Skip Navigation U.S. Department of Health and Human Services
Agency for Healthcare Research Quality

Managed Care

Authors: Zhan C, Miller MR, Wong H, et al.
Title: The effects of HMO penetration on preventable hospitalizations.
Publication: Health Serv Res 39(2):345-61.
Date: 2004
Abstract: Available on PubMed®

Authors: Jiang HJ, Begun JW.
Title: Dynamics of Change in Local Physician Supply: An Ecological Perspective.
Publication: Social Science and Medicine 54(10):1525-41.
Date: 2002
Abstract: An ecological framework was proposed that explains the growth of a physician population by four mechanisms—the intrinsic properties of this physician population; the local market's carrying capacity, determined by three environmental dimensions (munificence, concentration, diversity); competition within the same physician population; and interdependence between different physician populations. The study period is from 1985 to 1994, during which dramatic changes occurred in the health care sector—an unprecedented growth in managed care, increased hospital consolidation and organized physician practice. MSA level data were compiled from ARF, the AHA Annual Surveys of Hospitals, the AMA Census of Medical Groups, the InterStudy National HMO Census, and the U.S. County Business Patterns. Both changes in the number and percentage of physicians in a particular specialty population were examined. Variables measuring three environmental dimensions were found to have significant and differential effects on change in the size of different specialty populations. For instance, hospital consolidation and managed care penetration both showed significant positive effects on growth of the generalist population but suppressing effects on growth of the specialist population. MSAs with higher percentages of for-profit hospitals had significant increases in the percentage of specialists.

Authors: Wong H., Hellinger F.
Title: Conducting Research on the Medicare Market: The Need for Better Data and Methods.
Publication: Health Services Research 2001 Apr;36(1 Part 2):291-308.
Date: 2001
Abstract: This study highlights data limitations, the need to improve data collection, the need to develop better analytic methods, and the need to use alternative data sources to conduct research related to the Medicare program. These objectives are achieved by reviewing existing studies on risk selection in Medicare HMOs, examining their data limitations, and introducing a new approach that circumvents many of these shortcomings. Data for 1995-97 for five States (Arizona, Florida, Massachusetts, New York, and Pennsylvania) from the HCUP State Inpatient Databases (SID), maintained by AHRQ and the Health Care Financing Administration's Medicare Managed Care Market Penetration Data Files and Medicare Provider Analysis and Review Files are used in this study. The authors analyzed hospital utilization rates for Medicare beneficiaries in the traditional fee-for-service Medicare and Medicare HMO sectors and examine the relationship between these rates and the Medicare HMO penetration rates. Medicare HMOs were found to have lower hospital utilization rates than their fee-for-service counterparts, differences in utilization rates vary across States, and that HMO penetration rates are inversely related to the rough measure of favorable selection. The authors conclude that substantial growth in Medicare HMO enrollment and the implementation of a new risk-adjusted payment system have led to an increasing need for research on the Medicare program. Improved data collection, better methods, new creative approaches, and alternative data sources are needed to address these issues in a timely and suitable manner.

Authors: Friedman B., Basu J.
Title: Health Insurance, Primary Care, and Preventable Hospitalization of Children in a Large State.
Publication: American Journal of Managed Care 7(5):473-81.
Date: 2001
Abstract: The study analyzes variations of the admission rate to hospitals of children with ambulatory care-sensitive (ACS) conditions, testing the relationship to insurance coverage, HMO enrollment, availability of primary care, severity of illness, distance to hospital, and a number of other factors. Hypotheses are derived from basic considerations of demand and use of primary care and preventive services, and then tested with a weighted linear regression model of the ACS admission rate for children residing in each county of New York. The principal data are all hospital discharges for New York resident children admitted to hospitals in New York, Pennsylvania, New Jersey, or Conecticut in 1994. The data and methodology are noteworthy for including out-of-area hospital admissions. One key result is a substantial negative association of the ACS rate with private HMO coverage. There are also sizable negative effects of the availability of primary care services in physician offices and distance traveled. Large differences related to racial and ethnic composition of the population are found, independent of other determinants. There was a positive association with the proportion of admissions for all conditions covered by Medicaid or self-pay. Severity of illness and use of emergency departments were controlled. There was no independent effect of a location in New York City. The results are consistent with smaller-scale studies, suggesting that improved health insurance for children could reduce hospital admissions. Contracting with HMOs also appears to be attractive. Independently, programs to increase the availability of primary and preventive services could substantially reduce ACS admissions. Some disparities remain that deserve more detailed attention at a local level.

