The effect of managed care on quality: a review of recent evidence.

This article reviews recent evidence about the relationship between managed care and quality. With one exception, the studies reviewed represent observation periods that extend through 1990 or a more recent year. The review has led to the conclusion that managed care has not decreased the overall effectiveness of care. However, evidence suggests that managed care may adversely affect the health of some vulnerable subpopulations. Evidence also suggests that enrollees in managed care plans are less satisfied with their care and have more problems accessing specialized services. In addition, younger, wealthier, and healthier persons were more satisfied with their health plans than older, poorer, and sicker persons, even after adjusting for the type of health plan.The findings of the studies reviewed do not provide definitive results about the effect of managed care on quality. Indeed, relatively few studies include data from the 1990s, and little is known about the newer types of health maintenance organizations that invest heavily in information systems and rely on financial incentives to alter practice patterns. Furthermore, managed care is not a uniform method that is applied identically by all health plans, and research studying the different dimensions of managed care also is needed.

Pediatric human immunodeficiency virus infection. Recent evidence on the utilization and costs of health services.

OBJECTIVE: To measure the utilization and costs of pediatric human immunodeficiency virus (HIV)-related health care services. DESIGN: Cohort survey. SETTING: Eight outpatient departments serving large numbers of HIV-infected children in five standard metropolitan areas with high prevalence of HIV-infected children. PATIENTS: One hundred forty-one HIV-seropositive children older than 15 months of age or children whose clinical conditions meet the definition of acquired immunodeficiency syndrome (AIDS) at any age who visited the selected providers during the second quarter of 1991. INTERVENTIONS: None. MAIN OUTCOME MEASURES: Quarterly interview survey (via adult proxies) of health care services utilization during each preceding 3-month period, repeated six times between March 1991 and August 1992. Charge data were abstracted from inpatient, outpatient, home health care, and pharmacy bills. RESULTS: Children with AIDS averaged 1.4 hospitalizations, 16 inpatient days, two emergency department visits, 18 ambulatory care visits, 15 professional home health care visits, and one dental visit per year, generating an estimated $37,928 in annual charges. The HIV-infected children used fewer services, with annual charges of $9382. CONCLUSIONS: We found lower utilization than reported in prior research on pediatric HIV and similar unit costs after inflation adjustment. Increasing experience in clinical management and expanded ambulatory care may have contributed to reductions in inpatient services utilization and total costs since the mid-1980s.

Selection bias in HMOs: a review of the evidence.

Early reviews found that health maintenance organizations (HMOs) attracted healthier beneficiaries in the Medicare program and healthier employees in the market for employer-based insurance. This review finds that HMOs still attract healthier Medicare beneficiaries, that HMOs no longer attract healthier employees, and that HMOs attract healthier Medicaid recipients. This review also found conflicting evidence about whether Medicare HMOs are overpaid, no evidence that HMOs are overpaid in the market for employer-based insurance, and evidence that concerns about overpaying Medicaid HMOs have diminished because many states are adopting mandatory programs.

Antitrust enforcement in the healthcare industry: the expanding scope of state activity.

OBJECTIVE: To describe the landscape of state antitrust activity and review related research and policy issues. In particular, to examine state laws that attempt to immunize mergers among healthcare providers from state and federal antitrust prosecution and consent decrees issued by state attorneys general permitting healthcare providers to merge. DATA SOURCES: State laws attempting to immunize collaborative activities from state and federal antitrust prosecution and consent decrees between state attorneys general and collaborating healthcare providers. PRINCIPAL FINDINGS: State antitrust agencies have been more willing than federal antitrust agencies to approve mergers that are contingent on the fulfillment of specific conditions that require continued oversight. CONCLUSIONS: Research is needed to inform policymakers about the consequences of state-approved mergers on market performance.

The use of health services by women with HIV infection.

