How does managed care manage the frail elderly? The case of hospital readmissions in fee-for-service versus HMO systems

OBJECTIVES: This study examined whether hospital readmissions varied among the frail elderly in managed care versus fee-for-service (FFS) systems. SETTING AND PARTICIPANTS: Random sample of 450 patients, aged 65 and over, from a large vertically integrated health care system in San Diego, California. Participants were receiving physician-authorized home health and survived and 18-month follow-up period. MAIN OUTCOME MEASURES: Multiple logistic regression analyses were used to conduct comparisons of readmissions and preventable readmissions by plan type. Two methods to identify preventable readmissions were developed, one based on a computerized algorithm of service use patterns, and another based on blind clinical review. RESULTS: The odds of having a preventable hospital readmission within 90 days of an index admission were 3.51 (P = 0.06) to 5.82 (P = 0.02) times as high for Medicare HMO enrollees compared to Medicare FFS participants, depending on the method used to assess preventability. Readmission patterns were similar for Medicare HMO enrollees and FFS study participants dually enrolled in Medicare and Medicaid. CONCLUSION: In this group of frail elderly Medicare beneficiaries, those enrolled in an HMO were more likely to have a preventable hospital readmission than those receiving care under FFS. These results suggest that policies promoting stringent approaches to utilization control (e.g., early hospital discharge, reduced levels of post-acute care, and restricted use of home health services) may be problematic for the frail elderly.     

Rural-Urban Home Health Care Differences Before the Balanced Budget Act of 1997

This study arose from concerns that home health care may be more difficult to provide to rural than urban elderly patients (because of geographic barriers, personnel shortages, and other factors) and may therefore be less effective in terms of patient outcomes. Case mix, home health care service use, and outcomes (primarily discharge status) were analyzed for a national random sample of 3,869 rural and urban elderly home health patients. Longitudinal data covered the period from home health admission to discharge or 120 days (whichever occurred first). Primary data collection instruments were designed to obtain longitudinal patient-level health status data; agency records and Medicare data provided service use information. (The study did not address access but focused on services and outcomes after admission to home health care.) Two-group statistical tests and multivariate analyses were employed to assess rural-urban differences. The major findings were that, after adjustment for rural-urban case mix and agency differences, rural compared to urban patients received fewer home health services and attained less favorable discharge outcomes. For example, the rural patients had a higher case mix adjusted hospitalization rate. Because the study data pertain to 1995 through 1996, the results provide a baseline for future analyses of possibly different rural compared to urban effects of the Balanced Budget Act of 1997, which resulted in major changes in Medicare payment for home health care.     

Service-level selection by HMOs in Medicare

In the federal Medicare program, contracting health maintenance organizations (HMOs) are paid on a capitated basis. There has long been concern that an "adverse selection" of risks remain in the traditional fee-for-service (FFS) sector, since beneficiaries with low costs may leave the FFS sector and join the HMOs. The distortion associated with this form of selection is that health plans may design their mix of health care services in order to effectuate favorable selection. This paper scrutinizes patterns of HMO membership and costs by service in the FFS sector for evidence consistent with the hypothesis that HMOs engage in service-level product distortion. We develop a multi-service model of choice between FFS and HMOs and show that if the HMO sector is underproviding (overproviding) a service relative to the FFS sector, we should observe a positive (negative) correlation between the HMO market share and average costs of those remaining in the FFS sector. We estimate the correlation between the HMO market share and the average FFS costs for different health care services using Medicare data for 1996. We find evidence indicating that there exists significant service-level selection by HMOs.     

Adequate Access to Posthospital Home Health Services: Differences Between Urban and Rural Areas

The health care environment in rural areas changed dramatically in the 1980s. Policy-makers are concerned that these changes have reduced access to care among residents of rural areas. This study measures adequate access to Medicare home health services and determines whether it differs for urban and rural beneficiaries. Adequate access to care is measured by whether a patient with a specific health condition received a level of skilled services predetermined as appropriate for that condition. The predetermined levels of care were developed in an earlier study and were found to correlate with adverse outcomes. This study focused on patients with diabetes mellitus and surgical hip procedures to concentrate on access to skilled nursing services and physical therapy services. To conduct the analysis, a data base was constructed that included both patient utilization and health status data, drawing on three different data sources: Medicare hospital claims data, Medicare home health bill record data, and home health plan of treatment data from patients' utilization review forms (forms 485 and 486). The analysis samples consisted of 404 patients with diabetes and 876 patients who had surgical hip procedures. Significant differences were found between urban and rural areas in access to home health services. The largest differences were found in access to physical therapy services, but differences in access to skilled nursing services also exist. The data suggest that the availability of skilled care services may cause these differences.     