Authors: Basu J, Friedman B.
Title: Hospitalization of children for ambulatory care sensitive conditions: Determinants of pPatient flows in a large State.
Publication: Health Economics 10(1)67-78.
Date: 2001
Abstract: The study examines the influence of key policy variables such as types of insurance, and local supply of primary care, and patient characteristics such as race, and severity of illness, among others, on out-of-area use of hospitals by children with diagnoses defined as ambulatory care sensitive (ACS) conditions. Hospital discharge data for New York residents admitted to hospitals in New York, Pennsylvania, New Jersey or Connecticut in 1994 are used. Patient-level data are merged with the Area Resource file (ARF), and American Hospital Association (AHA) surveys. Hypotheses are developed from a model that links the choices of families residing in a local area, supply considerations of ambulatory care providers, HMOs and hospitals, determining the admissions to hospitals for ACS conditions in an out-of-area hospital. The study uses logistic regression to predict travel out of the local area for ACS admission. The study finds that HMOs do not especially take members outside the area when hospital care is needed. Inadequate primary care could cause significant patient flows. Severity of illness significantly affects flows out of the local area and children with nonwhite race tend to stay in. The implications of these findings might be that a greater availability of local primary care physicians could reduce the movement of children outside the county. This could be more effective in areas with more nonwhites and Medicaid patients because those are the areas associated with higher occurrence rates, and a higher likelihood of patients to stay locally. Future research will compare patient flows for ACS conditions with other conditions such as those treated with elective procedures, use other age groups, and examine the time trends for ACS conditions.

Author: Encinosa W.
Title: The economics of regulatory mandates on the HMO market
Publication: Journal of Health Economics 20(1):85-107.
Date: 2001
Abstract: Recently proposed HMO regulations have involved mandates of two forms: (1) minimum quality standards, and (2) mandated increases in access to specialty care. The author shows that piecemeal regulation, which uses only one of either mandate, may decrease welfare for all HMO consumers. Under full regulation using both mandates, if the minimum standard is set too low, a floor-to-ceiling effect occurs. This involves HMOs setting quality at the minimum standard, even when their quality would be above the standard in an unregulated market. Finally, the author show how premiums may either increase or decrease under a mandate.

Authors: Brach C, Sanches L, Young D, et al.
Title: Wrestling with typology: Penetrating the "black box" of managed care by focusing on health care system characteristics.
Publication: Med Care Res Rev 57(Suppl 2):93-115.
Date: 2000.
Abstract: The health care system has undergone a fundamental transformation, undermining the usefulness of the typology of HMO, IPA, PPO, etc. The authors present a new approach to studying the health care system. In matrix form, they have identified a set of organizational and delivery characteristics with the potential to influence outcomes of interest, such as access to services, quality, health status and functioning, and cost. The matrix groups the characteristics by domain (financial features, structure, care delivery and management policies, and products) and by key roles in the health care system (sponsor, plan, provider intermediary organization, and direct services provider). The matrix is a tool for researchers, administrators, clinicians, regulators and policy makers, and data collectors. It suggests a new set of players to be studied; emphasizes the relationships among the players; and provides a checklist of independent, control, and interactive variables to be included in analyses.
Availability: AHRQ Publication No. 01-R014 is available from the AHRQ Publications Clearinghouse.

Author: Hellinger FJ, Wong HS.
Title: Selection bias in HMOs: A review of the evidence.
Publication: Med Care Res Rev 57(4):405-39
Date: 2000
Abstract: Many studies have compared the characteristics of persons who join HMOs with those of persons who join FFS plans, and several studies have reviewed findings regarding selection bias in HMOs. This article extends the findings of previous reviews by including information from studies published through 1999. This is important because of the rapid diffusion of HMOs in all markets and recent changes in the way public programs are organizing and paying for care from HMOs. This article also examines recent changes in how HMOs are paid. This is important because recent changes in payment methodologies may reduce, or eliminate, overpayments to HMOs resulting from selection bias. For example, changes in Medicare's risk adjustment system implemented in January 2000 unquestionably mitigate the impact of favorable selection on HMO payments.
Availability: AHRQ Publication No. 01-R026 is available from the AHRQ Publications Clearinghouse.

