Disability outcomes of older Medicare HMO enrollees and fee-for-service Medicare beneficiaries.

OBJECTIVES: To investigate whether older Medicare beneficiaries enrolled in Medicare risk health maintenance organizations (HMOs) have different rates of disablement than fee-for-service (FFS) beneficiaries. DESIGN: Secondary analysis of annual functional status transitions using the Medicare Current Beneficiary Survey, 1991 to 1996. SETTING: Telephone interviews. PARTICIPANTS: Forty-four thousand seven hundred and sixty-five person-years of annual functional status transitions for noninstitutionalized older Medicare beneficiaries who were either risk HMO enrollees or FFS beneficiaries with or without private supplementary insurance. MEASUREMENTS: Five multinomial logit models were estimated as single-state transition models, with five functional states, death, and censored as outcomes. The probability of being in a certain functional state the following year was specified as a function of individual risk factors and HMO versus FFS supplementary insurance status. RESULTS: Among functionally independent beneficiaries, the odds of becoming disabled in activities of daily living (ADLs) within a year were lower among FFS individuals with supplementary insurance (odds ratios (OR) = 0.67, P <.01) and HMO enrollees (OR = 0.58, P <.01). Among older people who were functionally impaired, neither HMO enrollment nor private supplementary insurance affected the risk of further functional decline or functional improvement. Supplementary insurance, but not HMO enrollment, was associated with lower mortality risk among beneficiaries with functional limitations (OR = 0.65, P <.05) or moderate ADL disability (OR = 0.72, P <.05). CONCLUSION: Medicare risk HMO enrollment and FFS private supplementary insurance convey similar benefits of slowing functional decline and extending life span for nonseverely disabled older people. That no association was found between adverse functional status outcomes and risk HMO enrollment has favorable implications regarding the quality of care of managed care plans.

A comparison of ambulatory care-sensitive hospital discharge rates for Medicaid HMO enrollees and nonenrollees.

With an increasing volume of Medicaid recipient enrollees in managed care, many states are developing tools for monitoring service quality and access of Medicaid recipients. This article explores the use of ambulatory care-sensitive (ACS) hospital discharge rates as a simple, practical indicator tool for monitoring the access of Medicaid health maintenance organization (HMO) enrollees through an empirical application in Massachusetts in 1995. Although unadjusted hospital discharge rates were lower, Medicaid HMO enrollees had higher age-gender-race adjusted total and ACS hospital discharge rates than Medicaid recipients enrolled in a primary care case management program under fee-for-service reimbursement. Higher HMO discharge rates for the specific ACS conditions of asthma and dehydration were suggestive of potential HMO access problems.

A longitudinal analysis of nursing home outcomes.

OBJECTIVE: To investigate resident and facility attributes associated with long-term care health outcomes in nursing homes. DATA SOURCES: Quarterly Management Minutes Questionnaire (MMQ) survey data for Medicaid case-mix reimbursement of nursing homes in Massachusetts from 1991 to 1994, for specification of outcomes and resident attributes. Facility attributes are specified from cost report data. STUDY DESIGN: Multivariate logistic and "state-dependence" regression models are estimated for survival, ADL functional status, incontinence status, and mental status outcomes from longitudinal residence histories of Medicaid residents spanning 3 to 36 months in length. Outcomes are specified to be a function of resident demographic and diagnostic attributes and facility-level operating and nurse staffing attributes. PRINCIPAL FINDINGS: The estimated parameters for resident demographic and diagnostic attributes showed a great deal of construct validity with respect to clinical expectations regarding risk factors for adverse outcomes. Few facility attributes were associated with outcomes generally, and none was significantly associated with all four outcomes. CONCLUSIONS: The absence of uniform associations between facility attributes and the various long-term care health outcomes studied suggests that strong facility performance on one health outcome may coexist with much weaker performance on other outcomes. This has implications for the aggregation of individual facility performance measures on multiple outcomes and the development of overall outcome performance measures.

Medicare risk contracting: determinants of market entry.

The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 made it more attractive for health maintenance organizations (HMOs) and other competitive medical plans to enter into risk contracts with Medicare. Since the start of the TEFRA program in April 1985, more than 160 HMOs have had risk contracts with Medicare under the program. An investigation of factors associated with TEFRA risk-market entry at the end of 1986 revealed that high adjusted average per capita cost payment levels, prior Medicare cost-contract experience, and prior Federal qualification were the most important factors distinguishing market entrants from nonentrants.

