AHCPR Research about Managed Care

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Impact on Cost

What do managed care plans spend to treat particular conditions? Are managed care plans able to reduce costs, or are enrollees healthier than the FFS population? How can adjustments be made to compensate appropriately for adverse selection? These studies use expenditure data to address these questions.

Cost Containment and Group Health Insurance Benefit Growth. Douglas C. Coate, Principal Investigator. In this study, investigators evaluated the effectiveness of managed care cost containment strategies in the group health benefit plans of private- and public-sector employers in the United States. Data were used from the Foster Higgins annual Health Care Benefit Surveys for 1986-92. Results suggest that group health plans in which all enrollment is in one type of plan (traditional indemnity, PPO, or HMO) are about 6 percent less costly than plans that allow employee choice between different plans. For employers who offer multiple health plan choices, increased enrollment of employees in HMOs was associated with higher overall costs. However, HMOs were the least costly option for employers offering only one choice for health coverage. (Project Officer: Michael Hagan. Project dates: 9/1/92-8/31/94)

A Comparison of S/HMO and TEFRA HMO Enrollees. Bryan E. Dowd, Principal Investigator. This study compared cost, use of health care services, and health and functional status measures for enrollees in a social HMO (S/HMO) and a Tax Equity and Fiscal Responsibility Act (TEFRA-risk) Medicare HMO. The study concluded that people enrolled in the S/HMO had higher expenditures overall than those in the TEFRA-risk Medicare HMO. Specifically, the S/HMO group had higher expenditures for nursing home services but lower expenditures for inpatient care. There were no differences between the two groups by two measures of functional status. (Project Officer: Melford Henderson. Project dates: 7/1/92-6/30/94)

Direct Medical Costs of Preclass IV HIV Care in an HMO. Jenifer L. Ehreth, Principal Investigator. In studying the 1990-92 direct medical care costs and utilization of some 250 patients who were preclass IV HIV positive (not full-blown AIDS), investigators explored the impact that patients with HIV infection have on health service delivery systems. All patients were actively being treated at the HMO Group Health Cooperative of Puget Sound. Findings showed that having preclass IV HIV infection increased a person's annual health care costs an average of $3,818 and a diagnosis of AIDS increased those costs by $15,077. The greatest increase in demand due to preclass IV HIV infection was for pharmacy and laboratory services. Having AIDS mainly affected demand for home health/hospice; respiratory, physical, and occupational therapy; and inpatient services. (Project Officer: Melford Henderson. Project dates: 9/1/93-8/31/94)

Risk Adjusters for Pediatric Populations. Elizabeth J. Fowler, Principal Investigator. Using utilization and expenditure data from two pediatric populations, this study tested the predictive performance of two risk adjustment methods—a case-mix method and a demographic model based on the Average Adjusted Per Capita Cost methodology. A Maryland Medicaid program and a private, nonprofit Minneapolis HMO provided the data for the study. The results of this study fill a gap in existing knowledge, because previous research on risk adjusters has focused primarily on elderly and employed populations. (Project Officer: David Lanier. Project dates: 9/30/94-9/29/95)

Medical Care Use and Costs for Adults with Sleep Apnea. Dennis G. Fryback, Principal Investigator. Using study subjects from one of four HMOs in Madison, Wisconsin, this study investigated the health status and health care costs associated with undiagnosed sleep apnea. The recently established high prevalence of undiagnosed sleep apnea has raised concerns about the public health burden and health care costs associated with this condition. Using cost and service delivery data obtained from the HMO, investigators were able to compare patterns of health care utilization and estimated costs among persons with sleep apnea versus those of persons without the disorder. (Project Officer: Peter Gergen. Project dates: 7/1/94-12/31/96)

HMO Cost Performance: A Simultaneous Equations Approach. Dana P. Goldman, Principal Investigator. This study examined the impact on the demand for medical services of reforms to reduce the costs of Federally insured health care. Two experiences were analyzed: the Department of Defense (DoD) effort to reduce health care costs for its civilian employees and a Robert Wood Johnson Foundation-funded demonstration of prepaid managed health care enrollment for Medicaid eligibles. The DoD analysis revealed that the generosity of benefits and lower prices expanded managed care participants' use of ambulatory services, suggesting that large and geographically diffuse managed care networks may not reliably contain public-sector health costs. Analysis of the Medicaid reforms revealed that the HMO did not significantly reduce expenditures. (Project Officer: Michael Hagan. Project dates: 9/1/92-8/31/94)