Authors: McNamara P, Caldwell B, Fraser I, et al.
Title: New contributions from the field of health services research
Publication: Med Care Res Rev 57(Suppl 2):5-8.
Date: 2000.
Abstract: Recent publication and wide press coverage of an Institute of Medicine (IOM) study documenting the extent and nature of patient safety problems broadened public understanding of a fundamental and discouraging finding from the field of health services research—the quality of care delivered in the United States varies greatly and cannot be presumed. The IOM report underscores another finding from health services research that offers some guidance for those seeking to improve quality: the safety and quality of patient care can be no better than the system within which it occurs. Improvements in quality require a comprehensive and purposive set of system solutions based on scientific evidence about what works and what doesn't. This introductory article summarizes seven articles included in a special supplement of Med Care Res Rev, which were drawn from centerpiece presentations at two recent national meetings of health plans and health services researchers (Building Bridges 1999, 2000). The family of timely and actionable articles provides insights on organizational and institutional approaches to quality, and inform our future research agenda related to quality by identifying evidence gaps, offering design suggestions, and implicitly identifying research priorities.

Author: Encinosa W, Sappington D.
Title: Adjusted community rate reforms to promote HMO participation in Medicare+ Choice.
Publication: Health Care Financing Review 21(1)19-29.
Date: 1999
Abstract: The authors review the financial regulations imposed on HMOs that participate in the Medicare+ Choice program, and identify elements of the regulations that may discourage HMO participation in the program. We propose modifications of the regulations that can encourage the participation of HMOs without affording them excessive profit. The modifications include smoothing and bounding profit estimates, and authorizing and encouraging expanded use of benefit stabilization funds.

Authors: Fraser I, Wong H, Arent J, et al.
Title: Building Bridges IV: Managed care research comes of age.
Publication: Med Care Res Rev 56(Suppl 2):5-12.
Date: 1999
Abstract: This article describes and contrasts the challenges and objectives facing attendees of the May 1998 conference, "Building Bridges IV: Improving the Public's Health through Research Partnerships," with those facing conference attendees of the inaugural Building Bridges conference held in April 1995. The conference was cosponsored by the American Association of Health Plans, AHCPR, Centers for Disease Control, and HMO Research Network. A brief overview of the articles presented in the special issue of Med Care Res Rev demonstrates just how far managed care research has evolved. Five of the most notable changes since the first Building Bridges conference are highlighted: (1) The two worlds of managed care and research are no longer distinct and separate. (2) The conference and the parties to the dialogue have grown substantially. (3) We have moved from broad concern about the impact of managed care to looking inside the black box. (4) Researchers are questioning established theories about how markets do and will work, with particular emphasis on the role of consumers and purchasers. (5) Continued progress in conducting and implementing managed care research will require new bridges and partnerships.

Author: Friedman B, Steiner C.
Title: Does managed care affect the supply and use of ICU services?
Publication: Inquiry 1999 Spring;(36):68-77.
Date: 1999
Abstract: In two States that differ greatly in hospital ownership and history of regulation, we find that the services per ICU user are less for managed care patients than for other privately insured. In Massachusetts, the differences across payers disappear for hospitals where the total supply of ICU is low in relation to expected demand. In both States, admission to ICU is not significantly different between managed care and other privately insured.
Availability: AHCPR Publication No. 99-R071 is available from the AHRQ Publications Clearinghouse.

Authors: Luce B, Elixhauser A.
Title: Documenting the value of your product—Outcomes research for medical devices.
Publication: Medical Devices and Diagnostic Imaging Jan 1999:159-68.
Date: 1999
Abstract: The market for medical technologies is changing. This market is more austere and more demanding, and new technologies are being scrutinized more closely than ever before. This article describes the new medical marketplace and helps device manufacturers become proactive in demonstrating the value of their products. Rather than trying to catch up when the demands for information are thrust upon them, a proactive approach helps smooth the way for product development, marketing, and acceptance.

Author: Paramore C, Elixhauser A.
Title: Quality of health care services in managed care organizations.
Publication: Value in Health 2(4):258-68.
Date: 1999
Abstract: As managed care has grown to dominate the U.S. health care delivery system, questions have been raised about the impact on the quality of care provided to its enrollees. Two important aspects of health care quality are access to care and the appropriateness of care. This analysis evaluated the occurrence of preventable hospitalizations among managed care (MCO) versus fee for service (FFS) populations to compare access to and appropriateness of preventive, primary, and surgical health care services. Rates of preventable hospitalizations associated with ambulatory sensitive conditions (ASCs) were calculated based on all discharges from Massachusetts hospitals in 1995, and categorized by population characteristics including: age, sex, ethnicity, and insurance status. Multivariate logistic regression models were employed to explain the likelihood of having a preventable hospitalization. Rates of preventable hospitalizations for two of the conditions evaluated (perforated appendix and diabetes complications) were lower for MCO enrollees. For two additional indicators (immunization preventable pneumonia and low birth weight), MCO rates were no different from FFS rates. Results for pediatric asthma were inclusive. For four out of five quality indicators evaluated, individuals in Massachusetts MCOs are doing better or no worse than their counterparts in FFS plans. Until population-based data on managed care enrollees becomes available, and until such data can be linked to utilization and health outcomes information, investigations into the quality of services provided by MCOs compared to FFS plans cannot be definitive.

