Breast cancer outcomes among older women: HMO, fee-for-service, and delivery system comparisons.

OBJECTIVE: To analyze the relationship of health insurance status and delivery systems to breast cancer outcomes--stage at diagnosis, treatment selected, survival--focusing on comparisons among women aged 65 or more having Medicare alone, Medicare/Medicaid, or Medicare with group model HMO, non-group model HMO, or private fee-for-service (FFS) supplement. DESIGN: Retrospectively defined cohort from Sacramento, Calif, regional cancer registry. SETTING: Thirteen-county region in northern California with mature managed care market. PATIENTS: Female invasive breast cancer patients aged 65 or more (N = 1,146), diagnosed 1987-1993. MEASUREMENTS AND MAIN RESULTS: Health insurance was determined from hospital records. Outcomes were analyzed with multivariate regression models, controlling for age, ethnicity, time, and SES measures. Stage I diagnosis was more likely among group model HMO patients than among private FFS insured (odds ratio [OR], 1.42; 95% confidence interval [CI], 0.84 to 2.40). Stage I tumors were significantly less likely for Medicaid patients (OR, 0.50; 95% CI, 0.31 to 0.82). Use of breast-conserving surgery plus radiation (BCS+) varied significantly by hospital type (including HMO-owned and various-sized community hospitals) and time. Survival of patients with private FFS, group-, and non-group model HMO insurance was not significantly different, but was for those with Medicaid or Medicare alone. CONCLUSIONS: This study sheds new light on the relationship of insurance to stage and survival among older breast cancer patients, highlighting the importance of distinguishing types of HMOs and types of FFS plans. These outcomes do not differ significantly between women with Medicare who are in HMOs and those with private FFS supplemental insurance. However, patients with Medicare/Medicaid or Medicare alone are at risk for poorer outcomes.

The relationship of HMOs, health insurance, and delivery systems to breast cancer outcomes.

BACKGROUND: The current climate of anger and frustration with managed care has heightened interest in the quality of health care provided by managed-care plans, particularly health maintenance organizations (HMOs). This breast cancer outcomes study, investigating relationships of health insurance and delivery systems to stage at diagnosis, treatment selected, and survival, is based in a heavily penetrated, highly competitive HMO market. METHODS: Data for 1,788 residents of northern California younger than 65 years of age at diagnosis (1987-1993) were provided by a population-based cancer registry. Patient insurance included fee-for-service (FFS), group-model HMO, nongroup HMO, publicly insured, and uninsured. Diagnosis and treatment occurred in 73 hospitals (large, medium/moderately small, or very small community, rural, teaching, or HMO-owned hospitals). Regression models examined relationships of insurance and hospital type to 3 outcomes (stage, treatment, and survival), controlling for age, ethnicity, education, neighborhood occupational class, and time period. RESULTS: Early diagnosis was as likely for group-model and nongroup-model HMO-insured patients as for the private FFS-insured patients. In 1987-1990, HMO-owned hospitals were leaders in treating 46% of early-stage breast cancers with breast-conserving surgery plus radiation (BCS+); by 1991-1993, the most significant increases in BCS+ use occurred at teaching and large community hospitals. Survival of group-model HMO, nongroup-model HMO, and FFS patients was not significantly different. Publicly insured/uninsured patients had more stage III/IV disease (OR=2.01, P = 0.006) and greater all-cause mortality (risk ratio 1.46, P = 0.015). CONCLUSIONS: Group-model and nongroup-model HMO patients are similar to FFS-insured patients in stage at diagnosis and survival outcomes. Treatment selection is related to hospital type rather than insurance coverage.

Does competition by health maintenance organizations affect the adoption of cost-containment measures by fee-for-service plans?

