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PubMed1991

Mental health and selection of preferred providers. Experience in three employee groups.

While Preferred Provider Organizations (PPOs) are designed to contain the costs of health care, they may not be able to do so if sicker individuals opt not to use PPO providers. This study examined how level of mental health status and prior use of mental health services affected the decision to use or not use PPO providers for mental health care for employees enrolled in fee-for-service plans with a PPO option. Data were obtained from an employee survey and claims data on three large employee groups. It was not possible to examine effects of sickliness on the intent to select PPO providers for mental health care directly because about one half of employees could not identify who they would visit for mental health care or even how they would select a provider for such care. The intent to use PPO or non-PPO providers for general medical care, however, was not significantly associated with mental health status when other factors were controlled. Furthermore, among persons who used mental health services after implementation of the PPO option, those who had previously visited providers who were to become part of the PPO panel tended to stay with PPO providers, while those who previously visited providers who were not to enter the PPO panel subsequently selected away from PPO providers for mental health care. This pattern of results suggests that established individual patient-provider relationships, rather than sickliness, determined the selection of PPO versus non-PPO providers for mental health care for employees enrolled in these optional PPO fee-for-service plans.

Adult↗
PubMed1993

Health plan switching in anticipation of increased medical care utilization.

We compare rates and days of maternity and nonmaternity hospital admission for the years 1981 through 1984 for three groups of employees and dependents from a large private employer: those continuously enrolled in a fee-for-service (FFS) plan (N = 147,700), those continuously enrolled in a health maintenance organization (HMO) (N = 30,957), and those switching from the FFS plan to the HMO (N = 2,144). The rate of maternity admissions for plan switchers increased by 106% (P < 0.001) in the post-switch year compared with the pre-switch year, while maternity rates for continuing FFS-plan enrollees declined by 12% (P < 0.001) and rates for continuing HMO enrollees remained unchanged. Nonmaternity admission rates for switchers decreased by 19% (P = 0.079), consistent with the expectation that HMOs reduce these rates substantially, while rates for FFS-plan stayers increased 4% (P < 0.001) and those for HMO stayers remained unchanged. We conclude that employees often switch health plans when anticipating increased needs for maternity care and therefore that pre-switch rates of utilization are unreliable measures of the true magnitude of risk selection between HMOs and FFS plans.

California↗
PubMed1993

Who enrolled in a state program for the uninsured: was there adverse selection?

Managed care plans may hesitate to participate in programs for uninsured persons because they fear adverse selection, whereby only the sickest people or highest users would choose to join the program. We studied this issue in Washington State's Basic Health Plan, a demonstration program that provides subsidized health insurance for families earning less than 200% of the poverty level. We interviewed people in three counties who enrolled in the program, and compared them to people in the same counties who were eligible but did not enroll. There were substantial differences between enrollees and eligibles in education, age, income, employment, race, and insurance status. In spite of these demographic and access differences, health status was remarkably similar for enrollees and eligibles, with the few significant differences favoring the enrollees. In addition, previous and subsequent use of health services was similar or lower for enrollees. The results for health status and utilization were similar across the three counties, even though the counties and the providers were quite different. We conclude that there is no evidence of adverse selection. This is welcome news for the health plans, but suggests that the BHP may not have reached those most in need of insurance.

Age Factors↗
PubMed1994

Health plan choice in the Twin Cities Medicare market.

This paper examines the relationship between characteristics of Medicare beneficiaries and their choice of health plan in the Twin Cities during 1988. This analysis provides the first comparison of beneficiaries in the basic fee-for-service (FFS) Medicare sector (without a supplementary policy) to beneficiaries in the FFS sector with a supplementary policy, enrollees in independent practice associations (IPAs), and network health maintenance organizations (HMOs). The site and time period are important because there were five large, mature HMOs with TEFRA-risk contracts operating at that time, enrolling 50% of Medicare beneficiaries in the market area. We find that the oldest, poorest and, to a lesser extent, the sickest Medicare beneficiaries were most likely to have basic FFS Medicare coverage without supplementary insurance. The youngest enrollees are found in network HMOs. The availability of group coverage and premium subsidies are positively associated with choice of FFS with a supplementary policy. Government policy concerning Medicare HMO premiums appears to contribute to the poorest beneficiaries facing the highest out-of-pocket costs.

Age Factors↗
PubMed1995

Adverse selection among multiple competing health maintenance organizations.