Self-Selection into Medicaid Managed Care. Teresa M. Herbert, Principal Investigator. The objective of this study was to analyze data on children ages 1-9 who are enrolled in either fee-for-service Medicaid (FFSM) or Medicaid managed care (MMC) to determine the direction and strength of the association between self-selection into an MMC program and prior utilization of health care services and health status. Because MMC and FFSM enrollees are likely to be different, policymakers will need these data to predict future utilization if MMC becomes the standard for Medicaid-eligible children. (Project Officer: William Maas. Project dates: 9/1/94-8/31/96)

Adverse Selection and Risk Rating in Insurance Markets. James C. Robinson, Principal Investigator. In this study, investigators used 1985-89 personnel data and medical care claims from a large employer to develop a method for measuring and compensating for adverse selection among FFS and HMO health insurance plans competing with each other. Diagnostic information from the claims data was used to identify particularly high-risk individuals most likely to be the objects of risk selection strategies. Investigators analyzed both predicted and actual expenditures for individuals switching from the FFS plan to an HMO or from one HMO to another and compared these with predicted and actual expenditures for individuals continuously enrolled in particular plans. The comparison was found to overestimate the degree of favorable selection enjoyed by HMOs, because employees who anticipate the need for maternity services were more likely to switch to an HMO. (Project Officer: Michael Hagan. Project dates: 2/1/91-1/31/94)

Who Belongs to HMOs?: A Comparison of Fee-for-Service Versus HMO Enrollees. Amy K. Taylor, Karen M. Beauregard, and Jessica P. Vistnes, AHCPR Investigators. Although research has indicated that HMOs have been effective in limiting medical costs, there is mixed evidence in the literature on how they achieve these savings. This project used data from the 1987 National Medical Expenditure Survey to examine the hypothesis that HMOs enroll a healthier population that FFS plans. Results indicated that HMOs tend to enroll a younger but not much healthier population than traditional FFS plans, suggesting that self-selection is not a major contributor to HMO cost savings. (Project dates: 7/1/92-12/30/94)

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Rural Studies

Can the achievements of HMOs or delivery models derived from comparable principles be replicated in rural areas with relatively low population density? In addition to five demonstration grants to promote the establishment of managed care approaches to health care delivery in rural areas, AHCPR has awarded several grants and contracts to further the understanding of managed care in rural areas.

Oklahoma Rural Managed Care Demonstration Center. Edward N. Brandt, Principal Investigator. The Center for Health Policy Research and Development established the Oklahoma Rural Research Center, a multidisciplinary collaborative center, to analyze and evaluate effective characteristics of public-private partnerships that can create and sustain rural health primary care networks. Faculty members of the Center are working with collaborating partners and community demonstration sites to disseminate and apply primary care network principles to improve primary care access for rural Oklahomans. (Project Officer: Linda Siegenthaler. Project dates: 9/30/94-10/31/99)

The Maine AHCPR Rural Center. David Hartley, Principal Investigator. The Maine AHCPR Rural Center is a consortium of health sciences and State health policy organizations that will assist two rural, underserved regions in Maine to develop strategies for responding to changing local conditions and broader State and Federal health reform initiatives. The project will link community- and provider-stimulated initiatives already underway in these rural areas with research and practice findings regarding successful models of rural heath care delivery, network development, and managed care. The Rural Center will strengthen the capacity of local leaders and procure additional resources and expertise to fully design and implement a vertically integrated network approach for the delivery of managed health care services to rural populations. (Project Officer: Carole Dillard. Project dates: 9/30/94-10/31/99)

West Virginia Rural Managed Care Demonstration Center. Hilda R. Heady, Principal Investigator. The West Virginia University Robert C. Byrd Health Sciences Center will create a Rural Managed Care Demonstration Center through a statewide consortium led by its Office of Rural Health. This managed care demonstration center will build on two existing managed care projects in the State by supporting activities that promote the delivery of cost-effective, quality care while promoting competition among rural, regional networks. (Project Officer: Carole Dillard. Project dates: 9/30/94-10/31/99)

