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.     

Enrollee health status under Medicare risk contracts: an analysis of mortality rates.

Previous studies comparing the health status of Medicare beneficiaries enrolled under HMO risk contracts to that of Medicare beneficiaries in fee-for-service (FFS) have generally focused on demonstration projects conducted before 1985. This study examines mortality rates in 1987 for approximately 1 million aged Medicare beneficiaries enrolled in 108 HMOs. We estimated adjusted mortality ratios (AMR) for each HMO and across all HMOs, by dividing the actual number of deaths among HMO enrollees by the "expected" number of deaths. The expected number of deaths was based on death rates among local FFS populations, adjusting for age, sex, Medicaid buy-in status, and institutional status. The AMR for all HMO enrollees pooled together was 0.80. For persons newly enrolled in 1987, the AMR was 0.69; in general, AMRs were higher for beneficiaries who had been enrolled for longer periods of time. Among individual HMOs, none exhibited an AMR substantially above 1.00. Regression analysis indicated lower AMRs for staff model HMOs than for either IPA or group models. Low mortality among Medicare HMO enrollees is consistent with favorable selection or with improvements in the health status of enrollees due to better access or quality of care in HMOs. In either case, health status differences between HMO enrollees and FFS beneficiaries have implications for the appropriateness of Medicare's Adjusted Average Per Capita Cost (AAPCC) payment formula for HMOs.     

Health status of Medicare enrollees in HMOs and fee-for-service in 1994

We compared the health status of 863 health maintenance organization (HMO) enrollees with that of 4,576 non-enrollees, controlling for demographics and area of residence, using 1994 data from the Medicare Current Beneficiary Survey (MCBS). HMO respondents were less likely to report fair or poor health, functional impairment, or heart disease. Average predicted costs based on various health-status measures were substantially lower for HMO respondents than for respondents in fee-for-service (FFS) arrangements. The Medicare payment formula for HMOs does not adequately adjust for the better health and consequent lower expected costs of HMO enrollees. The addition of health-status measures would improvement payment accuracy and reduce average HMO payments significantly below current levels.     

Comparing mortality and time until death for medicare HMO and FFS beneficiaries

OBJECTIVE: To compare adjusted mortality rates of TEFRA-risk HMO enrollees and disenrollees with rates of beneficiaries enrolled in the Medicare fee-for-service sector (FFS), and to compare the time until death for decedents in these three groups. DATA SOURCE: Data are from the 124 counties with the largest TEFRA-risk HMO enrollment using 1993-1994 Medicare Denominator files for beneficiaries enrolled in the FFS and TEFRA-risk HMO sectors. STUDY DESIGN: A retrospective study that tracks the mortality rates and time until death of a random sample of 1,240,120 Medicare beneficiaries in the FFS sector and 1,526,502 enrollees in HMOs between April 1, 1993 and April 1, 1994. A total of 58,201 beneficiaries switched from an HMO to the FFS sector and were analyzed separately. PRINCIPAL FINDINGS: HMO enrollees have lower relative odds of mortality than a comparable group of FFS beneficiaries. Conversely, HMO disenrollees have higher relative odds of mortality than comparable FFS beneficiaries. Among decedents in the three groups, HMO enrollees lived longer than FFS beneficiaries, who in turn lived longer than HMO disenrollees. CONCLUSIONS: Medicare TEFRA-risk HMO enrollees appear to be, on average, healthier than beneficiaries enrolled in the FFS sector, who appear to be in turn healthier than HMO disenrollees. These health status differences persist, even after controlling for beneficiary demographics and county-level variables that might confound the relationship between mortality and the insurance sector.     

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.     

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.     

Managed care and medical expenditures of Medicare beneficiaries

This paper investigates the impact of Medicare HMO penetration on the medical care expenditures incurred by Medicare fee-for-service (FFS) enrollees. We find that increasing penetration leads to reduced spending on FFS beneficiaries. In particular, our estimates suggest that the increase in HMO penetration during our study period led to approximately a 7% decline in spending per FFS beneficiary. Similar models for various measures of health care utilization find penetration-induced reductions consistent with our spending estimates. Finally, we present evidence that suggests our estimated spending reductions are driven by beneficiaries who have at least one chronic condition.     

