Do HMOs Provide Better Quality Primary Care to Medicare Beneficiaries?
- Presenter:
Chair: Albert Okunade; Discussant: TBA Mon June 5, 2006 13:45-15:15 Room 235
Managed care plans can directly reduce preventable hospitalizations by increasing primary and preventive services available to constituents. Accordingly, a higher rate of preventable hospitalization has been proposed as an indicator of poorer health plan performance. The literature suggests that there is greater use of preventive care in HMOs. To date, no study has evaluated whether Medicare HMO enrollees experience differential preventable hospitalization rates than those in traditional Medicare (FFS), or whether there would be beneficial spillovers from managed care penetration in the overall market that would reduce preventable hospitalizations for the Medicare population. The purpose of this study is to assess both direct and indirect effects of managed care on preventable hospitalizations among the elderly in four states.
This research uses the complete 2001 hospital discharge abstracts for elderly Medicare enrollees (age 65 and above) who reside in four states (NY, PA, FL, CA), from the Healthcare Cost and Utilization Project (HCUP-SID) database of the Agency for Healthcare Research and Quality. These states exhibit high but varying degrees of managed care experience and penetration. We use a multivariate cross sectional design with patient level data, modeling each state’s cohort separately due to heterogeneity across states. The logistic model controls for socioeconomic and demographic variables, patient severity of illness, and county resources. We use admissions for persons with “marker” conditions as a comparison group for the observed admissions for persons with preventable conditions, following methods used in the literature.
We find no evidence of beneficial spillovers from HMO penetration onto area Medicare populations. However, holding other factors such as demographics and illness severity constant, we find that in 3 out of 4 states, Medicare HMO patients had lower odds of a preventable admission versus marker admission than Medicare FFS patients. The odds in CA, NY, and FL were respectively 17%, 12%, and 9% lower for HMO as compared to FFS patients. There was no significant difference for HMO versus FFS patients in PA, the state with the tardiest managed care presence and lowest penetration by Medicare HMOs. Moreover, in the two states with longest tenure and greatest Medicare HMO penetration, CA and FL, the reduction in preventable admissions among Medicare HMO patients was mainly concentrated among more ill patients. That is, the predicted marginal probability of preventable vs marker admission was higher in FFS plans than Medicare HMO plans, and the gap widens across the patient severity index.
These findings suggest that Medicare HMO enrollees may have experienced better quality primary care than their FFS counterparts in these three states. The largest difference in quality between HMO and FFS patients was found in CA, the state with the earliest managed care penetration and largest Medicare HMO presence. Because we control well for patient illness severity, these findings add to the evidence that managed care outperforms traditional care among the elderly, rather than simply skimming off the healthiest populations. Although the study uses one outcome indicator for the quality of primary care, it is quite important for total social cost of care and a signal of effective management of chronic illness.