Managed Health Care Reform and Rural Areas. Ira Moscovice, Principal Investigator. The purpose of this study was to gain a more in-depth understanding of the complexities of rural HMOs and Alternate Delivery Systems (ADSs). This delivery order involved an extensive literature review and synthesis and secondary data analysis covering such issues as: (1) formation process of the managed care organization, (2) the organizational structure used to support rural or urban/rural HMOs or other types of MCOs, (3) ramifications of such structures, (4) the effects these structures may have on rural physicians' supply and satisfaction, and (5) access and quality of care. Findings will provide some of the necessary background information needed to inform policy decisions affecting changes in the health care delivery system in rural areas. (Project Officer: James Cooper. Project dates: 9/30/93-9/25/95)

Program of Rural Health Demonstration Activities. Keith J. Mueller, Principal Investigator. The Nebraska Center for Rural Health Research is establishing a Program for Rural Demonstration Activities, which will be responsible for designing activities to improve the practice of managed care in rural communities in Nebraska and Iowa. Primary care practitioners will be targeted in each of the activities. A consortium of the Nebraska Center for Rural Health Research, the University of Iowa Graduate Program in Hospital and Health Administration/Center for Health Services Research, the Nebraska Office of Rural Health, and the Iowa Office of Rural Health have responsibility for this project. (Project Officer: Michael Hagan. Project dates: 9/30/94-10/31/99)

Arizona Rural Managed Care Center. Andrew W. Nichols. Principal Investigator. In this 5-year project, the University of Arizona Rural Health Office is working cooperatively with AHCPR to develop and manage an AHCPR Rural Center that will plan, initiate, and monitor demonstration projects for the expansion and promotion of managed care in rural Arizona. The goal of the project is to increase access to primary care and preventive clinical services for 95 percent of those Arizona residents who are currently uninsured and/or not receiving needed medical services. (Project Officer: James Cooper. Project dates: 9/30/94-10/31/99)

Monitoring Experience and Consequences of Medicaid Managed Care for Rural Populations Under a Reconstructed Federal Role. Thomas Rickett, Principal Investigator. The purpose of this delivery order is to inform State and National policy of the effect of Medicaid managed care waivers on rural populations by synthesizing and classifying existing State approaches and current evaluations in those States that have had a Medicaid managed care waiver in place for at least 1 year. (Project Officer: Linda Siegenthaler. Project dates: 9/30/96-3/31/98)

Evaluation of AHCPR Rural Managed Care Projects. Thomas Rickett, Principal Investigator. The purpose of this delivery order is to conduct an evaluation of the AHCPR Rural Managed Care Centers to (1) develop "lessons learned" by each Project Director, (2) assess advantages/disadvantages of each project's approach, and (3) compare progress in development of managed care and/or networks in each grant target area with an appropriate control area(s). (Project Officer: James Cooper. Project dates: 9/30/96-3/31/98)

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Tools

In the quest to improve the performance of the health care system, a variety of tools is being developed. These tools range from performance measures to innovative uses of automated record systems. Much of the tool development funded by AHCPR has been in managed care settings, but many tools will be useful to unmanaged systems as well.

Clinical Performance Measures for Dental Health Care Plans. James D. Bader, Principal Investigator. Performance measures will be developed and tested for two major dental diseases— dental caries and periodontal disease. They will be evaluated in two large HMOs, in terms of relationship to outcomes, feasibility of implementation, and perceived utility among purchasers, administrators, and providers. (Project Officer: Elinor Walker. Project dates: 9/30/96-9/29/98)

Multi-Institutional Test Bed for Clinical Vocabulary. Christopher G. Chute, Principal Investigator. The absence of robust clinical terminologies is a major difficulty in realizing the full potential of electronic records to aid in clinical epidemiologic research. Using the combined clinical environments of the Mayo Foundation and Kaiser Permanente, project investigators are developing, evaluating, maintaining, and implementing standard medical terminologies. This environment will be a controlled test bed, resembling in miniature the national environment of care delivery. The relative merits of terminology additions and changes are being measured as they affect guideline development and patient data retrieval. The impact of terminology variants on physician practice and satisfaction is also being evaluated. (Project Officer: Diane Adams. Project dates: 9/30/94-9/29/97)

Ongoing Development and Evaluation of HEDIS Measures. Arnold M. Epstein, Principal Investigator. This project is based on the National Committee on Quality Assurance's Health Plan Employer Data and Information Set (HEDIS), widely used to measure performance of managed health care plans. The project will develop operational specifications for certain HEDIS 3.0 measures, and validate them against appropriate outcomes. (Project Officer: Elinor Walker. Project dates: 9/30/96-9/29/99)

