Health Care Use and Expenditures of Medicare HMO Disenrollees
Parente, Stephen T., Evans, William N., Schoenman, Julie A., Finch, Michael D., Health Care Financing Review
On January 1, 1999, approximately 407,000 Medicare beneficiaries (nearly 7 percent of all Medicare HMO enrollees) were forced to leave their current Medicare risk-plan HMO because their health insurers chose not to enter into a new Medicare+Choice contract; or decided to reduce their current service area (Gold et al., 1999; U.S. Department of Health and Human Services, 2000; Gold and Justh, 2000; U.S. General Accounting Office, 1999). Plans have cited the payment and regulatory changes legislated by the Balanced Budget Act of 1997, combined with often intense market competition, as the reason for their withdrawal from the Medicare market (Harrison, 2002). Since 1999, Medicare managed care plan withdrawals continue to have significant consequences to Medicare beneficiaries (Booske, Lynch, and Riley, 2002). With the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), which provides new incentives to private health insurers to reenter the market by 2006, and offer extended health care and prescription drug coverage to beneficiaries, understanding the impact of Medicare HMO withdrawals at the beneficiary level remains relevant.
Prior studies completed at the beneficiary level used survey data to gauge the impact of Medicare HMO withdrawals on cost and utilization (Booske, Lynch, and Riley, 2002; Laschober et al., 2000). While these studies have identified significant deleterious effects for beneficiaries associated with involuntary disenrollment from a Medicare HMO, such as increased out-of-pocket expenditures for prescription drugs, higher premium prices for supplemental coverage, and disruptions in their usual source of care, they have not provided an account of the utilization and expenditure impact. Also, none of these studies used a comparison group to determine whether the effects reported by disenrollees differed from underlying trends in the Medicare market.
Using 1998 and 1999 claims and enrollment data from Medicare and United Health Group (UnitedHealth), we examine the utilization and cost impact of plan changes at the beneficiary level. We report the results of an analysis comparing the utilization, out-of-pocket cost sharing, and reimbursement differences among three groups of enrollees: (1) beneficiaries involuntarily dropped from their plan and returned to FFS Medicare, (2) beneficiaries who remained enrolled in the same HMO throughout the period, and (3) beneficiaries in an UnitedHealth HMO in 1998 who voluntarily left the plan to return to FFS in 1999.
The focus of our analysis is the beneficiary level consequences of an involuntary disenrollment from a Medicare HMO from 1998 to 1999, the first period of widespread closures. This period represents a time when alternative Medicare managed care plan choices were still abundant to the beneficiary facing an HMO market withdrawal. For example, a survey of UnitedHealth Medicare seniors found that over 82 percent of those forced to leave their UnitedHealth plan in 1998 found a new managed care plan by January 1, 1999 (Schoenman et al., 2005). The implications of this research could help identify the impact of 2003 MMA failing to provide a long-term stable market-based Medicare HMO set of plan choices in 2006.
This study focuses on the utilization consequences of the first large-scale wave of withdrawals of HMOs from the Medicare market, which went into effect in January 1999. A unique feature of our research is the use of claims data made available by UnitedHealth as a collaborative research partner. Effective January 1999, United-Health ended HMO coverage for 59,017 Medicare beneficiaries in 15 markets nationwide. Of these markets, United-Health had claims and enrollment data for 9 markets comprised of 31,189 beneficiaries. Table 1 lists UnitedHealth's 1998 operational markets corresponding to 92 counties for which we have enrollment. …