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.     

The unmet needs of the elderly with diabetes in home health care

The implementation of the Prospective Payment System (PPS) in Medicare home health care has raised concern about health outcomes of elderly patients since its intention is to curb spending. This study examines the unmet needs of older diabetic patients while receiving home health care and post-discharge from home health care (N = 129) in order to explore any effects of PPS on patients' need. The study found that a higher proportion of elders had unmet needs 30 days post-discharge compared with while receiving home health care. The specific unmet needs identified by the elderly diabetic patients included social work services, home health aide, homemaker services, and need for medical equipment. The study explores the role of social work to better manage the unmet needs of diabetic elders who live in the community.     

Cost-effectiveness implications based on a comparison of nursing home and home health case mix.

Case-mix differences between 653 home health care patients and 650 nursing home patients, and between 455 Medicare home health patients and 447 Medicare nursing home patients were assessed using random samples selected from 20 home health agencies and 46 nursing homes in 12 states in 1982 and 1983. Home health patients were younger, had shorter lengths of stay, and were less functionally disabled than nursing home patients. Traditional long-term care problems requiring personal care were more common among nursing home patients, whereas problems requiring skilled nursing services were more prevalent among home health patients. Considering Medicare patients only, nursing home patients were much more likely to be dependent in activities of daily living (ADLs) than home health patients. Medicare nursing home and home health patients were relatively similar in terms of long-term care problems, and differences in medical problems were less pronounced than between all nursing home and all home health patients. From the standpoint of cost-effectiveness, it would appear that home health care might provide a substitute for acute care hospital use at the end of a hospital stay, and appears to be a more viable option in the care of patients who are not severely disabled and do not have profound functional problems. The Medicare skilled nursing facility, however, is likely to continue to have a crucial role in posthospital care as the treatment modality of choice for individuals who require both highly skilled care and functional assistance.     

The quality of ambulatory care in Medicare health maintenance organizations.

The quality of ambulatory care received by Medicare recipients who enrolled in health maintenance organizations (HMOs) was compared to the care received by fee-for-service (FFS) Medicare recipients, in a quasi-experimental, non-randomized design. Both samples were drawn from the four major geographic areas in the country, and included two types of HMO practices: staff/group models, and independent practice associations (IPAs). A panel of expert physicians developed criteria for evaluating ambulatory care, and medical record abstractions using these criteria were performed on 1,590 outpatient records: 777 FFS and 813 HMO (441 staff/group, 372 IPA). While individual items of medical histories and physical examinations were performed most often for staff/group HMO patients and least often in FFS patients, odds ratios (OR) for performance in staff/group HMO patients were particularly large for health maintenance items: tonometry (OR = 8.4), mammography (OR = 2.7), pelvic examination (OR = 5.3), rectal examination (OR = 2.9), fecal occult blood test (OR = 3.3). The results suggest that recommended elements of routine and preventive care are more likely to be performed for Medicare enrollees in staff/group HMOs than in FFS settings.     

Use of preventive care services,beneficiary characteristics,and Medicare HMO performance

Medicare health maintenance organization (HMO) enrollees use more preventive care services than their fee-for-service (FFS) counterparts. This may be because those who enroll in HMOs have characteristics that make them more disposed to use preventive care. To investigate this possibility, we examined the use of four preventive care services by respondents to the 1996 Medicare Current Beneficiary Survey (MCBS). Unadjusted preventive care use rates for HMO enrollees were slightly higher than rates for non-HMO enrollees with private supplemental insurance. However, after adjusting for enrollee characteristics (sociodemographics, health behaviors, health status, and functioning) we found that preventive care use rates for HMO enrollees were substantially higher--consistent with HMO enrollees being less disposed to use preventive care. In comparing preventive care service rates across groups, managers and policymakers may want to consider taking into account beneficiary characteristics that are correlated with the disposition to use preventive care.     