OBJECTIVE: The purpose of this study is to determine whether women who have been diagnosed with HIV utilize the same volume of medical care services as men who have been diagnosed with HIV. DATA SOURCES: This study uses data from the first wave of interviews of the AIDS Cost and Service Utilization Survey (ACSUS) conducted between May and July of 1991. The first wave of interviews involved 1,949 adults and adolescents, of whom 359 were women. STUDY DESIGN: The ACSUS sample was selected from 26 sites (hospitals, clinics, and physician offices) in ten cities chosen from the 25 cities with the most AIDS cases. Cities are located throughout the nation, and in low, medium, and high prevalence areas. The sites in each city are generally those that treat the highest number of persons with HIV infection. Patients at each site were chosen using disease stage (asymptomatic, symptomatic, and AIDS) and gender as the selection criteria. Utilization equations are estimated for AZT use, outpatient care, and hospitalization. DATA COLLECTION: The ACSUS involves six in-person interviews over an 18-month period. Interviews include questions about the use of medical and support services, insurance status, functional status, and barriers to care during the prior three-month period. PRINCIPAL FINDINGS: A male injection drug user (IDU) with AIDS is 20 percent more likely to be hospitalized than a woman with AIDS, and the hospital cost of treating a male IDU with AIDS is $9,180 more per year than the hospital cost of treating a woman with AIDS. CONCLUSIONS: This study shows that, even after being diagnosed and after having accessed the medical care system, women with AIDS receive fewer services than men with AIDS.

Substitutability among different types of care under Medicare.

The question of whether Medicare coverage of outpatient services, nursing home care, and home health care reduced the use of short-term hospitals by Medicare beneficiaries, and whether reduced hospital use saved the Medicare program money, is reexamined by use of a simultaneous-equations model estimated by the two-stage least-squares method. It is argued that all alternative modes of care must be examined simultaneously for accurate results. The findings partly support and partly contradict results of previous studies: both outpatient care and nursing home care can substitute for hospital care, but a complementary relationship between outpatient and nursing home care indicates that the additional coverage resulted in greater, not less, expenditure by Medicare.

Heart disease and hospital deaths: an empirical study.

This study examines the effects of selected characteristics of hospitals and physicians on the mortality rates of heart patients who survive their first day in the hospital. Separate multivariate regression analyses are conducted for three groups: (1) patients who undergo a direct heart revascularization or coronary artery bypass graft (CABG) operation; (2) patients who undergo a cardiac catheterization and do not undergo a CABG operation; and (3) patients with a principal diagnosis of acute myocardial infarction (AMI) who do not undergo surgery. The number of patients in each group treated by specific physicians, and the number treated in specific hospitals, measure provider experience with similar patients. Other hypothesized determinants of in-hospital mortality include: (1) patient severity of illness, age, sex, and the presence of comorbidities; (2) hospital ownership, size, location, teaching status, resources expended, and the presence of a coronary care unit; and (3) board certification status of the attending physician or surgeon who operated. Empirical results show that presence of a coronary care unit decreases the chance that CABG patients will die in the hospital but is not significant for other heart patients included in this study. Patients with atherosclerosis who receive a CABG or a cardiac catheterization procedure are more likely to survive in hospitals with high volumes of these procedures. However, hospital volume of AMI admissions was not a factor in survival; AMI patients are more likely to survive when their attending physicians treat high volumes of AMI patients. Also, AMI patients whose physicians are board certified in family practice or in internal medicine are less likely to die compared to AMI patients with physicians not board certified. Similarly, AMI patients hospitalized in teaching facilities are less likely to die compared to AMI patients in hospitals not affiliated with a medical school.

Conducting research on the Medicare market: the need for better data and methods.