Authors: Schnaier J, Sweeny S, Williams W, et al.
Title: Special issues addressed in the CAHPS® survey of Medicare managed care beneficiaries.
Publication: Med Care 37(3 Suppl):MS69-MS78.
Date: 1999
Abstract: This article describes the process through which the Medicare Managed Care plan (MMC) survey was developed and examines issues in using this survey with Medicare beneficiaries that have implications for all CAHPS® surveys. These implications include the ability of Medicare beneficiaries to use MMC navigational features, whether access measures are meaningful for this population, and whether beneficiaries' familiarity with managed care influences their health plan assessments.

Authors: Simpson L, Fraser I.
Title: Children and managed care: What research can, can't, and should tell us about impact.
Publication: Medical Care Research and Review 56(Suppl 2):13-36.
Date: 1999
Abstract: The speed and ubiquity of the move from fee-for-service to managed care raises questions about how these changes affect children. This article examines: (1) The pace and context of the move to managed care for children. (2) Potential opportunities and challenges emerging from these changes. (3) Research findings on how managed care affects children. (4) Next steps for learning more. The research review provides a consistent answer to whether managed care is good for children: it depends on what kind of managed care, which children, and under what circumstances. This finding suggests lessons for future research: (1) Focus on particular features of managed care. (2) Get inside the "black box" of managed care and examine providers. (3) Expand the portfolio of research on children; research on adults cannot "trickle down" to children. (4) Foster research partnerships and networks. (5) Focus on poor and chronically ill children.
Availability: AHCPR Publication No. 99-R062 is available from the AHRQ Publications Clearinghouse.

Authors: Wong H, Smithen L.
Title: A case study of point-of-service medical use in a managed care plan.
Publication: Med Care Res Rev 56(Suppl 2):85-110.
Date: 1999
Abstract: This study examines the extent of point-of-service use in a managed care plan using 1990 and 1991 proprietary claims data (excluding pharmacy claims) from a large, well-established IPA with a point-of-service option. Our results show that approximately 12 percent of all claims were made by out-of-network providers, representing about 9 percent of the dollar value of all claims. This is about $131 per enrollee per year. While younger enrollees (i.e., 6-24 years) use fewer medical resources than do older enrollees, they tend to receive a greater share of their medical services from out-of-network providers. There is little difference between point-of-service use by males and females. Mental illness is the most common diagnosis for out-of-network claims, accounting for about 25 percent of the dollar value of out-of-network claims. 96 percent of the out-of-network claims for this diagnosis category were made by providers with a specialty in psychiatry.

Author: Brach C.
Title: Designing substance abuse and mental health capitation programs: A managed care guide for State and local officials.
Publication: Rockville (MD): Substance Abuse and Mental Health Services Administration.
Date: 1998
Abstract: This guide provides an overview of capitation and its goals for the substance abuse and mental health fields and defines 10 design decisions that must be analyzed when formulating a capitation program: identify goals, define populations eligible for enrollment, determine the scope of services, assign responsibilities for administration and delivery (integrated, mixed, or carved out), contracting, manage risk, set rates, market and enroll clients, assure quality, and implementation.
Availability: This guide can be ordered through the National Clearinghouse on Alcohol and Drug Information (NCADI) by calling 1-800-729-6686 or (301) 468-2600 or by E-mail

Authors: Brach C, Scallet L.
Title: Managed care challenges for children and family services.
Publication: In Humane Managed Care?, edited by Schamess G, and Lightburn A. Washington (DC): National Association of Social Workers Press.
Date: 1998
Abstract: This chapter highlights five challenges facing those dedicated to the welfare of children and their families who also want to make the most of the opportunity managed care presents: (1) The speed with which managed care is moving through the various systems that serve children and families. (2) The emphasis that has been placed on outcomes. (3) The participation of clients in the design and implementation of managed care policies and programs and the importance of ensuring client protection. (4) The need for the development of culturally competent systems of care. (5) The potpourri of legal considerations that accompany managed care initiatives.

Return to Topic Index
Proceed to Next Section


AHRQ Advancing Excellence in Health Care