How the elderly fare in HMOs: outcomes from the Medicare competition demonstrations.

Because of concern about the effects of prepaid care on outcomes for elderly enrollees in health maintenance organizations (HMOs), a prospective study of access to care and functional outcomes was performed. HMOs with Medicare risk contracts in January 1985 (N = 17) were selected from ten communities and were matched for comparison with ten similar communities where no Medicare HMOs were in operation. Random samples of HMO enrollees (N = 2,098) and fee-for-service (FFS) nonenrollees (N = 1,059) were assessed at baseline and at follow-up one year later (HMO = 1,873, FFS = 916) to observe access to care and functional outcomes. At baseline, nonenrollees had more bed days and poorer functional status than HMO enrollees. While fewer HMO enrollees experienced declines in functional status between baseline and follow-up (e.g., patient's ability to function declined in one or more activities of daily living: HMOs at 5.3 percent versus FFS at 8.5 percent, p < .01), after controlling for other factors with logistic regression, enrollment status was not significantly associated with functional decline. Self-rated health, history of hospitalization, age of 80 or older and baseline functional status were predictive of decline in function. After controlling for baseline differences, HMO disenrollees also experienced similar functional declines at follow-up compared to continuously enrolled beneficiaries. These findings suggest that Medicare beneficiaries who belong to HMOs experience comparable rates of functional decline to those experienced by beneficiaries in the FFS sector with similar initial levels of function and health status. Together with results showing no significant difference in medical visits according to various symptoms, we conclude that access and quality of care delivered by HMOs is comparable to that provided in FFS settings.     

Impact of Medicare payment policy on home health resources utilization

In this study, the association between Medicare regulations and the provision of public home health care is examined. Medicare clients were compared with non-Medicare groups of those 65 years of age or over and those under 65. Results suggested that both age- and payer-related factors contribute to utilization of services. Older patients showed greater need for chronic illness care relative to younger patients; however, Medicare patients used fewer resources and had poorer outcomes relative to older non-Medicare patients.     

How Do the Experiences of Medicare Beneficiary Subgroups Differ between Managed Care and Original Medicare?

Objective. To examine whether disparities in health care experiences of Medicare beneficiaries differ between managed care (Medicare Advantage [MA]) and traditional fee‐for‐service (FFS) Medicare. Data Sources. 132,937 MA and 201,444 FFS respondents to the 2007 Medicare Consumer Assessment of Health Care Providers and Systems (CAHPS) survey. Study Design. We defined seven subgroup characteristics: low‐income subsidy eligible, no high school degree, poor or fair self‐rated health, age 85 and older, female, Hispanic, and black. We estimated disparities in CAHPS experience of care scores between each of these groups and beneficiaries without those characteristics within MA and FFS for 11 CAHPS measures and assessed differences between MA and FFS disparities in linear models. Principal Findings. The seven subgroup characteristics had significant (p<.05) negative interactions with MA (larger disparities in MA) in 27 of 77 instances, with only four significant positive interactions. Conclusion. Managed care may provide less uniform care than FFS for patients; specifically there may be larger disparities in MA than FFS between beneficiaries who have low incomes, are less healthy, older, female, and who did not complete high school, compared with their counterparts. There may be potential for MA quality improvement targeted at the care provided to particular subgroups.     

Preliminary Assessment of Appropriateness of Emergency Care Service Use: Actions Taken and Consultations Obtained Before Emergency Care Presentation

Inappropriate use of emergency care services can increase hospital readmissions and related costs. This pilot, cross-sectional survey project determined whether home health care patients who receive emergency care services during a Medicare-approved home care episode sought consultation from health care professionals before they made the emergency care visit. The two research questions were: (a) What actions were taken by the patient before making an emergency care visit?; (b) If prior consultation was obtained, what were the suggestions? Preliminary data were obtained from a Michigan-based, Medicare-certified, not-for-profit home health agency affiliated with a university health system. A two-page questionnaire recorded up to three emergency care visits. Volunteer participants were Medicare patients who had no cognitive deficits and were able to communicate with home health care providers (HHCPs) by themselves. Thirty-five emergency care visits were reported; 31 (88.6%) Medicare patients participated and 4 (11.4%) of them had two emergency care visits. Before the patients made an emergency care visit, they most often called their primary care physicians (PCPs; N = 20, 57.1%), followed by the HHCPs (N = 10, 28.6%). All 20 patients who contacted their PCPs and 7 patients who contacted their HHCPs were advised to seek emergency care services. In 20 emergency care visits the patient was admitted for an acute hospital stay; the other 15 patients went home. Most patients contacted their PCPs or HHCPs before they went to an emergency department or urgent care facility. These results implied that PCPs and HHCPs seemed to perceive that the need for emergency care should be determined at an emergency room or urgent care facility. This study was unable to differentiate the need for emergency care services or the appropriateness of the advice given by PCPs or HHCPs when the home care patients were under the care of a medical team.     

