AAHP
Joseph Newhouse, Melinda Beeuwkes Buntin, Joan Buchanan, Richard Frank, Bruce
Landon, Barbara McNeil, Alan Zaslavsky
In collaboration with the American Association of Health
Plans, the HMO industry trade association, we have revised AAHP's annual health
plan survey. Historically, the survey focused on reporting benefit limits, enrollment,
and member utilization data. The new survey includes substantive sections on
1) administrative functions such as marketing, member services, and assistance
with primary care provider selection, 2) contractual arrangements including
carve outs, physician compensation and financial incentives, and hospital payment,
and 3) medical management including network capability, quality measurement,
and utilization management. The full survey was fielded in 1998; shorter, revised
versions were fielded in 1999 and 2000.
PHYSICIAN GROUP INCENTIVES AND PERFORMANCE
Arnold Epstein, Richard Frank, Meredith Rosenthal, Joan Buchanan
In California, center researchers are looking at how variations in organization and financing arrangements between physician group practices and a large managed care plan affect costs and outcomes of care. The primary concern of Americans about the growth of managed care is the fear that financial incentives placed on physicians will lead them to limit or deny needed care to patients. In areas such as California where managed care and the use of financial incentives are common, large physician groups have emerged. Physician group practices now control how risks and incentives are transmitted to individual physicians and very little is known about what is actually occurring. This project aims to understand physicians' actual financial incentives and other managerial practices employed by medical groups to influence patterns of care. This knowledge will not only assist the public debate, but also help plans identify which group practices to contract with and what procedures to encourage group practices to develop.
CARVE-OUTS
David Blumenthal, Melinda Beeuwkes Buntin
Despite increasing discussion of carve outs as a device for controlling costs and improving quality of care, little systematic information exists on the effects of carve outs on cost, quality, and access to healthcare services. In the absence of such information, a conceptual framework is useful for deciding which conditions and populations may benefit from carve-out strategies, and how such arrangements should be designed. After carefully defining carve outs, and distinguishing them from other similar arrangements, center researchers identified five characteristics of a healthcare condition that increase the likelihood that a carve out's benefits will outweigh its drawbacks. They also examined the advantages and disadvantages of alternative approaches to structuring and administering carve-out arrangements, including how to pay for services, how to integrate them with mainstream care, provisions for consumer choice and provisions for carve-out accountability. The investigators concluded that population carve outs, in which all the healthcare problems of a group of patients are managed by the carve-out organization, have inherent advantages, and identified candidate conditions for population carve outs.
RISK SELECTION IN MEDICARE MANAGED
CARE
Melinda Beeuwkes Buntin
Risk selection is a major impediment to the functioning of health insurance markets and a serious problem for those who seek to introduce more competition into the Medicare program. Ideally, health care providers should compete on the basis of cost and quality. Whenever providers are paid a fixed amount per patient or per service, however, they have an incentive to compete to attract patients who are healthier (and hence more profitable) than the population as a whole - a practice known as "risk selection." This dissertation investigates the determinants of risk selection among competing Medicare plans, examines econometric issues involved with modeling health care costs and risk selection, and seeks better ways to compensate Medicare plans that experience favorable or adverse selection. Chapter one investigates whether or not standardizing Medicare HMOs' benefits packages would reduce risk selection. Policymakers have expressed the hope that standardization would reduce health plans' ability to risk select by constructing benefits packages that are differentially attractive to healthy beneficiaries. Melinda Buntin finds evidence that plans' relative copayment levels, physician network sizes, and quality all influence risk selection among plans. Thus, the standardization of benefits packages would restrict consumers' choices without preventing risk selection. Given this finding, in chapter two she looks for ways in which Medicare payments to plans could be "risk adjusted" to reflect the expected costs of plan enrollees. She focuses on decedents since they have high costs. She finds that while Medicare payment systems could be improved by paying more for beneficiaries with certain terminal illnesses, incentives would remain to select against the terminally ill. Chapter three focuses on methodological issues. It presents and evaluates alternative econometric methods of modeling risk selection and predicted health care cost measures such as the selection measure used in chapter one.
