Background Enrollment in Medicare health maintenance organizations(HMOs) is encouraged because of the expectation that HMOs canhelp slow the growth of Medicare costs. However, Medicare HMOs,which are paid 95 percent of average yearly fee-for-serviceMedicare expenditures, are increasingly believed to benefitfrom the selective enrollment of healthier Medicare recipients.Furthermore, whether sicker patients are more likely to disenrollfrom Medicare HMOs, thus raising average fee-for-service costs,is not clear.
Methods We used Medicare enrollment and inpatient billing recordsfor southern Florida from 1990 through 1993 to examine differencesin the use of inpatient medical services by 375,406 beneficiariesin the Medicare fee-for-service system, 48,380 HMO enrolleesbefore enrollment, and 23,870 HMO enrollees after disenrollment.We also determined whether these differences were related todemographic characteristics and whether the pattern of use afterdisenrollment persisted over time.
Results The rate of use of inpatient services in the HMO-enrollmentgroup during the year before enrollment was 66 percent of therate in the fee-for-service group, whereas the rate in the HMO-disenrollmentgroup after disenrollment was 180 percent of that in the fee-for-servicegroup. Beneficiaries who disenrolled from HMOs re-enrolled atabout the time that their level of use dropped to that in thefee-for-service group.
Conclusions These data show marked selection biases with respectto HMO enrollment and disenrollment. These biases underminethe effectiveness of the Medicare managed-care system and highlightthe need for longitudinal and population-based studies.
Source Information
From the University of Miami School of Medicine and the Miami Veterans Affairs Medical Center (R.O.M., B.A.V., C.A.D.); and the Michael I. Abrams Health Policy Research Center, University of Miami–Public Health Trust (R.O.M., B.A.V., C.A.D., N.A.P.) — all in Miami; and the George Washington University School of Public Health and Health Services, Washington, D.C. (N.A.P.).
Address reprint requests to Dr. Morgan at UM/PHT Health Policy Research Center, 630 Alton Rd., Suite 402, Miami Beach, FL 33139.
The Medicare-HMO Revolving Door
Josephson D. G., Grana J. R., Hanchak N. A., Morgan R. O., Virnig B. A., DeVito C. A., Persily N. A.
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N Engl J Med 1997;
337:1851-1852, Dec 18, 1997.
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