How groups insured by fee-for-service health plans react to increased competition from health maintenance organizations (HMOs) is an unresolved question. We investigated whether groups insured by indemnity plans respond to HMO market competition by changing selected health insurance features, such as deductible amounts, stop loss levels, and coinsurance rates, or by adopting utilization management or preferred provider organization (PPO) benefit options. We collected benefit design data for the years 1985 through 1992 from 95 insured groups in 62 US metropolitan statistical areas. Multivariate hazard analysis showed that groups located in markets with higher rates of change in HMO enrollment were less likely to increase deductibles or stop loss levels. Groups located in markets with higher HMO enrollment were more likely to adopt utilization management or PPO benefit options. A group located in a market with an HMO penetration rate of 20% was 65% more likely to have included a PPO option as part of its insurance benefit plan than a group located in a market with an HMO penetration rate of 15% (p < 0.05). Concern about possible adverse selection effects may deter some fee-for-service groups from changing their health insurance coverage. Under some conditions, however, groups insured under fee-for-service plans do respond to managed care competition by changing their insurance benefits to achieve greater cost containment.

Changes in benefit payments and health insurance premiums among firms switching health insurance carriers.

Employer-purchased group health insurance is a major source of funding in the US healthcare system, accounting for approximately one third of each healthcare dollar spent. Surprisingly, little is known about employers' behavior in purchasing health insurance or the circumstances leading employers to switch health insurance carriers. We descriptively analyzed data for a cohort of 95 insured groups between 1985 and 1991 to determine the frequency with which employers switch health insurance carriers and the growth pattern in premiums and benefit payments before the switch was made. Thirty-seven percent of groups switched carriers during the study period, with at least five groups switching each year from 1987 through 1991. The groups that switched insurance carriers experienced higher average annual rates of growth in benefit payments than those that did not switch (18% versus 11%). Groups that switched did not have significantly higher observed premium growth rates than those that did not switch, suggesting that employers decided to switch insurers before absorbing an increase in premiums. However, some firms that switched experienced below average increases in both benefit payments and premiums, indicating that premiums and anticipated premium increases are not solely responsible for the decision to switch health insurance carriers.

The effect of price on switching among health plans.

A recent policy change by the University of California (UC) provides a unique natural experiment for investigating the sensitivity of consumers to health plan premiums. When the UC moved to a policy of limiting its contribution to the cost of the least expensive plan, out-of-pocket premiums increased for roughly one-third of UC employees. We examine the extent to which UC employees switched plans in response to this change in premiums. Our results indicate a strong response. Individuals facing premium increases of less than $10 were roughly 5 times as likely to switch plans as those whose premiums remained constant.

Consumers' sensitivity to health plan premiums: evidence from a natural experiment in California.

A recent policy change by the University of California (UC) provides a unique natural experiment for investigating how consumers respond to financial incentives when choosing health plans. In 1994 UC went from a premium contribution policy that subsidized more costly plans to a policy of contributing a constant dollar amount. As a result, employee premium contributions increased for roughly one-third of university employees. The response to this change in relative prices was strong. Whereas only 5 percent of employees facing constant premium contributions switched plans, roughly one-quarter of those facing premium contribution increases of less than $10 per month switched to lower-cost plans. Higher price increases led to even greater rates of plan switching.

Hospital community benefits other than charity care: implications for tax exemption and public policy.

Recent policy initiatives attempt to link the tax treatment of nonprofit hospitals more closely with the provision of social benefits. A key issue in defining these benefits is the treatment of "community benefit" programs and services. While their costs are often unreimbursed, these programs differ from traditional charity care in terms of the populations whom they benefit and the motivation for their provision. Community benefit programs are typically targeted to the general population, rather than the poor or other underserved groups, and often serve a marketing function.

Analysis of private health insurance premium growth rates: 1985-1992.

The rate of increase in health care expenditures has been a central policy concern for well over a decade, yet little empirical research has been conducted to examine expenditure growth rates. This study analyzed health insurance premium growth rates for a selected sample of 95 insured groups over the period 1985 to 1992. During this time, premiums increased by approximately 150% in nominal terms and by 45% in real terms. The observed rate of growth was not constant over time, however. The most rapid growth occurred during the years 1986 to 1989; thereafter, the rate of increase in premiums declined. Multivariate analysis was conducted to assess the effects on premium growth rates of selected variables representing insurance benefit design features, market competitive factors, insurance system factors, and group-specific factors. In addition to the percentage increase in benefit payments, other factors found to affect premium growth rates were health maintenance organization market penetration, deductible level, the coinsurance rate, and state insurance mandates. Further, this analysis suggests that the insurance underwriting cycle may play an important role in influencing insurance premium growth rates. These results support the belief that health maintenance organization induced competition has potential to control the rate of increase in health care costs.

