Reform Update: New fuel for managed-care debate

Managed care rapidly gained and quickly lost favor more than a decade ago, but even as it lost ground, it never fully lost a hold in the market. Now, it's an increasingly popular option among seniors enrolled in Medicare, and some managed-care tenets—care coordination led by primary care and capitation—have re-emerged under new models endorsed by the Patient Protection and Affordable Care Act.

Nonetheless, the debate continues over whether patients benefit when insurers, doctors and hospitals have more financial incentives to closely manage care. The sickest patients could lose if they are shunned by health plans or providers looking to avoid the higher costs of their care. But incentives may also provide financing for care coordination to prevent or better manage chronic diseases and their costs.

Answering the question is increasingly important as enrollment in Medicare Advantage grows, Congress debates Medicare policy and new payment models proliferate under health reform.

A newly released working paper by the National Bureau of Economic Research, adds to research on the subject with an analysis that seeks to weed out the risk that patients who choose Medicare managed care may be more likely to be healthy or share another so-called selection bias that could skew performance of managed care compared with traditional Medicare.

Researchers Christopher Afendulis and Michael Chernew of Harvard University and Daniel Kessler of Stanford University compared hospital visits and mortality in large metropolitan areas—where Medicare boosted Advantage payments in 2001—with comparable figures in smaller metropolitan areas.

The comparison allowed researchers to ask how those numbers differ when managed care plans had more resources to dedicate toward more generous benefits or less costly premiums, both of which could benefit patients and increase enrollment, said Afendulis.

The results, he said, suggest that Medicare managed care did something right. The likelihood of hospitalization—including for conditions that can be managed by outpatient care—and mortality was reduced in the larger metro areas.

Afendulis, a lecturer on healthcare policy in the Harvard Medical School, stressed that the research as published is a working paper that will hopefully attract comment and may undergo revision before submission to a peer-review journal.

Bryan Dowd, an economist and health policy and management professor at the University of Minnesota School of Public Health, called the work interesting and novel but also that said it required clarification. Results could be skewed if managed care plans gained new enrollees who were also healthier or if Medicare managed care plans characterize patients as sicker than they actually are, which would make their performance look better if those patients avoid the hospital.

Disinterest from executives and too little data can undermine efforts to adopt payment bundles, one of the new models for reimbursement to be tested under health reform, according to results of a new study, Modern Healthcare's Jessica Zigmond reports. Leadership commitment and insurer engagement were listed among the necessary ingredients to take on the bundles, she wrote. Bailit Health Purchasing conducted the survey of 19 pilots—though some early ones dropped out and others joined later—for the Health Care Incentives Improvement Institute.

Medical homes with financial incentives under contract with CareFirst BlueCross BlueShield of Owings Mill, Md., reduced medical costs for roughly 1 million privately insured patient by 2.7% during the second year of the effort, the insurer said. The savings totaled $98 million against projected expense and were lower than reduced spending during the first year, when costs were 1.5% less than projected.

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