How do urban organized health care delivery systems link with rural providers?

Organized delivery systems are becoming an increasingly important component of urban health care markets and are expanding their influence in rural areas as well. They also are developing new linkages with rural providers. This article, based on the experiences of 20 diverse organizations, identifies and describes the strategies being used by urban systems to redefine linkages with rural hospitals and, particularly, physicians.

Outcomes for Medicaid beneficiaries with schizophrenia under a prepaid mental health carve-out.

This study examines the impact of a mental health carve-out program in Utah on mental health status of Medicaid beneficiaries with schizophrenia. Three community mental health centers contracted to provide mental health care for all Medicaid beneficiaries in their service areas under managed care arrangements, while beneficiaries in the remainder of the state remained under traditional Medicaid. A pre-post evaluation was utilized, with a contemporaneous control group of Utah Medicaid beneficiaries with schizophrenia under traditional Medicaid. From 1991 to 1994, the average beneficiary's mental health status improved, but the improvement was less under the carve-out program than under traditional fee-for-service Medicaid. The difference was the greatest for beneficiaries with the worst mental health status at baseline, with effects growing over time. Medicaid beneficiaries with schizophrenia experienced less improvement in mental health status under a carve-out arrangement for mental health care compared to what would have happened under traditional Medicaid.

HMO consolidations: how national mergers affect local markets.

The health maintenance organization (HMO) industry has undergone a wave of national consolidations in recent years. The most notable among these were between United HealthCare and MetraHealth (1995), PacifiCare Health Systems and FHP International (1996), Aetna Life and Casualty and U.S. Healthcare (1996), and Aetna and Prudential's health care unit (1999). This paper examines HMO consolidation from 1994 to 1997, looking first at concentration at the national level and then at the consequences of national consolidations for local markets. Whereas earlier mergers may have caused only a small increase in the type of local market concentration that may increase prices, later and currently proposed mergers may be motivated by considerations of increasing local market concentration. However, the concentration-increasing effect of national mergers was offset by the concentration-decreasing effect of HMO entry and growth. The analyses suggest that antitrust policy still has a role to play in ensuring that HMO markets remain open to new entry and in evaluating the effect of national mergers on local market concentration.

Patterns of outpatient use of mental health services for Medicaid beneficiaries under a prepaid mental health carve-out.

This study examines the impact of a mental health carve-out, the Utah Prepaid Mental Health Plan (UPMHP), on use of outpatient mental health services by Medicaid beneficiaries with schizophrenia. Data were collected through interviews with the same group of Medicaid schizophrenic beneficiaries. A pre/post comparison with a contemporaneous control group examined the impact of the program on type of outpatient services used by beneficiaries. The results indicate a greater reliance on medically-oriented outpatient mental health services in treatment of beneficiaries under the UPMHP. Medicaid beneficiaries with schizophrenia in the UPMHP group received relatively fewer day treatment visits, but relatively more medication visits and individual therapy visits over the first 3 1/2 years of the program.

Do Medicare HMOs cost shift?

We tested the hypothesis that health maintenance organizations (HMOs) increase their commercial premiums when Medicare pays less. Such a linkage would be taken as evidence of "cost shifting." Other studies have tested the cost-shifting hypothesis among health care providers, but this is the first to examine the HMO industry. Our data consisted of annual observations on all HMOs that operated in the United States between 1990 and 1995 and had a Medicare risk contract. A comparison group of HMOs that had no Medicare contract during that period also was analyzed. The main finding from this study is that HMOs have not shifted costs from Medicare to commercial premiums. This results supports the skeptical consensus that is developing toward the cost-shifting hypothesis. Additional findings include the negative effects of competition and for-profit status on HMOs' commercial premiums.

The role of employers in community health care systems.

Employers can play an important role in shaping community health care systems through their direct efforts to institute system change, their negotiations with health plans, and their decisions concerning the structure of health benefits for their employees. This paper describes recent employer initiatives in all three of these areas, using data collected from interview respondents in the twelve communities that are part of the Community Tracking Study being carried out by the Center for Studying Health System Change. During the recent period of relative health premium stability, employers have responded to employees' concerns about managed care by favoring looser, less structured managed care plans offering broader networks of providers or out-of-network options.

The effect of the Utah Prepaid Mental Health Plan on structure, process, and outcomes of care.

Capitation reduced Medicaid costs but had limited effects on most measures of process and outcome. Clients under capitation with the poorest mental health at baseline performed more poorly over time on some measures.