This study examines risk selection among nine health plans competing for 16,182 employees of one large firm in 1989: one conventional fee-for-service plan, one group-model health maintenance organization (HMO), and seven network and independent practice model HMOs. We develop and compare measures of risk using weights based on HMO and fee-for-service expenditure data, respectively. We use a multiequation statistical model to develop two sets of utilization and expenditure weights for enrollees in each plan. One set of weights, based on discharge abstracts and outpatient records from the large group-model HMO, measures how much each of the nine groups of employees and dependents would have spent, had they been enrolled in a stringently managed plan with no consumer cost sharing. The other set of weights, based on fee-for-service claims data, measures how much each group would have spent, had it been enrolled in an unmanaged health plan with significant coinsurance and deductibles. Predicted annual expenditures per enrollee exhibit a 23% range from lowest (favorable selection) to highest (adverse selection) risk plans using the HMO weights and a 17% range using fee-for-service weights. The fee-for-service plan and group-model HMO with large enrollments have risk mixes near the center of the spectrum. Smaller HMOs exhibit the extreme forms of both favorable and adverse selection. The statistical methods adopted in this study can be used to risk-adjust capitation payments to competing health plans. As mergers among HMOs and group purchasing arrangements among employers increase the average enrollment in each plan from each payor, however, risk differences among plans will be attenuated and the need to risk-adjust payments will be less severe. Key words: health insurance; adverse selection; managed competition; health maintenance organization.

Actuarial Analysis↗
PubMed1996

Individual choice in spending accounts. Can we rely on employees to choose well?

Flexible spending accounts (FSA) represent a current health care financing tool that may become an important component of incremental health care reform. Because FSAs require employees to make financial contributions based on anticipated health care needs, contribution decisions are likely to be subject to many of the errors made in other insurance decisions. The authors analyzed the benefits selections, benefits forms completion, and FSA contribution levels of approximately 9,500 employees of the University of Pennsylvania from 1987 to 1992. Default and repeat choice trends characterize the completion of benefits forms and the reselection of health insurance options by employees. Despite the economic benefits of contributing to an FSA, only 14% of employees contributed in any one year and 73% never made a contribution. Multivariate models of these contributions fail to demonstrate the importance of what ought to be relevant influences in contribution decisions (for example, age, income, family status, or underlying health insurance). Whereas most FSA decisions are characterized by default contributions of $0, employees who contribute in one year are most likely to contribute exactly the same amount the next year, even when other circumstances change. The pervasiveness of these patterns raises concerns that health care reform plans that rely on financial incentives at the consumer level--for example, proposed medical saving accounts--will be inefficient.

Choice Behavior↗
PubMed1996

Disenrollment of Medicare cancer patients from health maintenance organizations.

OBJECTIVES: There is concern that financial incentives in health maintenance organizations (HMOs) might result in pressures to induce sicker members to disenroll. The authors compared disenrollment rates of Medicare HMO enrollees with cancer with disenrollment rates for cancer-free enrollees, using Medicare enrollment files linked to population-based tumor registry data from the Surveillance, Epidemiology, and End Results (SEER) Program. METHODS: The authors identified all aged Medicare beneficiaries who enrolled in an HMO located in a SEER reporting area during 1985 to 1989. Time to disenrollment was analyzed using a proportional hazards model. RESULTS: Overall, cancer patients were no more likely to disenroll than others. However, persons diagnosed with cancer after enrollment were less likely to disenroll than other persons in Independent Practice Association (IPA) mode HMOs (relative risk [RR] = 0.79). Persons diagnosed with cancer after enrollment in group- and staff-model HMOs were about equally likely to disenroll as other persons (RR = 0.91). Persons diagnosed with cancer less than 18 months before enrollment were at high risk for disenrollment from both IPA and group-/staff-model HMOs (RR = 1.47 and 1.35). There was substantial variation among HMOs in overall disenrollment rates and in RRs for disenrollment by cancer patients. CONCLUSIONS: The low disenrollment rates of patients diagnosed after enrollment do not support the contention that features intrinsic to managed care make HMOs unattractive to the seriously ill. Monitoring of selective disenrollment could be used as a screen for possible access and quality problems.

Aged↗
PubMed1999

Managed care evolution--where did it come from and where is it going?

The emergence and development of managed care has been and will continue to be a major force in America's health care delivery system. Specifically reviewed in this article are those legislative initiatives that contributed to the formation of this system of reimbursement and utilization management. Also addressed are responsibilities that can be ascribed to all stakeholders in necessitating this system as well as the adjustments required to make the system more responsive to the needs of higher-risk populations. This article concludes with a series of recommended actions that will be required of all individual citizens in assuring the future economic viability of this nation's health care programs.