Preliminary assessment of appropriateness of emergency care service use: actions taken and consultations obtained before emergency care presentation

Inappropriate use of emergency care services can increase hospital readmissions and related costs. This pilot, cross-sectional survey project determined whether home health care patients who receive emergency care services during a Medicare-approved home care episode sought consultation from health care professionals before they made the emergency care visit. The two research questions were: (a) What actions were taken by the patient before making an emergency care visit?; (b) If prior consultation was obtained, what were the suggestions? Preliminary data were obtained from a Michigan-based, Medicare-certified, not-for-profit home health agency affiliated with a university health system. A two-page questionnaire recorded up to three emergency care visits. Volunteer participants were Medicare patients who had no cognitive deficits and were able to communicate with home health care providers (HHCPs) by themselves. Thirty-five emergency care visits were reported; 31 (88.6%) Medicare patients participated and 4 (11.4%) of them had two emergency care visits. Before the patients made an emergency care visit, they most often called their primary care physicians (PCPs; N = 20, 57.1%), followed by the HHCPs (N = 10, 28.6%). All 20 patients who contacted their PCPs and 7 patients who contacted their HHCPs were advised to seek emergency care services. In 20 emergency care visits the patient was admitted for an acute hospital stay; the other 15 patients went home. Most patients contacted their PCPs or HHCPs before they went to an emergency department or urgent care facility. These results implied that PCPs and HHCPs seemed to perceive that the need for emergency care should be determined at an emergency room or urgent care facility. This study was unable to differentiate the need for emergency care services or the appropriateness of the advice given by PCPs or HHCPs when the home care patients were under the care of a medical team.     

Variations in hospital resource use for Medicare and privately insured populations in California

The amount of resources used in the care of chronically ill Medicare fee-for-service (FFS) patients varies widely across hospitals. We studied variations across California hospitals in hospital resource use for chronically ill patients covered by Medicare health maintenance organizations (HMOs) and private insurers and found substantial variation in all of the coverage groups studied. Resource-use measures based on Medicare FFS data often reflect patterns evident for other payers. Previous estimates of savings if the most resource-intensive hospitals more closely resembled less resource-intensive hospitals, based on just Medicare FFS spending, could underestimate possible savings when other payers are taken into account.     

Growth of Fee-for-Service Medicare Home-Based Medical Care Within Private Residences and Domiciliary Care Settings in the U.S., 2012–2019

ObjectivesHome-based medical care (HBMC) delivers physician or advanced practice provider–led medical services for patients in private residences and domiciliary settings (eg, assisted living facilities, group/boarding homes). We aimed to examine the time trends in HBMC utilization by care settings.DesignAnalyses of HBMC utilization at the national and state levels during the years 2012–2019.Setting and ParticipantsWith Medicare public use files, we calculated the state-level utilization rate of HBMC among fee-for-service (FFS) Medicare beneficiaries, measured by visits per 1000 FFS enrollees, in private residences and domiciliary settings, both separately and combined.MethodsWe assessed the trend of HBMC utilization over time via linear mixed models with random intercept for state, adjusting for the following state-level markers of HBMC supply and demand: number of HBMC providers, state ranking of total assisted living and residential care capacity, and the proportion of FFS beneficiaries with dementia, dual eligibility for Medicaid, receiving home health services, and Medicare Advantage.ResultsTotal HBMC visits in the United States increased from 3,911,778 in 2012 to 5,524,939 in 2019. The median (interquartile range) state-level HBMC utilization rate per 1000 FFS population was 67.6 (34.1–151.3) visits overall, 17.3 (7.9–41.9) visits in private residences, and 47.7 (23.1–86.6) visits in domiciliary settings. The annual percentage increase of utilization rates was significant for all care settings in crude models (3%–8%), and remained significant for overall visits and visits in domiciliary settings (2%–4%), but not in private residences.Conclusions and ImplicationsThe national-level growth in HBMC from 2012–2019 was largely driven by a growth of HBMC occurring in domiciliary settings. To meet the needs of a growing aging population, future studies should focus efforts on policy and payment issues to address inequities in access to HBMC services for homebound older adults, and examine drivers of HBMC growth at regional and local levels.     

