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Health Care Costs and Financing

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Managed care helps the elderly avoid preventable hospitalizations more than traditional Medicare

Preventable hospitalizations are hospital admissions that can potentially be prevented with adequate primary care. These admissions are generally used as an indicator of primary care access and quality.

Elderly Medicare patients in three out of four States who were enrolled in HMOs were less likely to be hospitalized for preventable conditions than elderly persons in traditional fee-for-service Medicare plans.

Moreover, in California and Florida, the two States with long experience with HMOs and the greatest Medicare HMO penetration, these reduced admissions were mainly concentrated among the more ill HMO patients.

These findings add to the evidence that managed care outperforms traditional Medicare among the elderly, rather than simply enrolling the healthiest populations, note Jayasree Basu, Ph.D., M.B.A., of the Agency for Healthcare Research and Quality (AHRQ), and Lee R. Mobley, Ph.D., of the Research Triangle Institute.

The authors contend that this may be due to the better coordination of care and higher level of primary and preventive care services provided by HMOs. With the general backlash against managed care in the latter nineties and the more recent push by the Federal government to enroll more seniors in managed care plans, these findings demonstrate the effectiveness of Medicare HMO plans in three out of four study States.

However, the authors caution that the data may not reflect changes that have taken place since 2001, such as the 2003 Medicare Modernization Act. This legislation may have resulted in some relevant changes, such as the Medicare prescription drug benefit and new plan participation and enrollment patterns.

These changes might need to be taken into account when interpreting the relevance of the findings for the current Medicare program. The study findings were based on analysis of 2001 hospital discharge abstracts of elderly Medicare enrollees in New York, Pennsylvania, Florida, and California, from the AHRQ Healthcare Cost and Utilization Project database.

More details are in "Do HMOs reduce preventable hospitalizations for Medicare beneficiaries?" by Drs. Basu and Mobley, in the October 2007 Medical Care Research and Review 64(5), pp. 544-567. Reprints (Publication No. 08-R005) are available from the AHRQ Publications Clearinghouse.

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