Consumer information and biased selection in the demand for coverage supplementing Medicare.

This study examines how the relationship between health insurance knowledge and the health status of health insurance consumers influences their decisions to purchase insurance coverage. Data from the federal Medicare health insurance program for the elderly in the United States are used. The basic Medicare program provides a limited amount of coverage for health care services obtained from any provider in the private fee-for-service (FFS) market. Beneficiaries of this program may choose to supplement the basic coverage which they receive by two mechanisms: either they may purchase private insurance designed to fill some of the gaps left by the federal program ('Medigap' policies), thereby remaining in the FFS market and preserving their choice of provider, or they may enroll in health maintenance organizations (HMOs), thereby leaving the FFS market and agreeing to use only those providers affiliated with the HMO, and in return receiving broader coverage at little additional out-of-pocket cost. The study was made possible by a unique data set which combines measures of beneficiary knowledge of Medicare coverage with measures of perceived health status, socio-economic characteristics, and insurance coverage choices for a sample of Medicare beneficiaries who participated in an educational workshop about their insurance coverage options. These data were used to estimate a multinomial logistic model of the determinants of insurance choices, where the options included the two listed above and a basic Medicare option. The study explicitly recognizes the interaction between insurance information and health status in health plan choice. These results show that knowledge of coverage does have a differential impact on the decision to purchase health insurance depending on health status. With a high level of knowledge, sicker beneficiaries are less likely to have basic Medicare alone, compared with HMOs or Medigap policies, while healthier beneficiaries are less likely to be enrolled in HMOs, compared with Medigap policies. This finding has important implications for the use of health status measures to adjust capitated payment formulas when knowledgable consumers have the option to enroll in HMOs or remain in the FFS environment. In the absence of health status adjusters for the HMO capitation payments, high levels of coverage knowledge may exacerbate inherent selection bias among these coverage options by healthier and sicker consumers of health insurance.     

The effect of HMOs on the inpatient utilization of medicare beneficiaries

OBJECTIVE: To determine the effect of joining HMOs (health maintenance organizations) on the inpatient utilization of Medicare beneficiaries. DATA SOURCES: We linked enrollment data on Medicare beneficiaries to patient discharge data from the California Office of Statewide Health Planning and Development (OSHPD) for 1991-1995. DESIGN AND SAMPLE: A quasi-experimental design comparing inpatient utilization before and after switching from fee-for-service (FFS) to Medicare HMOs; with comparison groups of continuous FFS and HMO beneficiaries to adjust for aging and secular trends. The sample consisted of 124,111 Medicare beneficiaries who switched from FFS to HMOs in 1992 and 1993, and random samples of 108,966 continuous FFS beneficiaries and 18,276 continuous HMO enrollees yielding 1,227,105 person-year observations over five years. MAIN OUTCOMES MEASURE: Total inpatient days per thousand per year. PRINCIPAL FINDINGS: When beneficiaries joined a group/staff HMO, their total days per year were 18 percent lower (95 percent confidence interval, 15-22 percent) than if the beneficiaries had remained in FFS. Total days per year were reduced less for beneficiaries joining an IPA (independent practice association) HMO (11 percent; 95 percent confidence interval, 4-19 percent). Medicare group/staff and IPA-model HMO enrollees had roughly 60 percent of the inpatient days per thousand beneficiaries in 1995 as did FFS beneficiaries (976 and 928 versus 1,679 days per thousand, respectively). In the group/staff model HMOs, our analysis suggests that managed care practices accounted for 214 days of this difference, and the remaining 489 days (70 percent) were due to favorable selection. In IPA HMOs, managed care practices appear to account for only 115 days, with 636 days (85 percent) due to selection. CONCLUSIONS: Through the mid-nineties, Medicare HMOs in California were able to reduce inpatient utilization beyond that attributable to the high level of favorable selection, but the reduction varied by type of HMO.     

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.     