Examining Black-White Disparities Among Medicare Beneficiaries in Assisted Living Settings in 2014

ObjectiveAssisted living (AL) provides housing and personal care to residents who need assistance with daily activities. Few studies have examined black-white disparities in larger (25 + beds) ALs; therefore, little is known about black residents, their prior residential settings, and how they compare to whites in AL. We examined racial differences among a national cohort of AL residents and how the racial variation among AL Medicare Fee-For-Service (FFS) beneficiaries compared to differences among community-dwelling and nursing home cohorts.Study designRetrospective cohort study.ParticipantsWe included (1) a prevalence sample of 442,018 white and black Medicare beneficiaries residing in large AL settings, (2) an incidence sample of new residents (n = 94,741), and (3) 10% random samples of Medicare FFS community-dwelling and nursing home beneficiaries in 2014.MeasuresThe Medicare Master Summary Beneficiary File was used to identify AL residents and provided demographic, entitlement, chronic condition, and health care utilization information. We used the American Community Survey and prior ZIP code tabulation areas of residents to examine differences in prior neighborhoods. Medicare claims and the Minimum Data Set yielded samples of Medicare FFS community-dwelling older adults and nursing home residents.ResultsBlacks were disproportionately represented in AL, younger, more likely to be Medicaid eligible, had higher levels of acuity, and more often lived in ALs with fewer whites and more duals. New black residents entered AL with higher rates of acute care hospitalizations and skilled nursing facility utilization. Across the 3 cohorts, blacks had higher rates of dual-eligibility.ConclusionsBlack-white differences observed among AL residents indicate a need for future work to examine how disparities manifest in differences in care received and residents’ outcomes, as well as the pathways to AL. More research is needed to understand the implications of inequities in AL as they relate to quality and experiences of residents.     

Differences across payors in charges for agency-based home health services: evidence from the National Home and Hospice Care Survey.

OBJECTIVE: To investigate charge and payment differentials for home health services across different payors. DATA SOURCES: The 1992 National Home and Hospice Care Survey, a nationally representative survey of home and hospice care agencies and their patients, collected by the National Center for Health Statistics. STUDY DESIGN: We compare the average charge for a Medicare home health visit to the average charge for patients with other sources of payment. In making such comparisons, we control for differences across payors in service mix and agency characteristics. PRINCIPAL FINDINGS: Agencies charge various payors different amounts for similar services, and Medicare is consistently charged more than other payors. CONCLUSIONS: Findings imply the potential existence of payment differentials across payors for home health services, with Medicare and privately insured patients likely to be paying more than others for similar services. Such conclusions raise the possibility that, as in other segments of the healthcare market, cost-shifting and price discrimination might exist within the home health industry. Future research should explore these issues, along with the question of whether Medicare is paying too much for home health services.     

A research and policy agenda for transitions from nursing homes to home

More than 1 million adults make the transition from nursing homes to the community every year, often using formal health services including Medicare Part A skilled home health care. Although the need for discharge planning is well described, and the risks associated with care transitions are increasingly recognized, there is very limited information about the process and outcomes as patients move from nursing home to home. This paper reviews pertinent published data and health services research as background information and outlines a research agenda for studying these important transitions.     

Satisfaction with health care of dually eligible older beneficiaries

Satisfaction with health care was compared for dually eligible older beneficiaries receiving care in three settings: a managed care organization (MCO) that is at risk for providing Medicare and Medicaid benefits (n = 200); the fee-for-service (FFS) sector in the same ZIP Code (n = 201); and respondents to the national Medicare Current Beneficiary Survey (MCBS) (n = 531). Patients in the MCO were more likely to be highly satisfied in three domains--global quality, access to care, and technical skills--compared with patients in the local and national FFS study groups but fewer were highly satisfied with the interpersonal manner of their providers.