Health Services Accessibility↗
PubMedDate not supplied

Concerns in a primary care population about genetic discrimination by insurers.

PURPOSE: Fear of genetic discrimination might deter participation in research or therapy. This is a major impetus for laws limiting insurers' use of genetic information, yet there is little information about the extent of this fear in the general population and how it varies by social factors. METHODS: This study measures concern about insurance problems relating to genetic testing, as part of primary-care screening for hereditary hemochromatosis (iron overload). Data come from a multiethnic, primary care-based survey of 86,859 adults in five field centers in the United States (AL, CA, DC, HI, OR), and one in Canada (Ontario). Logistic regression was used to model the probability of agreeing to the question "Genetic testing is not a good idea because you might have trouble getting or keeping your insurance." RESULTS: Overall, 40.0% of participants agreed. Adjusting for other characteristics, African Americans and Asians were much less likely (OR = 0.52 and 0.39), and Hispanics were more likely (OR = 1.124), than Caucasians to express concern about insurance discrimination. Participants under 65 years old, US residents, and those without a high school diploma were substantially more likely to be concerned (ORs ranging from 1.4-1.6), as were participants with lower mental health scores. Education showed a nonlinear relationship, with significantly higher concern among both those with less than a high school education and those with a college degree, compared to high school graduates. CONCLUSIONS: Concern about genetic discrimination varies substantially by race and other demographic factors and by nationality. One possible explanation for lower concern about Canadians and by people over 64 is that both groups are covered by social insurance for health care (Medicare). However, US residents in states with some legal protections against genetic discrimination had more, not less, concern than either Canadians or US residents in states with no legal protections.

Adult↗
PubMed2003

Persistence in health expenditures in the short run: prevalence and consequences.

BACKGROUND: Knowing whether persons in the top percentiles of the health expenditure distribution exhibit persistently high expenditure is fundamental to developing health plan payment policies, containing costs, and understanding the consequences of costly illnesses. OBJECTIVES: To determine the extent of high expenditure persistence over a 2-year period. To identify the correlates and consequences of expenditure persistence. SUBJECTS: A national sample of the population from a longitudinal panel of the Medical Expenditure Panel Survey (MEPS). METHODS: Changes in a person's position in the expenditure distribution were examined. chi2 tests were used to identify differences in characteristics between high and low spenders. Logistic regression was used to predict the likelihood of expenditure persistence. Changes in income, employment, out-of-pocket expenditure burden, and health insurance were compared for high and low spenders. RESULTS: Of the top 5% of spenders in 1996, 30% retain this position in 1997 and 45% are in the top decile of 1997 spenders. High expenditures begin to regress to the mean over the study period. Cancer, mental disorders, diabetes, and infectious diseases and being in the top decile of 1996 spenders increase the probability of expenditure persistence (P < 0.05 for all). This probability also has a strong random component. An increased proportion of persons in the top expenditure decile for both years had out-of-pocket health spending greater than 20% of income in 1997 (P < 0.10). Persons with persistently high expenditures were less likely than low spenders to lose employment-based coverage (5.4% vs. 8.8%, P < 0.05) but no changes in income or employment status were detected. CONCLUSIONS: A sizable minority of persons exhibits persistently high expenditures, creating incentives for favorable risk selection. Few consequences of short-run expenditures persistence are observed.

Adult↗
PubMed2006

A closer look at the managed care backlash.

BACKGROUND: Much anecdotal evidence exists regarding the managed care backlash of the late 1990s, but limited empirical evidence is available. OBJECTIVES: Using a unique series of employer surveys, we examined trends in enrollment rates in health maintenance organizations (HMOs) and other plan types between 1997 and 2003. RESEARCH DESIGN: We present enrollment rates in employer-sponsored health plans by plan type. These plan-level enrollment rates are disaggregated by whether or not enrollees had a choice of plan types and by firm size and year. SUBJECTS: Employees who were enrolled in employer-sponsored health insurance in private sector establishments. RESULTS AND CONCLUSIONS: Although we found evidence of a decline in the popularity of HMOs, it occurred later than indicated in earlier studies. In our data, HMO enrollment rates fell from roughly 32% to 26% between 1997 and 2003, with most of the decline occurring after 2001. Earlier studies reported that the decline in HMO enrollment rates occurred between 1996 and 1998, and between 2000 and 2001. In addition, an interesting story emerged when we examined trends by firm size. We found evidence of a decline in the HMO enrollment rate for large employers starting in 1998. However, this was offset by an increase in the HMO enrollment rate in small employers, which explains the stability in our figures before 2002. Our data also indicated that when workers were given a choice between an HMO and other plan types, workers increasingly opted for the non-HMO plan during this time period.