Alternative geographic configurations for Medicare payments to health maintenance organizations.

Under prevailing legislation, Medicare payments to health maintenance organizations (HMOs) are based upon projected fee-for-service reimbursement levels for enrollees' county of residence. These rates have been criticized in light of substantial variations in rates among neighboring counties and large fluctuations in rates over time. In this study, the use of nine alternative configurations and the county itself were evaluated on the basis of payment-area homogeneity, payment rate stability, and policy criteria, including the fiscal impacts of reconfiguration on HMOs. The results revealed rather modest differences among most alternative configurations and do not lend strong support for payment area reconfiguration at this time.

Adjusting Medicare capitation payments using prior hospitalization data.

The diagnostic cost group approach to a reimbursement model for health maintenance organizations is presented. Diagnostic information about previous hospitalizations is used to create empirically determined risk groups, using only diagnoses involving little or no discretion in the decision to hospitalize. Diagnostic cost group and other models (including Medicare's current formula and other prior-use models) are tested for their ability to predict future costs, using R2 values and new measures of predictive performance. The diagnostic cost group models perform relatively well with respect to a range of criteria, including administrative feasibility, resistance to provider manipulation, and statistical accuracy.

Facility-level outcome performance measures for nursing homes.

Risk-adjusted nursing home performance scores were developed for four health outcomes and five quality indicators from resident-level longitudinal case-mix reimbursement data for Medicaid residents of more than 500 nursing homes in Massachusetts. Facility performance was measured by comparing actual resident outcomes with expected outcomes derived from quarterly predictions of resident-level econometric models over a 3-year period (1991-1994). Performance measures were tightly distributed among facilities in the state. The intercorrelations among the nine outcome performance measures were relatively low and not uniformly positive. Performance measures were not highly associated with various structural facility attributes. For most outcomes, longitudinal analyses revealed only modest correlations between a facility's performance score from one time period to the next. Relatively few facilities exhibited consistent superior or inferior performance over time. The findings have implications toward the practical use of facility outcome performance measures for quality assurance and reimbursement purposes in the near future.

Access to care and functional status change among aged Medicare beneficiaries.

OBJECTIVES: This study examined whether the extra-individual factors of better access to care and supplementary health insurance coverage can prevent, delay, or reverse transitions from functional independence to disability over time. METHODS: Six years of the Medicare Current Beneficiary Survey were pooled, yielding 40,793 transition periods for community residents aged 66 or older. Multinomial logit models of transitions among functional states were estimated, with functional improvement, functional decline, and mortality as outcomes. RESULTS: Insurance coverage and better access to care increased survival chances and reduced the odds of transitions from independence to disability by roughly 30%. Access and supplementary insurance did not appear to affect transitions from less disabled to more disabled states or affect functional improvement. DISCUSSION: The findings support the hypothesized role of extra-individual environmental factors in Verbrugge and Jette's conceptual scheme of the disablement process. Access to care is suggested to make the most difference in delaying or slowing down functional decline among functionally independent elderly persons. Transitions from less severe to more severe states of disability or to death appear to be influenced more by the natural course of chronic diseases, underlying health status, and medical instability.

Geographic variations in hospital discharge rates and discretionary hospital use.

OBJECTIVES: While past research has shown that there is greater geographic variability in hospital discharge rates for medical conditions where there is less agreement about proper treatment, there is little empirical evidence to support the corollary that high hospital use in a community is primarily the result of a greater volume of such discretionary hospitalizations. This study assesses the contribution of discretionary hospitalizations to higher overall rates of hospital use in communities. METHODS: Hospital discharge files and Medicare eligibility files were used to estimate adjusted rates of hospital discharge, days of care and adjusted mortality for a sample of 761 geographic communities in four states in the USA. Diagnostic information was used to classify hospitalizations into low, moderate and high discretion categories. Correlation and multiple regression analysis methods were used to test for systematic relationships between a community's overall rate of hospital use and discretion-level mix of hospitalizations. RESULTS: Although about half of the variance in overall rates of hospital use among communities was found to be related to the discretion-level mix of hospital discharges, only a small portion of the explained variance could be attributed specifically to community differences in the prevalence of high discretion hospitalizations. CONCLUSIONS: High overall rates of hospital use in communities were not found to be largely the result of high discretion hospital use.