The demand for health insurance by employees in a voluntary small group insurance program.

OBJECTIVES: This study examined the decisions of small group employees to enroll in prepaid plans offered through Healthcare Group of Arizona (HCGA), a state-sponsored and state-administered voluntary insurance program. METHODS: The study population included 653 potential employee enrollees who were offered the option of two health plans between January 1993 and June 1993, with 447 enrolling in one of the two plans. Data sources included two telephone surveys, HCGA administrative files, and enrollment application forms. RESULTS: The estimates of adjusted price elasticity were in the range of -0.12 to -0.24 for employees with prior insurance and were in the range of -0.42 to -0.51 for employees without prior insurance. The likelihood of enrolling in HCGA increased with log(income) and decreased with log(income) squared. The average income elasticity across income groups was 0.12. CONCLUSIONS: The results indicate that small group employees without prior insurance were more sensitive to the price of health insurance than those with prior insurance. Healthcare Group of Arizona health plans may have been viewed as inferior goods by high income employees possible because of their association with the Medicaid program.

HMO financial arrangements with rural physicians.

The growth of managed care in general suggests that a substantially larger number of rural primary care physicians will be asked to enter into risk-bearing contracts with Health Maintenance Organizations (HMOs) in the near future. This article describes the different types of payment and risk-sharing arrangements that exist between HMOs and primary care physicians and presents survey data relating to their prevalence in rural areas. Also, it describes in detail the payment arrangements used by four HMOs that contract with rural primary care physicians. The concluding discussion highlights policy issues regarding risk-sharing arrangements that are especially pertinent in rural settings.

The early experience of a voluntary small group insurance program utilizing managed care plans.

HealthCare Group of Arizona (HCGA), a state-sponsored, voluntary health insurance purchasing program offering prepaid health plans to small businesses, became operational in 1988. This article summarizes the results from a wide-ranging evaluation of that program and discusses their implications. In general, enrollees were satisfied with their experience in their plans. HCGA did not appear to attract an adverse mix of health risks, and service utilization rates were consistent with HMO industry averages. However, these findings varied across health plans and the marketing approaches they adopted. Enrollment growth in HCGA has been steady, but premium subsidies may be necessary if HCGA is to substantially increase its enrollment of low-wage, uninsured workers.

Importing employer-based managed care initiatives to rural areas: the experience of the South Dakota state employees group.

In urban areas, employers are frequently in the forefront of efforts to implement managed care initiatives at the community level, either individually or through coalitions. While employer-driven managed care initiatives also exist in rural areas, they are less common and much less is known about them. This article describes and analyzes the early experience of a large rural employer--the state of South Dakota--in its attempt to develop and implement a managed care initiative. Several aspects of that experience suggest that employer-driven managed care models in urban sites may require reexamination and redefinition for implementation in rural areas.

Implementing programs for chronic illness management: the case of hypertension services.

BACKGROUND: This article describes the process by which HealthSystem Minnesota (a vertically integrated health care organization), functioning in a competitive managed care environment, has been implementing a hypertension services program. The program involves a team approach to care, with emphasis on patient participation in treatment; decentralized care delivery by nurse coordinators at primary care practice sites; ongoing training and education for patients and providers; and the continuous monitoring and evaluation of patient outcomes and satisfaction. JOB-LEVEL ISSUES: A variety of issues, such as the role and responsibilities of the nurse coordinator, became evident as the program moved towards operational status at four primary care practice sites, which prolonged the implementation period. PROCESS-LEVEL ISSUES: Issues relating to work process changes were more complicated to resolve and required, in some cases, changes in the proposed model. The most significant process-level issues related to educating physicians about the program to secure their participation and support. ORGANIZATION-LEVEL ISSUES: Such issues, which were the most difficult for program implementors to anticipate and resolve, included an organizational culture that emphasized decision making autonomy at primary practice sites. In part, the difficulty encountered in resolving organization-level issues reflected the implementors' lack of awareness of the strength or complexity of the environmental pressures facing the organization, as well as a lack of sensitivity to nuances relating to organizational culture. MOVING AHEAD: Two groups of hypertensive patients--at the implementation and comparison sites--will be compared with respect to satisfaction with care, clinical outcomes, and costs. Expansion of the model to patients with other chronic conditions is under consideration.

The composition of rural hospital medical staffs: the influence of hospital neighbors.