OBJECTIVE: To highlight data limitations, the need to improve data collection, the need to develop better analytic methods, and the need to use alternative data sources to conduct research related to the Medicare program. Objectives were achieved by reviewing existing studies on risk selection in Medicare HMOs, examining their data limitations, and introducing a new approach that circumvents many of these shortcomings. DATA SOURCES: Data for years 1995-97 for five states (Arizona, Florida, Massachusetts, New York, and Pennsylvania) from the Healthcare Cost and Utilization Project (HCUP) State Inpatient Databases (SIDs), maintained by the Agency for Healthcare Research and Quality; and the Health Care Financing Administration's Medicare Managed Care Market Penetration Data Files and Medicare Provider Analysis and Review Files. STUDY DESIGN: Analysis of hospital utilization rates for Medicare beneficiaries in the traditional fee-for-service (FFS) Medicare and Medicare HMO sectors and examination of the relationship between these rates and the Medicare HMO penetration rates. PRINCIPAL FINDINGS: Medicare HMOs have lower hospital utilization rates than their FFS counterparts, differences in utilization rates vary across states, and HMO penetration rates are inversely related to our rough measure of favorable selection. CONCLUSIONS: Substantial growth in Medicare HMO enrollment and the implementation of a new risk-adjusted payment system have led to an increasing need for research on the Medicare program. Improved data collection, better methods, new creative approaches, and alternative data sources are needed to address these issues in a timely and suitable manner.

Correlates of medical service utilization among people with HIV infection.

OBJECTIVE: To examine factors affecting the use of inpatient, outpatient, and emergency room services by people with HIV infection. DATA SOURCES AND STUDY SETTING: Study participants are adults with HIV infection receiving services at major providers of medical care in ten U.S. cities. Six interviews were conducted over an 18-month period (March 1991 to September 1992). DATA COLLECTION METHODS: Data on service utilization, personal background characteristics, insurance status, and functional status are based on self-report. Disease stage is based on medical record data. STUDY DESIGN: This is an observational study using a panel survey design. Linear and Poisson regression analyses were conducted to determine the effects of need, enabling, and predisposing factors on the dependent variables of ambulatory visits, emergency room visits, inpatient admissions, and average length of inpatient stay. Analyses use 1,449 respondents who completed the second and third interviews. Independent variables were measured as of the second interview, while dependent variables were measured in the third and fourth interview periods. PRINCIPAL FINDINGS: Service utilization was higher among respondents with AIDS than among those at earlier stages of HIV infection. Functional limitations, experienced pain, and negative mood each were associated with increased service use, over and above disease stage. Black respondents reported more hospital admissions and longer lengths of inpatient stays than white respondents. Lack of insurance was related to reduced service use. The effects of disease stage and functional limitations were reduced among people with public, compared to private, insurance. CONCLUSIONS: While disease stage affects use of medical care, the experience of adverse HIV-related conditions, such as pain or functional limitations, has an additional effect on service use. Persistent racial differences in utilization remain to be explained. Lack of insurance impedes use directly and also modifies the effects of disease stage and functioning.

AIDS treatment costs during the last months of life: evidence from the ACSUS.

OBJECTIVE: The volume and cost of services consumed by persons with AIDS (PWAs) during their last months of life are examined in this study. DATA SOURCES: This study utilizes data from the AIDS Costs and Service Utilization Survey (ACSUS). The ACSUS is the most comprehensive survey of medical services that are consumed by persons with HIV. STUDY DESIGN: This study is restricted to persons with AIDS who survived the fifth time period (an approximately three-month period in the early spring and summer of 1992). The types and costs of services consumed during the fifth time period by PWAs who did survive (609) and who did not survive (79) the sixth time period are compared. DATA COLLECTION: The ACSUS consists of six interviews over an 18-month period from Spring 1991 to Fall 1992. PRINCIPAL FINDINGS: Decedents were hospitalized more than four times as many days and experienced more than four times the number of home health visits as survivors. Both the average length of stay (19.3 days for decedents and 10.3 for survivors) and the frequency of hospitalization during the fifth time period (.70 for decedents and .28 for survivors) were higher for decedents than survivors. The levels of outpatient care (including emergency room care) and of prescription drug use were similar for decedents and survivors. CONCLUSIONS: This study shows that the cost of treating decedents is more than three times the cost of treating survivors.

Selection bias in health maintenance organizations: analysis of recent evidence.

