Health Care Costs and Financing

Medicare plan quality information doesn't prompt people to switch from traditional to HMO plans or to choose low-cost HMOs

The Medicare program provides beneficiaries with data comparing the quality of Medicare traditional and HMO health plans via a toll-free hotline, Web site, and pamphlets. However, information about plan quality was not effective in encouraging people to leave traditional fee-for-service Medicare and join HMOs that are rated high in quality. Furthermore, those choosing among HMOs were not inclined to select a low-cost HMO, even when it was rated higher in quality, according to a recent study that was supported by the Agency for Healthcare Research and Quality (HS10797).

Jennifer D. Uhrig, Ph.D., of RTI International, and Pamela Farley Short, Ph.D., of Pennsylvania State University, provided a convenience sample of 225 elderly Medicare beneficiaries with information from the Health Plan Employer Data and Information Set (HEDIS), for example, how many plan members receive certain preventive screenings, and results from the Consumer Assessment of Health Plans Study (CAHPS®), to determine the impact of this information on Medicare plan choice. They randomized participants to several experimental groups, with each participant receiving quality information to make a hypothetical choice of the traditional FFS Medicare and two hypothetical Medicare HMOs (one high-cost and the other low-cost), and to a control group that did not receive quality ratings for any of the plans.

In the four experimental groups, higher quality ratings were associated with both the high-cost HMO and traditional Medicare; higher quality ratings were associated with both the low-cost HMO and traditional Medicare; higher quality ratings were associated with the high-cost HMO only; or higher quality ratings were associated with the low-cost HMO only. Most participants chose the same type of plan in the experiment as they had in real life. If informed competition is going to work in the Medicare market, it might be more effective to target new beneficiaries, beneficiaries who have been dropped from their HMO, those who purchase their own supplemental or managed care plan, and those who contact senior centers for help in choosing plans, conclude the researchers.

See "Testing the effect of quality reports on the health plan choices of Medicare beneficiaries," by Drs. Uhrig and Short, in the Winter 2002/2003 Inquiry 39, pp. 355-371.

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