Job characteristics and leisure physical activity.

OBJECTIVES: This study employs a sample population of older workers to estimate an empirical model of leisure exercise activity. Alternative theories relating work and leisure attitudes relevant for understanding the exercise behavior of older workers are tested empirically. METHODS: Responses of 6,433 full-time older workers (51 to 61 years old) from the 1992 Health and Retirement Study (HRS) are grouped into two white-collar and blue-collar worker categories and are analyzed to test whether self-reported levels of regular physical activity are associated with the physical demands and stress associated with one's job. RESULTS: Although the white-collar workers, whose jobs involve more physical efforts, are more likely to do light physical activity, the blue-collar workers, whose jobs are more physically demanding, tend to engage in more vigorous exercise. DISCUSSION: The empirical results are most supportive of the generalization theory, and they also illustrate the complexity of relationships between work and leisure physical activity.

Discretionary hospital use and diagnostic risk adjustment of Medicare HMO capitation rates.

The health maintenance organization (HMO) industry has expressed concern that implementation of a diagnostic risk adjustment model based solely on diagnoses from inpatient hospitalizations will penalize Medicare HMOs that have been successful in controlling costs by reducing discretionary hospitalizations. This study compares the diagnostic composition of HMO and fee-for-service (FFS) hospitalizations in four states to test the proposition that lower Medicare HMO hospital admission rates are the result of lower rates of "high-discretion" hospitalizations. The empirical findings show very little difference in the proportion of Medicare HMO and FFS hospitalizations with principal diagnoses rated as high discretion, and do not suggest that Medicare HMOs have been more successful in reducing discretionary hospitalizations than nondiscretionary ones.

Medicare risk contracting: identifying factors associated with market exit.

Over the past few years, a number of HMOs have chosen to discontinue their Medicare risk contracts. Using logistic regression, this study sought to identify factors associated with Medicare risk contract market exit in 1988. Low AAPCC rates were found to systematically affect the market exit of only Medicare risk contractors that were regional components of a central HMO organization. The Medicare risk market exit of other HMOs was found to be principally related to two attributes suggestive of possible unfavorable risk selection: the dropping of a previously offered prescription drug benefit and higher proportions of categorically disabled Medicare enrollees.

Spatial patterns of hospital utilization: the impact of distance and time.

Although the impact of the physical proximity of health care facilities on utilization in rural areas is well established, its effect in metropolitan areas is still subject to question. This paper develops a spatial demand model of hospital choice to empirically estimate the impacts of distance and time on hospital utilization patterns. With a cross-product ratio estimation approach, the effects of physical access are estimated after controlling for spatial irregularities owing to the distribution of hospitals and population in metropolitan areas. The empirical results suggest that distance and time factors strongly influence hospital choice, even in metropolitan areas where alternatives are widely available, and that their effects vary across service classifications and hospitals.

Biased selection under the senior health plan prior use capitation formula.

A widely acknowledged shortcoming of the current AAPCC capitation formula for Medicare HMOs is its inability to adjust capitation levels for differences in health status among enrolled groups. Prior use models have been proposed as one alternative to the current AAPCC risk classes. From 1984 through 1987, Senior Health Plan (SHP) participated in a HCFA-sponsored demonstration project in which capitation payments were determined by a prior use formula incorporating information on inpatient hospital days and Part B deductibles. This paper contains findings about selection bias in SHP enrollment from analyses of preenrollment reimbursements and postenrollment mortality rates of SHP enrollees compared with Medicare FFS beneficiaries and enrollees of other Medicare HMOs in the Minneapolis-St. Paul area.

Preferred provider organizations: options for Medicare.

Preferred Provider Organizations (PPOs) offer purchasers of care several benefits, including expenditure reduction, utilization control, improved quality of care, and efficient management. Although Medicare could benefit from these outcomes, the program lags behind the private sector in PPO development. The Health Care Financing Administration (HCFA) must address several policy issues and constraints as it develops PPOs for Medicare beneficiaries. The agency must identify services and providers to include in the PPO, develop program sponsorship and administration methods, create viable provider and beneficiary incentives to participate, identify sources of PPO cost savings, and examine the role of medigap insurance policies in PPO development. In this article we discuss three possible PPO models for Medicare: a service or population specific PPO, an integrated PPO/medigap policy, and a Medicare Part A/B PPO. We conclude by identifying several issues that require further research before these PPO models can be tested.