An analysis of recent research regarding selection bias in health maintenance organizations (HMO's) is presented in this article. Review of the available literature leads one to conclude that prepaid group practice HMO's do experience favorable selection. It has been demonstrated in numerous studies that prior use of health services by HMO enrollees is less than prior use of health services by those who remain in the fee-for-service sector, and there is considerable evidence that shows a statistically significant positive relationship between prior use and current use. This is true for both those under 65 years of age and those 65 years of age or over.

Cost and financing of care for persons with HIV disease: an overview.

This article explores the impact of new combination drug therapies on the cost and financing of human immunodeficiency virus (HIV) disease. Evidence indicates that the proportion of costs attributable to drugs has increased significantly since the diffusion of new combination drug therapies, and that the proportion of costs attributable to hospital inpatient care has decreased. The absence of timely data is the major difficulty in analyzing the impact of recent changes. Only two studies have examined costs since the diffusion of new combination drug therapies, and there are no recent studies of the insurance status of persons with HIV disease.

Reimbursement under diagnosis-related groups: the Medicaid experience.

The implementation of the Medicare prospective payment system has sparked the growth of similar Medicaid systems. Eight State Medicaid agencies now employ a system based on diagnosis-related groups (DRG's), and another four State Medicaid agencies are planning to implement such systems in the near future. The eight DRG-based systems in existence in 1986 are examined in this article. Preliminary evidence presented herein indicates that Medicaid DRG-based systems have experienced reduced rates of increase in expenditures for hospital services and that hospital admission rates have not increased under these systems.

Regulating the financial incentives facing physicians in managed care plans.

Recent accounts of enrolees in managed care plans being denied access to potentially lifesaving services have heightened public anxiety about the impact of managed care on the accessibility and appropriateness of care, and this anxiety has been translated into legislative action. The present review focuses on an area of managed care operations that has received considerable attention in state legistlatures and in Congress during the past 2 years: the financial relationship between managed care health plans and physicians. Twelve states now mandate that managed care plans disclose information about their financial relationship with physicians, and 11 states regulate the method used by managed care health plans to compensate physicians. Most laws that regulate methods of compensation prohibit health plans from providing physicians an inducement to reduce or limit the delivery of "medically necessary" services. Moreover, in 1996 the Health Care Financing Administration finalized its regulations governing the financial incentives facing physicians in plans that treat Medicaid or Medicare patients, and these regulations went into effect on January 1, 1997. These regulations also are examined in this study.

Forecasting the personal medical care costs of AIDS from 1988 through 1991.

The personal medical care costs of those diagnosed with acquired immunodeficiency syndrome (AIDS) in 1988 are forecast to be $2.2 billion, an amount that will increase to $4.5 billion in 1991. This is the first study to include the cost of purchasing azidothymidine (AZT), also called zidovudine, a palliative treatment for AIDS. The forecasts of this study are lower than those reported by Rice and Scitovsky, and other researchers, because the data are more recent and AIDS patients are receiving more care on an outpatient basis and staying in the hospital fewer days. They are also lower because projections for the number of AIDS cases diagnosed in future years are lower than those made by the Centers for Disease Control (CDC). This study projects that about 38,000 AIDS cases will be diagnosed in 1988 and 73,000 in 1991. The projections in this study are derived using data on the number of AIDS cases reported to CDC from January 1984 to October 1987, while the CDC projections employed by Rice and Scitovsky were derived using data from June 1981 to May 1986. It is also projected that the lifetime cost of treating an AIDS patient will increase from $57,000 in 1988 to $61,800 in 1991 due to the wider use of AZT.

Updated forecasts of the costs of medical care for persons with AIDS, 1989-93.