Depression as a risk factor for nursing home admission among older individuals

OBJECTIVES: Depression is common among those aged 65 and older and has been associated with increased morbidity and mortality. This study investigated whether individuals enrolled in Medicare+Choice with symptoms of depression as measured using the mental health scale from the SF-36 were at increased risk of using nursing home services. DESIGN: A Cox proportional hazards model was used. SETTING: The study investigated community-based adults aged 65 and older. PARTICIPANTS: Participants were individuals aged 65 years and older enrolled in Medicare+Choice who responded to the Health Outcomes Survey and were not institutionalized or incapable of responding for themselves at the time of survey administration. MEASUREMENTS: The purpose of the study was to predict the risk of admission to a nursing home over time, controlling for variables related to demographics, comorbidity, age, and functional status. RESULTS: The results indicated that, even after controlling for physical health, functional status, age, demographics, and socioeconomic status, Medicare+Choice enrollees over the age of 65 experiencing symptoms of depression as identified by the SF-36 are at increased risk of using nursing home services. CONCLUSIONS: These results have implications for payers of nursing home services such as Medicare and Medicaid as well as for providers and the families of older individuals. While the results do not prove that prevention is possible, they do suggest that better identification and treatment of depression reduce the risk of nursing home admission. Even if nursing home placement cannot be avoided, it is possible that the individual's quality of life could be significantly enhanced by better diagnosis and treatment of depression. These findings have implications beyond the Medicare+Choice population.     

Does quality of care for cardiovascular disease and diabetes differ by gender for enrollees in managed care plans?

PURPOSE: To assess gender differences in the quality of care for cardiovascular disease and diabetes for enrollees in managed care plans. METHODS: We obtained data from 10 commercial and 9 Medicare plans and calculated performance on 6 Health Employer Data and Information Set (HEDIS) measures of quality of care (beta-blocker use after myocardial infarction [MI], low-density lipoprotein cholesterol [LDL-C] check after a cardiac event, and in diabetics, whether glycosylated hemoglobin [HgbA1c], LDL cholesterol, nephropathy, and eyes were checked) and a 7th HEDIS-like measure (angiotensin-converting enzyme [ACE] inhibitor use for congestive heart failure). A smaller number of plans provided HEDIS scores on 4 additional measures that require medical chart abstraction (control of LDL-C after cardiac event, blood pressure control in hypertensive patients, and HgbA1c and LDL-C control in diabetics). We used logistic regression models to adjust for age, race/ethnicity, socioeconomic status, and plan. MAIN FINDINGS: Adjusting for covariates, we found significant gender differences on 5 of 11 measures among Medicare enrollees, with 4 favoring men. Similarly, among commercial enrollees, we found significant gender differences for 8 of 11 measures, with 6 favoring men. The largest disparity was for control of LDL-C among diabetics, where women were 19% less likely to achieve control among Medicare enrollees (relative risk [RR] = 0.81; 95% confidence interval [CI] = 0.64-0.99) and 16% less likely among commercial enrollees (RR = 0.84; 95%CI = 0.73-0.95). CONCLUSION: Gender differences in the quality of cardiovascular and diabetic care were common and sometimes substantial among enrollees in Medicare and commercial health plans. Routine monitoring of such differences is both warranted and feasible.     

An Analysis of Unobserved Selection in an Inpatient Diagnostic Cost Group Model

The study assesses unobserved selection bias in an inpatient diagnostic cost group (DCG) model similar to Medicare's Principal Inpatient Diagnostic Cost Group (PIP-DCG) risk adjustment model using a unique data set that contains hospital discharge records for both FFS and HMO Medicare beneficiaries in California from 1994 to 1996. We use a simultaneous equations model that jointly estimates HMO enrollment and subsequent hospital use to test the existence of unobserved selection and estimate the true HMO effect. It is found that the inpatient DCG model does not adequately adjust for biased selection into Medicare HMOs. New HMO enrollees are healthier than FFS beneficiaries even after adjustment for the included PIP-DCG risk factors. A model developed over an FFS sample ignoring unobserved selection overestimates hospital use of new HMO enrollees by 28 percent compared to their use if they had remained in FFS. Models that better captures selection bias are needed to reduce overestimation of Medicare HMO enrollees' resource use.     

Do Medicare Advantage enrollees tend to be admitted to hospitals with better or worse outcomes compared with fee-for-service enrollees?