MANAGED CARE PLANS AND EMERGENCY
ROOMS
Elizabeth Richardson
In her Sloan-supported dissertation research, Elizabeth Richardson examined the relationship between managed care penetration growth and change in the number of hospitals and emergency rooms. She found that growth in managed care penetration could explain between 19 and 37 percent of the decrease in hospitals and between 0 and 56 percent of the decline in emergency rooms in low income areas between 1984 and 1994. None of the decline in hospitals or emergency rooms in higher income areas could be attributed to managed care. She also found that distance to the nearest hospital in California cities increased by 22 percent for the poor and 16 percent for the non-poor over this period. She estimated that this would lead to a one percent drop in inpatient utilization by the poor and a 0.8 percent decline for people in higher income areas.
INFORMATION SYSTEMS AND MANAGED CARE
Joan Buchanan, Frank Levy
The practice of medicine is changing in fundamental ways and the needs for information are changing and growing dramatically. There is a clear need for better information systems 1) to support communication within these increasingly complex multi-facility networks of healthcare organizations; 2) to improve healthcare delivery; and 3) to provide a foundation for performance assessment. We also observe a clear industry response as the field of healthcare informatics has grown dramatically since its inception. What is less well understood is the extent to which this growing new industry is actually improving communication, care delivery, and organizational performance. To explore this further, we will investigate the role of information technology and its impact on managed care organizations.
PROVIDER-SPONSORED ORGANIZATIONS AND
THEIR ROLES
Haiden Huskamp, Meredith Rosenthal, Bruce Landon
Over the past several decades, the tradition of solo practice in medicine has given way to organizational arrangements that are more amenable to coping with the increased administrative burdens of dealing with managed care contracts. Today, the organization of physicians into groups and networks is primarily driven by the need to pool insurance risk and to offer health plans a continuum of services and clinical management capabilities. Increasingly, both utilization management functions and risk are being delegated to "provider sponsored organizations" (PSOs), which are physician organizations that have adopted managed care practices and are seeking prepaid (capitated) contracts. Because PSOs have emerged to accept the responsibilities associated with capitated contracts, it is likely that the increase in these types of contracts signals a parallel increase in the growth of PSOs.
Fundamental change in organization of physician services have important implications for the future role of health plans, for physician practice, and for the care received by enrollees of plans or purchasers that contract with PSOs. In addition, health plans and policy makers need to be concerned about the effects of passing large-scale financial risk to organizations that may not have the experience or financial reserves needed to manage that risk. A systematic study of these emerging organizational forms will inform industry participants and government about the economic roles of PSOs in the managed care market and the effects of the changes in physician organization.
HUMAN RESOURCES
Richard Frank, Nancy Keating
In the process of learning about the use of financial incentives and certain utilization management techniques to govern the costs and quality of health care we have become aware of a set of significant changes in the manner in which the health care labor force is being deployed. These trends are important in that they involve dramatic departures from traditional roles in the production of health care. Given the fragmented observations that form the knowledge base to date and the potential importance of such changes, we propose to begin to assess systematically changes in the health care labor force.
The analyses proposed here we expect will form the foundation for describing work force changes in the managed care industry and developing a more focused research project aimed at assessing the impact of key changes in human resource use on the quality and cost of health care. The initial work that will be produced here will allow the managed care industry to begin to benchmark labor practices. Finally, we anticipate developing a clearer understanding of issues involved in the emergence of physician unions.
*PROCUREMENT POLICY AND MEDICAID MANAGED
CARE FOR CHRONIC AND DISABLING CONDITIONS
Haiden Huskamp
For a variety of reasons, critics of the use of managed care for the Medicaid program are concerned that enrollees with chronic conditions or disabilities may not receive appropriate care in managed care settings. The manner in which competition for managed care contracts to serve these Medicaid enrollees is structured, the rules that govern procurement, and the oversight of the managed care organization's contract performance all influence the type of managed care program that is adopted, the cost and the quality of care that results. This study will examine systematically state and county strategies for the procurement of Medicaid managed care contracts intended to serve individuals with chronic and disabling conditions. The aim of the study is to inform the design of the procurement process for Medicaid managed care programs involving mental health and other chronic disabilities.
*MEDICARE DISENROLLMENT FROM MANAGED
CARE PLANS
Howard Bailit
Medicare members disenrollment from managed care plans has important implications for continuity, quality and the cost of care. In this project we analyze data from the Medicare Beneficiary File, the U.S. Census and the nine managed care plans in Connecticut offering a Medicare product. Controlling for member sociodemographic characteristics, residence, major diagnoses, utilization rates and length of time enrolled, we assess rate of disenrollment and the factors associated with these rates. We also track members overtime to determine their health plan selections once they have disenrolled. Data from this project will assist in the design, management, and regulation of Medicare managed care plans.