The impact of HMO competition on private health insurance premiums, 1985-1992.

A critical unresolved health policy question is whether competition stimulated by managed care organizations can slow the rate of growth in health care expenditures. We analyzed the competitive effects of health maintenance organizations (HMOs) on the growth in fee-for-service indemnity insurance premiums over the period 1985-1992 using premium data on 95 groups that had policies with a single, large, private insurance carrier. We used multiple regressions to estimate the effect of HMO market penetration on insurance premium growth rates. HMO penetration had a statistically significant (p < .015) negative effect on the rate of growth in indemnity insurance premiums. For an average group located in a market whose HMO penetration rate increased by 25% (e.g., from 10% to 12.5%), the real rate of growth in premiums would be approximately 5.9% instead of 7.0%. Our findings indicate that competitive strategies, relying on managed care, have significant potential to reduce health insurance premium growth rates, thereby resulting in substantial cost savings over time.

Treatment differences and other prognostic factors related to breast cancer survival. Delivery systems and medical outcomes.

OBJECTIVE: To determine differences in and relative importance of treatment modalities by hospital type and their effect on survival of breast cancer patients. DESIGN: Cohort of population-based cancer registry breast cancer patients diagnosed from 1984 through 1990. The analysis was done within this cohort, stratified by hospital type and treatment modality. SETTING: Orange County, California, residents diagnosed and treated for breast cancer in 126 hospitals (small community, large community, health maintenance organization [HMO], or teaching). PATIENTS: A total of 5892 non-Hispanic white women with no known prior cancer and with localized or regional, histologically confirmed breast cancer. MAIN OUTCOME MEASURES: Effects of treatment modality and hospital type on survival. Adjustments for differences in age, tumor size, number of positive lymph nodes, and histology were included in the analysis. RESULTS: Use of recommended breast-conserving surgery (BCS) was greatest among teaching hospitals, where more than 50% of patients with localized disease received BCS between 1988 and 1990 and 40% to 50% with regional disease received BCS between 1984 and 1990. At nonteaching hospitals, 30% or less of patients received BCS between 1984 and 1989, regardless of stage. Rates of survival after BCS were at least as good as rates of survival after total mastectomy, other factors being equal. Survival rates varied by hospital type for patients with localized disease, with significantly better rates at large community hospitals and significantly worse rates at HMO hospitals in comparison with small hospitals. Patients with regional disease at large hospitals had a significant survival advantage. CONCLUSIONS: Greater use of BCS is strongly urged. Overall, large community hospitals had significantly better survival rates than small community and HMO hospitals. Further follow-up will determine if treatment and survival differences by hospital type persist.

Have hospital inpatient cost containment programs contributed to the growth in outpatient expenditures? Analysis of the substitution effect associated with hospital utilization review.

The rapid increase in outpatient expenditures has been the focus of growing attention in recent years. This increase has corresponded with public and private efforts to contain hospital inpatient costs, prompting some analysts to suggest that outpatient expenditure growth is the result of a substitution effect; that is, the substitution of outpatient for inpatient care associated with hospital cost containment programs. Claims data on 43 privately insured groups that adopted utilization review (UR) during the latter part of 1984 or early 1985 were analyzed, comparing outpatient expenditures before and after adoption of hospital inpatient UR to quantify the substitution effect associated with UR. UR was not associated with higher physician office expenditures nor with higher outpatient diagnostic expenditures. UR was related to significantly higher hospital outpatient department expenditures. On average, these expenditures were approximately 20% higher (P = 0.01) after the adoption of UR. However, outpatient department expenditures of the groups analyzed represented a fairly small percentage of total medical expenditures; hence, the absolute expenditure increase was quite modest, on the order of $9 per insured person per year. This analysis, admittedly limited in scope, suggests that UR is associated with a measurable substitution effect. It is likely that inpatient hospital cost containment programs have resulted in some substitution of outpatient for inpatient care and thus have played a role in fostering outpatient expenditure growth during recent years.

