Selection bias between 2 Medicare capitated benefit programs.

OBJECTIVES: To assess enrollment selection bias between a standard Medicare health maintenance organization (HMO) and a higher-priced social health maintenance organization (SHMO) offering full prescription drug and unique home-based and community-based benefits and to assess how adverse selection was handled through SHMO finances. STUDY DESIGN: Kaiser Permanente Northwest offered the dual-choice option in the greater Portland region from 1985 to 2002. Analysis focused on 3 "choice points" when options were clear and highlighted for beneficiaries. Data collected included age and sex, utilization 1 year before and after the choice points, health status data at enrollment (1999-2002 only), mortality, and cost and revenues. Data were extracted from health plan databases. METHODS: Hospital, pharmacy, and nursing facility utilization for 1 year before and after the choice points are compared for HMO and SHMO choosers. Health and functional status data are compared from 1999 to 2002. Utilization and mortality data are controlled by age and sex. RESULTS: SHMO joiners evidenced adverse selection, while healthier members tended to stay in the HMO, with leaner benefits. Despite adverse selection, the health plan maintained margins in the SHMO, assisted by frailty-adjusted Medicare payments and member premiums. CONCLUSION: This high-low option strategy sought to offer the "right care at the right time" and may be a model for managed care organizations to serve aging and disabled beneficiaries under Medicare's new special needs plan option.

Utilization and costs of home-based and community-based care within a social HMO: trends over an 18-year period.

PURPOSE: Our objective was to describe the utilization and costs of services from 1985 to 2002 of a Social Health Maintenance Organization (SHMO) demonstration project providing a benefit for home-based and community-based as well as short-term institutional (HCB) care at Kaiser Permanente Northwest (KPNW), serving the Portland, Oregon area. The HCB care benefit was offered by KPNW as a supplement to Medicare's acute care medical benefits, which KPNW provides in an HMO model. KPNW receives a monthly per capita payment from Medicare to provide medical benefits, and Medicare beneficiaries who choose to join pay a supplemental premium that covers prescription drugs, HCB care benefits, and other services. A HCB care benefit of up to 12,000 dollars per year in services was available to SHMO members meeting requirement for nursing home certification (NHC). METHODS: We used aggregate data to track temporal changes in the period 1985 to 2002 on member eligibility, enrollment in HCB care plans, age, service utilization and co-payments. Trends in the overall costs and financing of the HCB care benefit were extracted from quarterly reports, management data, and finance data. RESULTS: During the time period, 14,815 members enrolled in the SHMO and membership averaged 4,531. The proportion of SHMO members aged 85 or older grew from 12 to 25%; proportion meeting requirements for NHC rose from 4 to 27%; and proportion with HCB care plans rose from 4 to 18%. Costs for the HCB care benefit rose from 21 dollars per SHMO member per month in 1985 to 95 dollars in 2002. The HCB care costs were equivalent to 12% to 16% of Medicare reimbursement. The HCB program costs were covered by member premiums (which rose from 49 dollars to 180 dollars) and co-payments from members with care plans. Over the 18-year period, spending shifted from nursing homes to a range of community services, e.g. personal care, homemaking, member reimbursement, lifeline, equipment, transportation, shift care, home nursing, adult day care, respite care, and dentures. Rising costs per month per SHMO member reflected increasing HCB eligibility rather than costs per member with HCB care, which actually fell from 6,164 dollars in 1989 to 4,328 dollars in 2002. Care management accounted for about one-quarter of community care costs since 1992. CONCLUSIONS: The Kaiser Permanente Northwest SHMO served an increasingly aged and disabled membership by reducing costs per HCB member care plan and shifting utilization to a broad range of community care services. Supported by a disability-based Medicare payment formula and by SHMO beneficiaries willing to pay increasing premiums, KPNW has been able to offer comprehensive community care. The model could be replicated by other HMOs with the support of favorable federal policies.

Medicare managed care and frail elders: lessons from social HMOs.

After 20 years of operations, the Social HMO demonstration of integrated acute and long-term care is scheduled to end on December 31, 2004. While a new disability adjustment to the Medicare payment system promises to provide the financial underpinning for continuing to serve the 113,000 beneficiaries now enrolled at four sites, a broader regulatory structure as an alternative to current waivers is also needed. The regulations could also accommodate other frail elderly programs, which serve nursing home residents and beneficiaries of both Medicare and Medicaid. The relevance of Social HMOs--the largest and most broadly targeted of frail elderly programs--is reviewed herein, particularly regarding marketing, selectivity, reimbursement, and special frail elderly benefits and geriatric services.

Kaiser Permanente's manifesto 2005 demonstration: the promises and limits of devolution.

In 1996, the eight-million member Kaiser Permanente HMO adopted a vision statement that said by 2005 it would expand its services to include home- and community-based services for its members with disabilities. It funded a 3-year, 32-site demonstration that showed that it was feasible to link HMO services with existing home-and community-based (HCB) services and that members appreciated the improved coordination and access. This private-sector project showed that devolution can produce innovative and feasible models of care, but it also showed that without federal financial and regulatory support, such models are unlikely to take hold if they are focused on "unprofitable" populations, for example, those who are chronically ill, poor, and/or disabled.