The local supply of physicians has a strong influence on the availability and the quality of services provided by rural hospitals. Nevertheless, there are no published studies that describe the composition of rural hospital medical staffs and, in particular, the availability of specialists on these staffs. This study uses 1991 and 1994 survey data from rural hospitals located in eight states to describe the specialty composition and factors that influence the presence of specialists on rural hospital medical staffs. The results show a strong, positive association between the level of medical staff specialization in rural hospitals and the level of medical specialization of their closet rural neighbors, which suggests there is competition among rural hospitals based on the composition of the hospital medical staff. Analysis by specialty type, however, indicates that the degree of competition may differ for different types of specialists.

HMO market structure and performance: 1985-1995.

This paper estimates the effect of market structure on hospital days and ambulatory visits in independent practice associations (IPAs) and group-model health maintenance organizations (HMOs) where market structure is measured by HMO penetration and the number of HMOs operating in a market. There was a steady decline in inpatient use in HMOs during the study period and a steady increase in use of ambulatory care. In multivariate analyses, inpatient use is significantly higher in IPAs, but there is no difference in ambulatory use. As HMO penetration increases and the number of HMOs increases, group-model HMOs have lower hospital use and greater ambulatory use. In contrast, use of both inpatient and ambulatory care decreases in IPAs but only at high levels of penetration and numbers of competitors.

Scale and scope economies among health maintenance organizations.

We examine scale and scope economics among Group and IPA Health Maintenance Organizations (HMOs) over the period 1988 to 1991 using a national sample of HMOs. We allow for the multiproduct nature of HMO production by estimating the cost of producing a member month of non-Medicare and Medicare coverage, and we examine the effect of HMO market structure on costs. We find that HMOs benefit from scale economies. There are scope diseconomies associated with providing both non-Medicare and Medicare products. Group HMOs in more competitive markets have lower costs but IPA costs are not affected by competition.

Income, health status, and insurance coverage of small group employees in a voluntary purchasing arrangement.

The ongoing health care reform discussion has highlighted the problems of insuring small group employees. Several state and private initiatives have attempted to address some of these problems through the formation of voluntary small group purchasing arrangements. This article uses data from one such initiative, Health Care Group of Arizona (HCGA), to describe the income, health status, and prior insurance of small group employees who enrolled in prepaid health plans through HCGA. It also compares employee enrollees to nonenrollees along these dimensions. The findings suggest that HCGA enrollees had relatively low incomes and that about three-quarters were without health insurance prior to enrollment. Higher income employee enrollees were more likely to report health conditions at enrollment even after controlling for other factors including age. Enrollees were less likely than nonenrollees to have prior health insurance but were more likely to be drawn from lower income groups and to report recent health conditions.

Open-ended options in Medicare risk contracts with HMOs.

The open-ended option has achieved broad acceptance in the health maintenance organization (HMO) industry. Permitting HMOs that enter into risk contracts with Medicare to offer open-ended products would expand the number of managed care options available to Medicare beneficiaries. The attractiveness of this option to HMOs depends in part on how issues are addressed relating to tracking and managing of out-of-plan use, education of Medicare beneficiaries, interface with peer review organizations (PROs), payment of nonnetwork providers, and use of medical screening. Perhaps most importantly, changes in the Medicare supplementary insurance market probably would be necessary before an open-ended product would be offered by HMOs under Medicare risk contracts.

Capitated Medicaid and the process of care of elderly hypertensives and diabetics: results from a randomized trial.

PURPOSE: To measure the quality of care for hypertensive and diabetic elderly Medicaid beneficiaries enrolled in managed care versus fee-for-service (FFS) plans. METHODS: Individuals enrolled in the Medicaid Demonstration Project in Hennepin County, Minnesota, were randomly assigned to receive their care either in one of seven managed care health plans in which the Medicaid payment for their care was capitated or in an FFS plan. Two hundred ninety-one hypertensives and 96 diabetics who were aged 65 years or over at the beginning of the evaluation were interviewed at baseline and followed for 1 year. Drug and nondrug therapy, monitoring, monthly medication costs, and access to medications were assessed. RESULTS: The prepaid and FFS did not differ in drug or nondrug therapy, with the exception that slightly more FFS enrollees were on human insulin after 1 year. Mean monthly medication costs and access to medications were similar for both groups. CONCLUSIONS: In this randomized trial, we were unable to detect differences in the process of care for hypertensive and diabetic Medicaid enrollees.