Data on the number of AIDS cases reported to the Centers for Disease Control (CDC) from January 1984 to June 1989 are used to predict the number of AIDS cases that will be diagnosed during the years 1989 through 1993. Using quadratic and linear models with the most recent data, it is projected that about 44,000 cases will be diagnosed in 1989, 56,000 in 1990, 70,000 in 1991, 87,000 in 1992, and 104,000 in 1993. These projections are lower than estimates derived using data from January 1984 to June 1988, and they are similar to estimates derived by the CDC. The lifetime medical care cost of treating a person with AIDS is estimated to be about $75,000 (all estimates are in 1988 dollars) assuming that the average length of survival is 15 months and that the intensity of care (that is, the cost of medical care per month) does not fall as longevity rises. This total, $75,000, reflects recent increases in the length of survival and the diffusion of costly drug therapies (for example, AZT and aerosol pentamidine). This study forecasts that the cumulative lifetime medical care costs of treating all people diagnosed with AIDS during a given year to be about $3.3 billion in 1989, $4.3 billion in 1990, $5.3 billion in 1991, $6.5 billion in 1992, and $7.8 billion in 1993.

National forecasts of the medical care costs of AIDS: 1988-1992.

Two statistical extrapolation models and data on the number of AIDS cases reported between January 1984 and June 1988 yield projections on the future numbers of AIDS cases which are considerably higher than those of earlier projections, while analysis of the lifetime cost of treating an AIDS patient in 1988 dollars yields estimates lower than most previous estimates. Based on an estimate of $60,000 per patient holding between 1988 and 1992, the analysis forecasts the cumulative lifetime medical care costs of treating all AIDS patients diagnosed with AIDS to be about $2.6 billion in 1988, $3.5 billion in 1989, $4.7 billion in 1990, $6.0 billion in 1991, and $7.5 billion in 1992.

Recent evidence on case-based systems for setting hospital rates.

Medicare's adoption of the Prospective Payment System (PPS) was the culmination of years of research and demonstrations to establish case-based systems for setting hospital rates. This paper examines the procedures and findings of the early programs in New Jersey and Maryland, as well as the Medicare case-based system that was established pursuant to the experience in these two states. This is followed by an examination of the recently established Medicaid case-based systems in Utah, Pennsylvania, Ohio, Michigan, and Washington and the case-based systems established by some Blue Cross and Blue Shield Plans. The strengths and weaknesses of these systems are discussed, and suggestions are made for improving the evaluations of these systems.

Forecasting the number of AIDS cases: an analysis of two techniques.

Two methods used to forecast AIDS cases--trend analysis and back calculation--are examined in this paper. I forecast AIDS cases using trend analysis with data on the number of cases reported between January 1984 and March 1990. Forecasts using back calculation methods are based on the assumption that the progression rates from HIV to AIDS slowed in 1988 due to the use of AZT and aerosol pentamidine. With both methods, reasonable models yield widely different forecasts. Analysis also is hampered by a lack of information about the basic determinants of AIDS incidence, changes in the definition of AIDS, underreporting, and uncertainty about the effect of the use of prophylactic drugs. It is not possible to establish confidence limits around forecasts that take into account these sources of biases, and it is important that those who use AIDS forecasts be aware of these uncertainties.

Forecasting the medical care costs of the HIV epidemic: 1991-1994.

This is the first paper to forecast the cost of medical care for all people with the human immunodeficiency virus (HIV). Previous studies have concentrated on the cost of treating people with AIDS (PWAs). It is estimated that the average cost of treating a person with HIV without AIDS is $5,150 per year, and that the average cost of treating a PWA is $32,000 per year ($24,000 for inpatient hospital care and $8,000 for other services). The lifetime cost of medical care for a PWA is calculated to be $85,333. This is higher than many previous estimates of lifetime costs due to increased longevity and the diffusion of costly outpatient drugs. The cost of treating all people with HIV in 1991 is forecast to be $5.8 billion. Of this amount, it is estimated that $1.4 billion will be spent on people with HIV without AIDS, and the remaining $4.4 billion on PWAs. It is forecast that the cost of treating all people with HIV will increase 21% each year between 1991 and 1994, and that $10.4 billion will be spent on treating all people with HIV in 1994.