test. However, testing also exposes individuals to uncertainty over the available insurance contract, so-called classification risk, which lowers the value of information. In our analysis we distinguish between four different policy regimes, determine the value of information under each regime and associated equilibrium outcomes on the insurance market. We show that the policy regimes can be Pareto ranked, with a duty to disclose being the preferred regime and an information ban the least preferred one.     

Making Medicaid a block grant program: an analysis of the implications of past proposals

In 2003, President Bush proposed converting Medicaid from an entitlement to a block grant program. Similar ideas from President Reagan in 1981 and Congress in 1995 were introduced but not enacted. Block grants aim to provide greater federal budget certainty and a stronger state incentive to contain program costs. This paper compares the preestablished funding levels proposed in 1981 and 1995 with what actually happened to federal Medicaid spending. Its results show that previous block grant proposals' funding levels at the national and state levels were quite different from what was anticipated and what occurred. As a result, Medicaid probably could not--and cannot--maintain existing health coverage under a block grant financing structure.     

Children's Access to Dental Care in Connecticut's Medicaid Managed Care Program

Objective: To describe dental care utilization and access problems in Connecticut's Medicaid managed care program, using quantitative and qualitative research methods. Methods: Using Medicaid managed care enrollment and encounter data from Connecticut, utilization rates for preventive care and treatment services are determined for 87,181 children who were continuously enrolled in Medicaid managed care for 1 year in 1996–97. Sociodemographic and enrollment factors associated with utilization are identified using bivariate and multivariate methods. Dental providers and practices where children received services are described. Qualitative methods are used to characterize problems experienced by families seeking dental care during the study period. Results: Only 30.5% of children continuously enrolled in Medicaid managed care for 1 year received any preventive dental services; 17.8% received any treatment services. Children who received preventive care were eight times more likely to have received treatment services. Utilization was higher among (a) younger children, (b) children who lived in Hartford and in other counties served by public dental clinics, and (c) children enrolled in health plans that did not subcontract for administration of dental services. Just 5% of providers, primarily those in public dental clinics, performed 50% of the services. Families whose children needed care encountered significant administrative and logistical problems when trying to find willing providers and obtain appointments. Conclusions: Access to dental care is a problem for children in Connecticut's Medicaid managed care program. Several features of managed care have negatively affected access. Public dental clinics served many children across the state and contributed to higher utilization of preventive care and treatment services among children living in Hartford.     

Impact of the HealthChoice Program on Cesarean Section and Vaginal Birth after C-Section Deliveries: A Retrospective Analysis

Objective To assess the impact of the HealthChoice program in Maryland on cesarean section and vaginal birth after C-section deliveries. Study Design Pre-post design using a comparison group with Maryland State Inpatient Databases, part of the Healthcare Cost and Utilization Project, developed by the Agency for Healthcare Research and Quality. Although the combined 1995 and 2000 database contained over 1.2 million inpatient discharge records, the analysis included all hospital discharge abstracts for women in labor. To identify the delivery, Diagnoses-Related Groups (DRGs) 370–375 were used from the discharge data. Together, there were 128,743 births identified in both years. Methods Pregnant women enrolled in Medicaid managed care were compared pre-implementation and post implementation with pregnant women delivering babies under private insurance. The analysis computed difference-in-differences estimates using a logistic regression model that controlled for maternal characteristics, payment source, labor and delivery complications, and hospital characteristics. The outcome variables included Primary Cesarean, Repeat Cesarean, and Vaginal Birth after C-section. Results These results suggest that Medicaid managed care enrollees were less likely to undergo cesarean section deliveries relative to privately insured beneficiaries. Medicaid MCOs may have done a better job of limiting the growth in overused procedures than did MCOs and providers for privately insured women. Conclusion This study has shown that there has been an overall increase in the use of primary and repeat cesarean sections in Maryland hospitals. However, HealthChoice limited this increase for Medicaid enrollees relative to privately insured women. On the other hand, vaginal births after C-section have declined in Maryland.     

The impact of insurance lapse among low-income children

Children living in poverty not only have disproportionately more health problems, but also have disproportionately lower health care service utilization. Change, whether in health care delivery system or in family living situation, may interfere with or jeopardize insurance status and thereby influence access to health care services. We hypothesized that children who have maintained Medicaid insurance compared to those who have not will be more likely to have preventive care visits and less likely to have emergency room visits. We further hypothesized that transient situations such as homeless episodes, foster care placement, and living in more than one location in the same 1-year period will contribute to loss in Medicaid coverage. This retrospective cohort study was conducted at an urban children’s hospital outpatient clinic at which 210 family respondents were recruited over a 1-year period. An in-person interview containing several standardized instruments was administered to the caregiver. In addition, children’s medical records were retrospectively abstracted from point of study entry to first contact. Findings indicated that children who lost Medicaid coverage, compared to others, had significantly fewer preventive care health visits. There were no differences in emergency room visits. Transient situations did not appear to influence preventive or emergency room care. In addition, the change into a managed-care delivery system also increased loss of coverage. Loss of coverage may be a barrier to preventive care services. To ensure optimal preventive care services, the onus is on the providers and plants to facilitate continued insurance coverage.     

Understanding biased selection in Medicare HMOs

OBJECTIVE: To investigate the extent of favorable health maintenance organization (HMO) selection for a longitudinal cohort of Medicare beneficiaries, examine whether the extent of favorable selection varies with the degree of Medicare HMO market penetration in a county, and explain conflicting findings in the literature on favorable HMO selection. DATA SOURCES: A panel of 1992-1996 data from the Medicare Current Beneficiary Survey (MCBS), supplemented with linked data from the Area Resource File and Medicare administrative datasets. STUDY DESIGN: Using random effects probit estimation, we model a beneficiary's HMO enrollment status as a function of self-reported health status and Medicare HMO market penetration. DATA EXTRACTION METHODS: The MCBS data for beneficiaries residing in states served by Medicare HMOs in 1992-1996 were linked by county to the supplementary datasets. PRINCIPAL FINDINGS: We find that favorable selection persists in the cohort over time on some, but not all, measures. We find no substantial association between favorable HMO selection and HMO market penetration. We find that conflicting findings in the literature on favorable HMO selection may be explained by several methodological choices, including the choice of health status measure and the structure of the sample. CONCLUSIONS: Our results support further risk adjustment of the adjusted average per capita cost (AAPCC) payment formula.