The hospitals selected by or for Medicare beneficiaries might depend on whether the patient is enrolled in a Medicare Advantage (MA) plan. A theoretical model of profit maximization by MA plans takes into account the tradeoffs of consumer preferences for annual premium versus outcomes of care in the hospital and other attributes of the plan. Hospital discharge databases for 13 states in 2006, maintained by the Agency for Healthcare Research and Quality, are the main source of data. Risk-adjusted mortality rates are available for all non-maternity adult patients in each of 15 clinical categories in about 1,500 hospitals. All-adult postoperative safety event rates covering 9 categories of events are calculated for surgical cases in about 900 hospitals. Instrumental variables are used to address potential endogeneity of the choice of a MA plan. The key findings are these: enrollees in MA plans tend to be treated in hospitals with lower resource cost and higher risk-adjusted mortality compared to Fee-for-Service (FFS) enrollees. The risk-adjusted mortality measure is about 1.5 percentage points higher for MA plan enrollees than the overall mean of 4%. However, the rate of safety events in surgical patients favors MA plan enrollees—the rate is 1 percentage point below the average of 3.5%. These discrepant results are noteworthy and are plausibly due to greater discretion by the health plan in approving patients for elective surgery and as well as selecting hospitals for surgical patients. Emergency patients are generally excluded for the safety outcome measures. In addition, the current mortality measures may not adequately represent all surgical patients. Such caveats should be prominently highlighted when presenting comparative data. With that proviso, the study justifies informing Medicare beneficiaries about the mortality and safety outcome measures for hospitals being used by a MA plan compared to hospitals used by FFS enrollees.     

Medicare beneficiaries rate their medical care: new data from the MCBS (Medicare Current Beneficiary Survey)

The Medicare Current Beneficiary Survey (MCBS) contains a wealth of information about the people whose care is financed by the program. This article examines their satisfaction with medical care received and explores the relationship of these attitudes with the characteristics of subgroups of the enrolled population. Satisfaction with medical care among Medicare beneficiaries is found to be generally high (80-90 percent). Disabled Medicare beneficiaries are less satisfied than the aged, and health maintenance organization (HMO) enrollees less satisfied than fee-for-service (FFS) patients. Others with lower-than-average satisfaction are people with poorer health status, those covered by Medicaid, and those without supplementary insurance.     

Measuring and improving health outcomes in Medicare: the Medicare HOS program

The Medicare Health Outcomes Survey (HOS) (originally called the Health of Seniors Survey) was developed as a longitudinal performance measure to assess the physical functioning and mental well being of Medicare beneficiaries over time. The survey was implemented nationally in Medicare managed care organizations (MCOs) as part of Medicare HEDIS, 3.0/1998 and continues today. In 1998, a pilot test of the HOS in Medicare FFS was conducted; the pilot test concluded in 2001. This overview discusses the importance of functional status assessment, reviews the goals of the HOS, and explains how researchers and quality improvement professionals are using the data to explore functional status measurement issues, describe policy and programmatic implications for CMS, and identify opportunities to improve health care practice.     

Beneficiary selection, use, and charges in two Medicare capitation demonstrations.

Findings with regard to health status, service use, and charges are presented for Medicare beneficiaries who received care under Medicare risk contracts with two health maintenance organizations from 1980 through 1982 and for fee-for-service comparison groups. Health status of plan enrollees and fee-for-service beneficiaries were compared using mortality data, preenrollment claims, and self-reported health measures. Patterns of use and expenditures during preenrollment and postenrollment periods were examined using Medicare records and data supplied by the plans.     

Having it all: national benefit equity and local payment parity in Medicare

The Medicare Payment Advisory Commission (MedPAC) has identified two important problems with the Medicare+Choice (M+C) program: nationwide geographic inequity in government-financed benefits, and unequal government payments for M+C plans versus fee-for-service (FFS) Medicare in the same market area. MedPAC concludes that both problems cannot be solved simultaneously. We argue that both problems could be solved if Congress discontinued its policy of underwriting the cost of FFS Medicare. Instead, Congress should define a national entitlement benefit package and have all health plans submit bids on the package in each market area. The government's premium contribution should be equal to the lowest bid submitted by a qualified health plan in each market area. The contribution could be adjusted for health risk, the special obligations of FFS Medicare, and welfare enhancements associated with FFS Medicare that are valued by both beneficiaries and taxpayers but unrelated to beneficiaries' health status.     

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.