An economic perspective on health politics and policy.

This article uses a self-interest model to explain health care legislation. Seemingly uncoordinated, contradictory, inefficient, and inequitable legislative outcome are shown to be the result of a rational process in which the participants, including legislators, act according to their calculation of costs and benefits. Those groups able to offer political support receive net benefits at the expense of those who are less politically powerful. This framework is used to examine different types of health legislation with the emphasis on explicit redistributive policies such as Medicare and Medicaid.

Reducing hospital use and expenditures through utilization review. Findings from an outcome evaluation.

Utilization review (UR) has become a prominent approach to cost containment now used by almost 65% of private group insurance plans. Although insurers have increasingly relied on UR to contain health care costs, until recently little was known about the effects of this cost containment approach. This article reviews some of the key findings of a UR evaluation, based on analysis of claims data on 223 insured groups for the years 1984 through 1986. The evaluation found that UR reduced admissions by 12%, inpatient expenditures by 8%, and total expenditures by 6%. It was estimated that UR generated net savings of $115 per employee per year. Groups adopting UR with high baseline rates of hospital use had larger expenditure reductions and greater net savings. It appears that UR can play an important role in private cost containment and help improve medical care resource consumption.

Does utilization review reduce unnecessary hospital care and contain costs?

Research indicates that approximately one in five hospital admissions is unnecessary or inappropriate, based on accepted clinical criteria. Various cost-containment approaches have been initiated to reduce unnecessary hospital care. Among these approaches, hospital utilization review (UR) has shown promise as a cost-containment strategy. Although third party payers are increasingly relying on UR and similar approaches to contain health care expenditures, little is known about the effects of these efforts. This study analyzes insurance claims data on 223 insured groups for 1984 through 1986 to determine the effects of a UR program instituted by a commercial insurance company. It was found that UR had a significant negative effect on both utilization and expenditures, even after controlling for a large number of factors. Specifically, UR reduced admissions by 13%, inpatient days by 11%, expenditures on routine hospital inpatient services by 7%, expenditures on hospital ancillary services by 9%, and total medical expenditures by 6%. Even though UR reduced the level of utilization and expenditures, it did not appear to influence the rate of change in these areas over time. These findings suggest that hospital UR programs can reduce utilization and expenditures and generate cost savings, thereby helping to improve the efficiency of medical care resources consumption.

Private cost containment. The effects of utilization review programs on health care use and expenditures.

Utilization review has been regarded as one of the most promising approaches to the containment of health care costs. We analyzed insurance claims data on 222 groups of employees and dependents for 1984 and 1985 to evaluate the effects of utilization review programs instituted by a large private insurance carrier. The utilization review programs we studied were compulsory; patients who did not follow established utilization review procedures were subject to financial penalties. Controlling for employee characteristics, health care market area factors, and benefit-plan features, we found that utilization review reduced admissions by 12.3 percent, inpatient days by 8.0 percent, hospital expenditures by 11.9 percent, and total medical expenditures by 8.3 percent. When only groups that had relatively high admission rates before adopting utilization review were analyzed, it was found that they had a 34 percent reduction in patient days and a 30 percent reduction in hospital expenditures. The savings-to-cost ratio of utilization review for groups overall was highly favorable--approximately 8 to 1. Private utilization review programs of the type we studied appear to be effective in reducing hospital use and decreasing medical expenditures. This study did not address the possible effects of such programs on the health status of patients.

An economic analysis of comparable worth.

Comparable worth has been called the civil rights issue of the 1980s. Nursing is in the forefront of this movement. Although several governmental agencies are implementing salary programs based on comparable worth, establishing such a program in the hospital setting could yield problems for nurse executives. Implementation could be costly and demand a significant investment of resources. This paper discusses how wages are determined in a competitive market and what happens to that process when restrictions and barriers make the market noncompetitive. Of most importance, alternative strategies for increasing nursing salaries are presented.

Comparable worth: how good an idea?

Comparable worth has become more than an idea in several states. Attempts are being made to establish pay scales for women according to the comparable worth of their jobs. Controversy surrounds this issue, and there are various reasons not to implement comparable worth.