Adult Global Quality Assessment Tool. Elizabeth A. McGlynn, Principal Investigator. This project will apply the RAND expert panel approach to the development of process measures for care delivered to adult men and women over 55 who are enrolled in managed care plans to assess the quality of their care. (Children and premenopausal women are being addressed in a complementary Health Care Financing Administration project.) The measures will be combined into a global measure of the performance of health care plans. A computerized database will be prepared, tested, and fully documented to be made available and accessible to the public through the National Technical Information Service. (Project Officer: Elinor Walker. Project dates: 9/30/96-9/29/99)

Quality of Care Measures for Cardiovascular Patients. Barbara J. McNeil, Principal Investigator. Focusing on a group of interrelated cardiovascular conditions (acute myocardial infarction, congestive heart failure, and hypertension), this project will develop and evaluate performance measures for episodes of care across the care spectrum in several health plans. Evaluation will include cost of data collection. (Project Officer: Elinor Walker. Project dates: 9/30/96-9/29/01)

Measurement Typology Project. Benjamin Duggar, Principal Investigator. This project collected and organized examples of 40 clinical performance measure sets used by private and public health care providers and organizations to assess the quality of clinical care. The project developed a typology, or framework, for evaluating the characteristics of these clinical performance measures so that persons trying to identify clinical quality indicators can assess their appropriateness for particular uses. Phase I was conducted with Heather Palmer of the Center for Quality of Care Research and Education at the Harvard School of Public Health and the Center for Health Policy Studies of Columbia, Maryland. (AHCPR Contact: Marge Keyes. Project dates: 6/6/94-1/31/95)

Measurement Typology Project (Phase II). Sharon Sokoloff, Principal Investigator. Phase II refined and validated the typology developed in Phase I. Developers of clinical quality measures reviewed the classification of their measures and ensured that the typology correctly assesses characteristics of measures and measure sets. Phase II also incorporated information from AHCPR-supported guidelines to help users interpret measures. Information on the measures was summarized in four related databases that will be a prototype for a national information source on clinical quality measures. This project produced the computerized needs-oriented quality measurement evaluation system (CONQUEST)—a tool that permits users to identify, compare, select, and use clinical performance measures most useful to a user's needs. CONQUEST includes both condition and clinical performance measure databases. The measure database includes about 1,200 measures categorized on more than 30 attributes of importance. The condition database includes 52 high-cost or high-frequency conditions. CONQUEST was provided to the public in April 1996 and continues to be available through AHCPR's Clearinghouse and AHCPR's Web page. (Project Officer: Marge Keyes. Project dates: 4/1/95-2/29/96)

Quality Measurement Network (QMNet). Nancy Merrick, Principal Investigator. This project evaluates and expands CONQUEST; convenes a technical expert panel composed of measure developers as well as managed care, provider, and insurance representatives; provides technical assistance; assesses the feasibility of developing a national benchmarking database; identifies gaps in measures for future research and development; and completes a feasibility study that may help transform QMNet into a self-supporting entity at the end of a contract. This project involves collaboration with AHCPR's partners (the Foundation for Accountability, the Joint Commission on Accreditation of Healthcare Organizations, and the National Committee for Quality Assurance) and a Federal users' group representing the Centers for Disease Control and Prevention, the Department of Defense, the Health Care Financing Administration, the Indian Health Service, the Substance Abuse and Mental Health Services Administration, and the Veterans' Administration. (Project Officer: Marge Keyes. Project dates: 9/30/96-9/29/98)

Record Linkage and Outcomes of Drug Therapy. Richard Platt, Principal Investigator. This investigation is assessing the usefulness of an automated record linkage system in an HMO—Harvard Community Health Plan—that contains pharmacy dispensing data as well as ambulatory and inpatient clinical data for studying the indications for, outcomes of, and resource utilization associated with prescribed drug therapy. A major aim is to determine whether either prescribing or dispensing data is a sufficiently accurate measure of drug exposure to allow the data to be used for investigation of several aspects of drug therapy. Investigators are studying hypertension therapy because it is a common indication for medical care and the principal outcome, blood pressure, must be assessed in ambulatory records. This approach may also provide a model for investigating drug therapy for other conditions, such as diabetes or depression. (Project Officer: Lynn Bosco. Project dates: 8/1/93-7/31/97)

