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February 28, 2002

Managed Care Plans Staying in Medicare Provide Higher Quality Care than Those That Withdraw

Managed care plans that continue to serve older Americans under the Medicare program tend to provide higher quality service than those that withdraw, according to a study from researchers at the Johns Hopkins Bloomberg School of Public Health. The study, which appears in the March 2002 issue of Medical Care, provides no support to the supposition that higher quality performance increases risk of withdrawal by raising costs and lowering profitability.

"More than one and a half million older Americans have been affected by the unexpected exodus of health plans from Medicare in recent years. Some plan representatives claim that they must withdraw because they cannot sustain high quality care under current payment levels. If that is the case, then a logical solution to keep plans in Medicare would be to increase payment rates," explains lead author Hoangmai Pham, MD, a Robert Wood Johnson Clinical Scholar and MPH candidate at the Johns Hopkins Bloomberg School of Public Health. "However, there are many other factors to consider. Little research has focused on the relationship of plan quality to withdrawals. This association is a vital consideration in policy decision-making."

Dr. Pham and her colleagues studied Medicare managed care plans, examining how a plan's performance on Health Plan Employer Data and Information Set (HEDIS) quality indicators compared to its longevity in Medicare over a three-year time span. HEDIS is one industry standard used in health plan accreditation.

Because plans can have multiple Medicare contracts covering different geographic areas, the researchers considered each contract-county combination as a single unit for analysis. They calculated scores on quality of service in two measures -- clinical and ambulatory care access -- for each of the 2310 contract-county combinations that reported HEDIS data and followed each plan from 1997 to 2000.

In the three-year time span, 38 percent of the plans withdrew from Medicare. Plans with high scores on a measure of clinical quality withdrew at a rate of one-fifth of that for low scorers. Plans with high scores on a measure of access to an annual ambulatory care visit withdrew at a rate two-fifths of that for low scorers. After taking into account other factors that might influence the rate of withdrawal, such as payments received from Medicare and geography, higher quality was still associated with lower rates of withdrawal from Medicare.

"Retaining quality health plans in Medicare may not simply be a matter of money," says senior author Neil Powe, MD, MPH, director of the Welch Center for Prevention, Epidemiology and Clinical Research and a professor of medicine, epidemiology, and health policy and management at the Johns Hopkins School of Medicine and Johns Hopkins Bloomberg School of Public Health. "These results challenge the notion that quality is dependent on payment rates."

Dr. Pham notes that the quality measures in this particular study were based on inexpensive services, and future research will be needed to access performance on more expensive services such as hospitalization and treatment of chronically ill patients.  In addition, future research should analyze other factors contributing to a plan's decision to withdrawal.

"Although it remains imperative to track quality performance among active plans, our results suggest that recent changes in Medicare managed care did not compromise the level of care in plans available to Medicare beneficiaries. These beneficiaries, along with physicians and policy-makers, should be reassured that recent policy changes have not forced out health plans providing higher quality service," concludes Dr. Pham.

The article, "Is Health Plan HEDIS Performance Associated with Withdrawal from Medicare Managed Care?" appears in the March issue of Medical Care.  Authors are Hoangmai H. Pham, Kevin D. Frick, Marie Diener-West, Haya R. Rubin, and Neil R. Powe.

This study was supported by a grant from the Robert Wood Johnson Foundation, Princeton, New Jersey.

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Public Affairs Media Contacts for the Johns Hopkins Bloomberg School of Public Health:Tim Parsons or Kenna Brigham at 410-955-6878 or