Medicare, the public health insurance program for the elderly and disabled, faces major challenges; healthcare costs and the Medicare population are growing rapidly, yet Medicare covers only 45 percent of healthcare spending for the elderly, creating demand for both program expansion and reductions in spending. Policymakers have long viewed Medicare managed care (MMC) as a way to provide seniors with additional benefits and reduce Federal expenditures. MMC enrollment is quickly growing under 2003 Medicare Modernization Act (MMA) reforms. MMC enrollees accept network and utilization restrictions in exchange for additional benefits and reduced cost sharing compared to fee-for-service Medicare (FFS). Public policy encourages MMC enrollment despite an absence of current empirical research about MMC quality and access or assessment of whether MMC has limited program spending. Existing research analyzing data from the early 1990s indicates quality problems in MMC (Experton et al., 1999; Riley et al., 1999) with the exception of preventative service use (Landon et al., 2004; Morales et al., 2004). MMC has changed greatly since that period, though reforms have not been evaluated. MMC may discourage use of expensive services for those who are sick in order to maximize profits, adversely affecting enrollees with complex health needs, or protect enrollees through preventative service provision. This study primarily seeks to: 1- test for differences in quality and access to care in FFS and MMC; supporting analyses will: 2-- examine effects of legislated payment rates and beneficiary characteristics on enrollment; and 3- assess cost-quality tradeoffs of MMC by testing whether greater MMC enrollment reduces total county-level costs. The focal analysis will examine quality and access to care by using the numbers of ambulatory care sensitive (preventable), referral sensitive, and reference hospitalizations in a county. Preventable hospitalizations have been used extensively to assess quality and identify potential problems accessing health care (AHRQ, 2004). Agency for Healthcare Research and Quality's State Inpatient Database (SID) from 1999 - 2004 for Arizona, Florida, New Jersey and New York merged with Centers for Medicare and Medicaid Services county level MMC enrollment and payment data and county level data from the Area Resource File will be used. The study will include all hospitalizations covered by FFS or MMC for seniors aged 65 and over. Payment rates will be used to instrument for MMC enrollment, allowing the unbiased estimation of fixed effects and negative binomial regressions identifying causal quality, access, enrollment, and cost effects of MMC. Findings will inform seniors, their families, and policymakers whether MMC is comparable in quality to FFS Medicare and effective at reducing overall costs. As MMC enrollees are more likely to be low-income, minority seniors who cannot afford alternative health insurance options, it is important to ensure that disadvantaged elders are encouraged to enroll in programs providing quality health care (AHIP, 2005).

R36HS016836

2007-09-04

2008-09-03