Health Care Delivery Systems and Primary Care Performance. Dana G. Safran, Principal Investigator. This study measures seven defining elements of primary care and compares performance across delivery systems that dominate the current insurance market: traditional indemnity plans; staff-, group-, and network-model HMOs, IPAs, PPOs, and POS plans. The primary assessment methodology will (1) provide information that public, corporate, and individual purchasers of health care can use to make informed decisions; (2) furnish an empirical basis for improvement; (3) provide information that enables comparisons and monitoring of performance; and (4) begin to identify those elements of primary care that are most important with respect to achieving desired outcomes of care. (Project Officer: Carolyn Clancy. Project dates: 9/30/95-9/29/97)

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Fostering Research

In addition to conducting and funding research, AHCPR undertakes a variety of activities that promote research on managed care. These activities include funding a major survey that provides data for researchers and conferences that encourage exchange among managed care researchers as well as dissemination of research findings.

Medical Expenditure Panel Survey (MEPS). MEPS is the third in AHCPR's series of medical expenditure surveys. It is a nationally representative survey that collects detailed information on health status, health care use and expenses, and health insurance coverage of individuals and families in the United States, including nursing home residents. The survey, which permits comparisons of services, costs, and utilization for persons in managed care plans with those in FFS plans, is designed to provide researchers and policymakers with the information necessary to examine in detail the relationship between individual and family characteristics, including health insurance and medical care use and spending. (AHCPR Contact: Steven B. Cohen. Survey dates: Annual, starting 1/1/96)

Building Bridges: Translating Research into Action. Third Annual Conference. The American Association of Health Plans (AAHP), in collaboration with AHCPR, is sponsoring a conference designed to bring health plans and health services researchers together to discuss (1) how we use research in managed care settings, (2) what we learned from research about managed care, (3) what the challenges are in conducting research in managed care, and (4) what issues are on future research agendas. AHCPR co-sponsored with AAHP the first and second annual Bridges conferences. (AHCPR Contact: Herbert Wong. Conference dates: 4/3/97-4/4/97)

HMO Research Network National Conference. Andrew F. Nelson, Principal Investigator. The HMO Network is comprised of researchers working in HMO research centers at 11 sites. AHCPR co-sponsored the HMO Network's 1996 conference and is collaborating on its 1997 conference. The conferences' primary aims are to (1) provide a forum for HMO research to discuss methodology and disseminate research findings, and (2) create opportunities for HMO researchers to collaborate on multi-site research projects. (AHCPR Contacts: Irene Fraser and Terry Shannon. Conference dates: 6/7/96-6/8/96 and 5/29/97-5/30/97)

From Competition to Collaboration: Building Partnerships for Research Within Managed Care. Mary L. Durham, Principal Investigator. This paper is intended to promote research within HMOs through an analysis of successful and unsuccessful models of collaboration. It will take the initial strategies produced at a conference of the HMO Research Network and consider questions such as (1) How can managed care organizations coordinate diverse data systems? (2) What criteria should be used to determine if a project can be conducted as a multisite study? (3) How should multisite projects be administered? (4) What population and organizational features should be considered when designing a cross-site collaboration? (Project Officer: Irene Fraser. Project dates: 9/30/96-3/1/97)

Assessment of the Feasibility of Creating a Managed Care Encounter-Level Database. Jim Lubalin, Principal Investigator. There is broad public and private interest in developing an encounter-level database using data from managed care organizations to support the study of health care issues. The purpose of the task order is to examine the research capabilities of databases from the managed care industry, investigate the circumstances under which the plans would release their data, and identify the potential difficulties that may arise when using and combining data systems from several health plans. (Project Officer: Kelly Devers. Project dates: 10/1/96-4/30/97)

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Additional Information

For more information on the above projects, contact the AHCPR Project Officer or Investigator at the Agency for Health Care Policy and Research.

Carolyn Clancy
Steven B. Cohen, Ph.D.
Christine Crofton
Charles Darby
Kelly Devers
Carole Dillard
Irene Fraser
Bernard Friedman
Peter Gergen
Michael Hagan
Fred Hellinger
Melford Henderson
Henrietta Hubbard
Lynn Kazemekas
David Lanier
Sandy Robinson
Claudia Steiner
Amy Taylor
Robin Weinick
Herbert Wong

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AHCPR Publication No. 97-0023
Current as of March 1997

Internet Citation:

AHCPR Research About Managed Care. AHCPR Program Note. AHCPR Publication No. 97-0023, March 1997. Agency for Health Care Policy and Research, Rockville, MD. http://www.ahrq.gov/research/mgdnote1.htm