Intermetropolitan migration and quality of life.

The aim of this paper is to assess the relative importance of economic and quality of life (QOL) factors as determinants of inter-metropolitan migration in the United States. The study is based on the generalized systemic gravity model of Alonso and on data from a sample of 25 SMSAs over the period 1965-1970. "The most striking feature of the empirical results is the apparent lack of importance of origin economic and QOL factors as determinants of outmigration.... On the other hand, the empirical results suggest both economic and QOL factors to be significant determinants of inmigration."

Biased selection under an experimental enrollment and marketing Medicare HMO broker.

All studies conducted to date suggest that nearly all Medicare HMOs have experienced favorable risk selection in their Medicare HMO enrollments. While there is little definitive empiric knowledge about the extent to which Medicare HMOs can and do encourage favorable selection through marketing and enrollment activities, it has been speculated that centralizing all such functions through an independent broker could reduce enrollment selection bias. In 1985, the Health Care Financing Administration initiated a three-year demonstration of a HMO broker model in Portland, Oregon, known as Health Choice, Incorporated (HCI). This study reports empiric findings that provide no evidence to support claims of the efficacy of an enrollment brokerage function in reducing Medicare HMO enrollment selection bias.

The health status and utilization patterns of the elderly: implications for setting Medicare payments to HMOs.

In this paper we have examined various aspects of the patterns of medical care use and costs of the elderly Medicare population. First, to summarize the major points, we found the following: 1. Although per capita costs increase with age among the elderly, the distribution of costs among individuals does not vary much across different age groups. Small changes in the shape of the cost distribution were observed, including a small decrease with age in the coefficient of variation of Medicare costs, and a spreading out or diffusion of the degree concentration of acute hospital utilization over single- and multiyear time frames. 2. Costs associated with mortality account for a large proportion of Medicare reimbursements; the 20 percent of elderly who are in their last 4 years of life account for over half of all Medicare expenditures over that period. The cost levels and the time span over which costs are high prior to death appears to vary systematically with the cause of death and with age. 3. The elderly population is quite similar to the younger population in that there is a subpopulation of individuals who are found to be frequent users of acute hospital care over an extended period of time. Among the elderly, we estimate that 85 percent are only routine users of the hospital, requiring one hospitalization every 8 years. The remaining 15 percent are frequent hospital users who often live on for many years. A key requirement of a Medicare payment system will be to identify these high-cost users and establish a fair payment for them. 4. Acute hospital use associated with certain marker conditions--heart attacks, strokes, and cancer, among others, is found to be associated with future high Medicare reimbursements, and the high costs persist over an extended period of time. Moreover, it may be possible to use these hospitalizations as morbidity indicators that are not sensitive to the discretionary behavior of physicians and can thus be used to detect differences in the expected costs of different groups of individuals. 5. There is a significant relationship between Medicare reimbursements and the extent of functional impairments. Disability level is an independent predictor of higher costs, even after controlling for prior utilization. In practice, the acute care utilization observed among severely impaired individuals participating in long-term care demonstrations is substantially higher than what is predicted from unidimensional measures of disability.

The impact of the closing of three Massachusetts public chronic disease hospitals: a multidimensional perspective.

The closing of three public chronic disease hospitals in Massachusetts in 1991 as a cost-cutting measure sparked renewed attention to the consequences of relocation. Massachusetts officials faithfully carried out a series of measures to assure that patients would be transferred to facilities providing high quality care and that the relocation process would be highly sensitive to patient needs. A survey of family representatives revealed that both the relocation process and the outcome tended to be perceived positively. Quasi-experimental studies of health and survival outcomes, however, provided less favorable results. On two of three measures of health change, relocation was found to have no effect. However, relocation was found to increase the likelihood of incontinence. For patients at the hospital with the greatest concentration of older patients, relocation lead to heightened mortality rates. Also disappointing for State officials was the fact that the anticipated cost savings were less than anticipated. The findings point to the need for renewed efforts to understand the circumstances when relocation places institutionalized older people at serious risk, more careful cost estimates of the savings to be achieved through proposed cost-saving policy changes, and more carefully formulated policy guidelines for relocation of the institutionalized elderly that balance the risks associated with relocation against other public policy objectives.