Draper DA; Academy for Health Services Research and Health Policy. Meeting.

Abstr Acad Health Serv Res Health Policy Meet. 2000; 17: UNKNOWN.

Presented by: Debra A. Draper, M.S.H.A., Researcher , Mathematica Policy Research Inc., 600 Maryland Avenue SW, Suite 550, Washington, DC 20024. Tel: 202-484-5265; Fax: 202-863-1763; e-mail: DDraper@Mathematica-mpr.com. Doctoral Candidate, Department of Health Administration, Medical College of Virginia Campus of Virginia Commonwealth University, 1008 East Clay Street, P. O. Box 980203, Richmond, VA 23298-0203.

Research Objective: Medicaid has evolved substantially since its inception in 1965. Most recently, states have instituted managed care programs, primarily using health maintenance organizations (HMOs), to control costs as well as to improve care delivery for their Medicaid beneficiaries. Recent media coverage, however, indicates that all may not be well in the relationship between states' Medicaid programs and HMOs. HMOs are withdrawing from Medicaid while others are no longer considering the decision to enter. The study examines the entry by licensed HMOs into Medicaid managed care. There are two primary objectives of the research effort - (1) to gain a better understanding of the entry trend over time and how it may be changing, and (2) to identify key determinants, organizational (age, size, model type, profit status, chain-affiliation, federal qualification status, and profitability) and market (complexity - state Medicaid policy and level of competition, munificence, and stability), influencing the HMO's entry decision.Study Design: The theoretical framework used to guide the study is premised on both resource dependence theory and the two-market demand model of Medicaid. The study is best characterized as being retrospective in design with both longitudinal and cross-sectional components. The longitudinal component includes 5 years of pooled data from 1993-1997. The cross-sectional component represents data from 1997 and was developed to test the influence of Medicaid payment rates on entry as this data was only available for a single point in time. In both the longitudinal and cross-sectional models, HMOs entering Medicaid managed care are compared to non-participating HMOs based on selected organizational and market characteristics. The market is defined as the individual state of HMO entry. Population Studied: Licensed HMOs operating in the United States from 1993 to 1997. For the 1993-1997 longitudinal model, a total of 1,396 HMOs are included in the sample (161 HMO entrants and 1,235 HMO non-participants). The sample for the 1997 cross-sectional model includes 331 HMOs (32 HMO entrants and 299 HMO non-participants).Principal Findings: The evidence suggests that interest by HMO in entering Medicaid managed care may be waning. The number of HMO entrants peaked in 1995 at 43, but declined in each of the two subsequent years (1996 - 41 entrants and 1997 - 32 entrants). Additionally, the number of states with HMO entry activity reached a high of 22 states in 1996, but declined to 18 states in 1997. In the 1993-1997 longitudinal model, age, size, and chain-affiliation were found to be significant determinants of HMO entry at p < .001. Specifically, HMO entrants were younger, larger, and non-chain-affiliated. The level of market competition was found to be significant at p < .01 with HMO entry more likely to occur in less competitive markets as measured by the Herfindahl Index of HMOs. At p < .10, model type and federal qualification status were found to be significant with open model types and federally qualified status important determinants of entry. In the 1997 cross sectional model, chain-affiliation and stability were found to be significant determinants of HMO entry at p < .01. HMO entrants were more likely to be non-chain-affiliated and operate in markets with more stable Medicaid programs as measured by the level of entry and exit activity. Age and munificence were significant at p < .05. HMO entrants were younger and entered Medicaid managed care in markets with lower per capita incomes. The level of market competition ( as measured by the Herfindahl Index of HMOs) was significant at p < .10. HMOs entered Medicaid in markets that were less competitive. Conclusions: HMOs continue to enter Medicaid, but the rate of entry has slowed. During the 5 year period, 1993-1997, HMO entrants were characterized as being younger, larger, non-chain-affiliated, open model types, and federally qualified. They were also more likely to enter less competitive markets. In 1997, HMO entrants were also more likely to be younger and non-chain-affiliated. Markets of entry during 1997 were also characterized as being less competitive, but in addition, they had more stable Medicaid programs and were less munificent. Implications for Policy, Delivery or Practice: States have become increasingly dependent on managed care, especially HMOs, to accomplish the dual objectives of cost control and improved systems of care for their Medicaid beneficiaries. Evidence suggests, however, that fewer HMOs are entering Medicaid managed care and that the relationship between states and HMOs is sometimes less than ideal. It is important, therefore, that policy makers understand the determinants that influence an HMO's decision to participate. Without HMO participation, the managed care strategy of states may be severely hampered. HMOs too, may suffer adverse consequences in some markets by not participating in Medicaid. Declining profitability, decreased leverage, and stagnated growth may result. Continuing research on HMO entry into Medicaid managed care is essential because of the dynamic nature of the phenomenon. Primary Funding Source: None.

Publication Types:

• Meeting Abstracts

Keywords:

• Health Maintenance Organizations
• Health Resources
• Managed Care Programs
• Medicaid
• United States
• economics
• hsrmtgs

Other ID:

• GWHSR0000558

UI: 102272232

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