Final second annual report of the TEFRA HMO and CMP program evaluation

284 Pages·1991·8.7 MB·English

by  Brown, Randall S

Contract No.: 500-88-0006
MPR
Reference No.: 7786-500
FINAL
SECOND ANNUAL REPORT
OF THE TEFRA HMO AND CMP PROGRAM
EVALUATION
April 1991
Randall S. Brown
Jeanette Bergeron
Richard Shin
Prepared for: Prepared by:
Department of Health and Human Services Mathematica Policy Research, Inc.
Health Care Financing Administration P.O. Box 2393
Room 2306 Oak Meadows Princeton, NJ. 08543-2393
6325 Security Blvd. [phone]
MD
Baltimore, 212077
Project Director: Randall S. Brown
Project Officer: James P. Hadley

CONTENTS
Chapter Page
EXECUTIVE SUMMARY
ix
INTRODUCTION
I 1
A. A BRIEF HISTORY OF THE MEDICARE RISK PROGRAM
AND EVALUATION
1
HMO
1. Participation in Medicare Prior to the
Medicare Risk Program 2
2. Goals of the TEFRA HMO/CMP Program Evaluation 4
3. Evaluation Findings to Date 5
B. CURRENT ISSUES AND RECENT DEVELOPMENTS 6
C. DATA SOURCES 9
GUIDE TO THE REMAINDER OF THE REPORT
D. 10
H CHANGES IN TEFRA HMOS 11
A ENROLLMENT, DISENROLLMENT, AND THE SIZE
DISTRIBUTION OF MEDICARE RISK PLANS 11
1. Enrollment Patterns Over Time and By Length of Contract 12
2. Distribution of Plans by Size 16
3. Distribution of Plans by Change in Enrollment 24
4. Distribution of Plans By Disenrollment Ratio and
Replacement Ratio for 1989 29
B. CHARACTERISTICS OF MEDICARE RISK PLANS 41
1. Organizational Characteristics by Year 41
2. Benefits Premiums and Copayments Per Year 44
3. Market Area Characteristics (1989-1990) 47
m WHY PLANS DO NOT RENEW THEIR MEDICARE RISK
CONTRACTS
51
A PRIOR RESEARCH ON Medicare RISK CONTRACT
NONRENEWAL
51
NONRENEWAL RATES OF HMOS GROUPED BY
B.
ENROLLMENT LEVELS AND OTHER PLAN
CHARACTERISTICS ^ 55
NONRENEWAL RATE.S. AMONG PLANS GROUPED BY
C.
BENEFITS, PREMIUMS, AND COPAYMENTS 61
D. INTERVIEWS OF NONRENEWING PLANS 63
1. Selection of Plans foF Telephone Interview 63
2. Plans Completing Telephone Interviews 65
3. Interview Protocol 65
4. Respondents 65
E. PLAN RESPONSES ON THEIR NONRENEWAL DECISIONS 66
1. Factors in the Decision Not to Renew the Risk Contract 66
2. Reasons For Entering a Medicare risk Contract 71
3. Utilization Experience 71
iii

CONTENTS (continued)
Chapter Page
HI (cont) 4. Competitive Experience 73
5. Provider Relations 73
6. The Future of Risk Contracting 74
7. Conversion to Cost or HCPP Contract 77
SUMMARY
F. 77
IV FINANCIAL PERFORMANCE OF MEDICARE RISK HMOS 79
A. DATA SOURCES 79
1. The Sample 80
2. Analysis Variables 80
3. Data Problems 83
B. MODELS TO ALLOCATE COSTS 84
1. Allocation Models Based on Regression 85
2. Alternative Models 87
C
PRELIMINARY RESULTS 89
1. Analysis of Overall Profitability 91
2. Qualifications Concerning the Results 99
D. FUTURE ANALYSES 101
V RESULTS TO DATE FROM THE EVALUATION 103
A. FIRST YEAR REPORTS 103
HMO
1. Quality and Availability of Data 103
2. Disenrollment Patterns 104
3. Organizational and Operational Characteristics 105
B. SECOND YEAR REPORTS 106
1. The First Annual Report 106
2. Report on Biased Selection in the Medicare risk program 108
VI ACnVTTTES FOR THE NEXT YEAR OF THE EVALUATION 119
A. DATA COLLECTION AND PROCESSING 119
1. The Beneficiary Survey 119
2. Medical Record Abstraction 120
3. Collection ofData from Sources at HCFA 120
4. Collect Use and Cost Data from a Limited Set ofHMOs 121
5. Collect Information from Rural HMOs and HMOs that
are Commercially Successful but are Losing Money in
the Medicare Risk Program 121
B. ANALYSES AND REPORTS 121
C KEY MILESTONES 122
REFERENCES
125
APPENDIX A: NONRENEWING PLAN PROTOCOL A.1
iv

TABLES
Table Page
n.l DISTRIBUTION OF MEDICARE RISK PLANS AND
ENROLLMENTS OF ENROLLMENT, 1988-1990 13
H.2 AVERAGE ENROLLMENT AND NUMBER OF ESTABLISHED
PLANS OVER TIME, BY YEAR THAT PLAN BEGAN 15
IL3 DISTRIBUTION OF PLANS BY NUMBER OF ENROLLEES
AS OF JANUARY 1990 17
H.4 DISTRIBUTION OF PLANS BY PERCENT CHANGE IN
ENROLLMENTSETWEEN JANUARY AND
1989
JANUARY
1990 25
H.5 DISTRIBUTION OF PLANS BY DISENROLLMENT
RATIO FOR 1989 30
H.6 DISTRIBUTION OF PLANS BY REPLACEMENT MEASURE 36
H.7 ORGANIZATIONAL CHARACTERISTICS OF TEFRA
HMOS/CMPS OVER TIME 42
n.8 DISTRIBUTION OF PLANS BY BENEFITS, PREMIUMS,
COPAYMENTS
45
H.9 MARKET AREA CHARACTERISTICS OF ESTABLISHED
MEDICARE RISK PLANS 49
m.l STATUS OF NONRENEWING PLANS PER YEAR 1988-1990 56
m.2 NUMBER AND PROPORTION OF PLANS NOT RENEWING
THEIR MEDICARE RISK CONTRACTS BY ORGANIZATIONAL
CHARACTERISTICS: 1988-1990 58
m.3 NUMBER AND PERCENT OF PLANTS NOT RENEWING,
BY BENEFITS, PREMIUMS, AND COPAYMENTS,
1988-1990 62
m.4 PLANS INTERVIEWED FOR THE NONRENEWING PLAN
ANALYSIS 67
IV.1 ESTIMATED PARAMETERS OF ALLOCATION ALGORITHM .... 90
IV.2 REVENUES RECEIVED AND EXPENSES INCURRED
PER MEMBER MONTH FOR INDIVIDUAL PLANS:
FOR MEDICARE MEMBERS ONLY AND OVERALL 92
IV.3 PROFITABILITY OF PLANS BY PLAN CHARACTERISTICS 96
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