Choice Behavior↗
PubMed2002

Pluralism, public choice, and the state in the emerging paradigm in health systems.

Today in developed nations, the public pays for most medical care, with the state and the medical profession or providers determining its nature, form, and level. But there is no well-defined institutional framework for revealing consumer preferences and enabling client choice about the nature and form of public entitlement. This thwarts the efforts of health system reformers to satisfy their clients and consequently promote equity and control costs--the raison d'être of publicly supported care. Consumers can be empowered in the emerging paradigm, however, in which the publicly financed system also contains competing fund-holding institutions that organize and manage the consumption of care (OMCC), such as HMOs and sickness funds. In a system in which individuals are entitled to health coverage, OMCC institutions can play an essential role in both shaping the entitlement and in expressing members' preferences. To do this, the OMCCs need to be financed through capitation and endowed with appropriate constitutional rights on how to use the funds.

Capitation Fee↗
PubMed2003

Selection incentives in a performance-based contracting system.

OBJECTIVE: To investigate whether a performance-based contracting (PBC) system provides incentives for nonprofit providers of substance abuse treatment to select less severe clients into treatment. DATA SOURCES: The Maine Addiction Treatment System (MATS) standardized admission and discharge data provided by the Maine Office of Substance Abuse (OSA) for fiscal years 1991-1995, provides demographic, substance abuse, and social functional information on clients of programs receiving public funding. STUDY DESIGN: We focused on OSA clients (i.e., those patients whose treatment cost was covered by the funding from OSA) and Medicaid clients in outpatient programs. Clients were identified as being "most severe" or not. We compared the likelihood for OSA clients to be "most severe" before PBC and after PBC using Medicaid clients as the control. Multivariate regression analysis was employed to predict the marginal effect of PBC on the probability of OSA clients being most severe after controlling for other factors. PRINCIPAL FINDINGS: The percentage of OSA outpatient clients classified as most severe users dropped by 7 percent (p < = 0.001) after the innovation of performance-based contracting compared to the increase of 2 percent for Medicaid clients. The regression results also showed that PBC had a significantly negative marginal effect on the probability of OSA clients being most severe. CONCLUSIONS: Performance-based contracting gave providers of substance abuse treatment financial incentives to treat less severe OSA clients in order to improve their performance outcomes. Fewer OSA clients with the greatest severity were treated in outpatient programs with the implementation of PBC. These results suggest that regulators, or payers, should evaluate programs comprehensively taking this type of selection behavior into consideration.

Adult↗
PubMed2004

The costs of decedents in the Medicare program: implications for payments to Medicare + Choice plans.

OBJECTIVE: To discuss and quantify the incentives that Medicare managed care plans have to avoid (through selective enrollment or disenrollment) people who are at risk for very high costs, focusing on Medicare beneficiaries in the last year of life-a group that accounts for more than one-quarter of Medicare's annual expenditures. DATA SOURCE: Medicare administrative claims for 1994 and 1995. STUDY DESIGN: We calculated the payment a plan would have received under three risk-adjustment systems for each beneficiary in our 1995 sample based on his or her age, gender, county of residence, original reason for Medicare entitlement, and principal inpatient diagnoses received during any hospital stays in 1994. We compared these amounts to the actual costs incurred by those beneficiaries. We then looked for clinical categories that were predictive of costs, including costs in a beneficiary's last year of life, not accounted for by the risk adjusters. DATA EXTRACTION METHODS: The analyses were conducted using claims for a 5 percent random sample of Medicare beneficiaries who died in 1995 and a matched group of survivors. PRINCIPAL FINDINGS: Medicare is currently implementing the Principal Inpatient Diagnostic Cost Groups (PIP-DCG) risk adjustment payment system to address the problem of risk selection in the Medicare+Choice program. We quantify the strong financial disincentives to enroll terminally ill beneficiaries that plans still have under this risk adjustment system. We also show that up to one-third of the selection observed between Medicare HMOs and the traditional fee-for-service system could be due to differential enrollment of decedents. A risk adjustment system that incorporated more of the available diagnostic information would attenuate this disincentive; however, plans could still use clinical information (not included in the risk adjustment scheme) to identify beneficiaries whose expected costs exceed expected payments. CONCLUSIONS: More disaggregated prospective risk adjustment methods and alternative payment systems that compensate plans for delivering care to certain classes of patients should be considered to ensure access to high-quality managed care for all beneficiaries.

Actuarial Analysis↗