Health maintenance organization versus fee-for-service subscribers

Health maintenance organization versus fee-for-service subscribers

Home Health ResourceUtilization Health Maintenance Organization Versus Fee-for-Service Subscribers BY CAROLYN E. ADAMS, EdD, RN, CNAA, AND SANDRA KRA...

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Home Health ResourceUtilization

Health Maintenance Organization Versus Fee-for-Service Subscribers BY CAROLYN E. ADAMS, EdD, RN, CNAA, AND SANDRA KRAMER, MEd, RN

A commonly held belief is that patients enrolled in health maintenance organizations (HMOs) are authorized fewer home health services than patients enrolled in fee-for-service (FFS) plans. This study compared home health resource utilization patterns between patients enrolled in a cost HMO and in FFS plans. Although no significant differences were found, the cost HMO subscribers actually received more services. Despite these similarities, home health administrators need to carefully craft contracts with cost HMOs.

ADDRESS FOR CORRESPONDENCE: Carolyn E.Adams, EdD,RN, CNAA 18 E. SalmonAve. Spokane,WA 99218 136

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he single largest payer of home health services is Medicare, administered by the Health Care Financing Administration (HCFA).’ Because home health expenditures more than quadrupled in the last 10 years, HCFA is supporting Medicare cost reductions.23 One cost reduction strategy is Medicare beneficiary enrollment in managed care plans. Medicare pays an annual national average of $4560 per Medicare beneficiary in managed care, whereas this cost in fee-for-service (FFS) plans is $4800.4 Although many types of managed-care systems exist, health maintenance organizations (HMOs) are by far the largest group. For a Medicare beneficiary enrolled in a federally qualified HMO, the HMO must provide all of the items and services available to the FFS Medicare beneficiary.5 Despite these requirements, home health administrators view movement of Medicare beneficiaries into HMOs with skepticism. They express that “the level of services authorized for Medicare patients within HMOs is significantly lower than that available for non-HMO enrollees.“s(ps9) Recent research supports the administrators’ belief for Medicare beneficiaries enrolled in HMOs with risk MAY/JUNE

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contracts (hereafter referred to as risk HMOs) with HCFA.6 However, not all HMOs that enroll Medicare beneficiaries operate under risk contracts. Some HMOs have cost contracts with HCFA (hereafter referred to as cost HMOs), which have different financial incentives than risk contracts. This study compared resource utilization patterns for Medicare home health patients enrolled in the FFS program versus patients enrolled in a cost HMO.

MEDICARE

BENEFIT AND HMOS

The Medicare benefit provides beneficiaries with six types of services: intermittent skilled nursing, physical therapy, speech pathology, home health aide, occupational therapy, and medical social work. To qualify for services, the beneficiary must be homebound and under the care of a physician who establishes a home health plan of care.7 Medicare beneficiaries can enroll in the traditional FFS Medicare program or in an HMO that has a contract with HCFA. HMOs contract with HCFA to provide services to Medicare beneficiaries under risk or cost contracts. With a Medicare risk contract, HCFA prepays the HMO a per capita premium for a beneficiary’s care, amounting to 95% of what it costs the government to provide all Medicare part A and B services to an FFS beneficiary in the same geographic region. This amount covers the HMO’s overhead, provider payments, and profit. If the HMO spends more than the premium on a subscriber’s care, the HMO absorbs the “loss.“sJ9 HMOs that have Medicare cost contracts with HCFA are reimbursed on a modified FFS basis. Cost HMOs receive per capita prepayments from HCFA for each Medicare subscriber. These per capita prepayments are adjusted at the end of the year to reflect actual reasonable cost of delivering services to the subscriber. Cost HMOs can receive up to 100% of the average cost that Medicare pays for an FFS Medicare subscriber in the region.9 Although some HMOs own their own home health agency (HHA), the majority contract with an outside agency to deliver home health services.9 HMOs use case managers to coordinate subscribers’ services with contract HHAs. Typically, when an HMO subscriber is admitted to a contract HHA, an HMO physician approves and signs the plan of care. The HMO case manager authorizes the discipline mix, number of visits, and frequency of visits that the HHA staff can use to implement the plan. During the course of care, if the patient needs other disciplines or additional visits, an HHA staff member contacts the HMO case manager for service authorization. The physician signs a treatment plan for these additional services. Medicare FFS subscribers select the HHA from which they want to receive care. On HHA admission, the patient’s physician signs the plan of care. The HHA staff member collaborates with the physician to determine the discipline mix and the number and frequency of visits needed to implement the plan of care. During the course of care, if the FFS patient needs additional services, the MAY/JUNE

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HHA staff member contacts the physician, who authorizes them and signs another plan of care. No insurance plan authorization of services is needed for FFS patients

RESEARCH REVIEW In 1987, InterStudy’s Center for Aging and Long-Term Care received a National Center for Health Services Research and Health Care Technology Assessment grant to conduct the first in-depth national study of home health care provided through HMOs. The research included interviews with I 25 experts in home health and HMOs, in-depth case studies of six HMOs, and a mailed survey to 103 HMOs with Medicare contracts.9 The researchers did not differentiate between risk and cost HMOs. HMOs were asked questions about the goals of home health care and the HMO role in providing home health care to subscribers. Ninety-three percent reported the primary uses of home health services were related to cost containment. However, 70% indicated that a goal of home health care was to improve the patient’s or family’s quality of life.g Investigators asked HMOs what types of services they provided to home health patients. One hundred percent offered skilled nursing, 97% offered physical therapy, 92% offered speech pathology, 8 I % offered home health aide, 74% offered occupational therapy, and 66% offered medical social work services. Volume of services was measured by calculating visits per 1000 subscribers. In the 32 HMOs in the InterStudy, the median utilization rate was 456 visits per 1000 for subscribers older than 65 years of age.9 An unpublished study completed by InterStudy researchers compared services with Medicare beneficiaries in risk HMOs and FFS plans. Most HMOs provided Medicare subscribers with home health services similar to those provided to FFS subscribers. In addition, more than one quarter of the HMOs offered supportive home care, i.e., personal care, not available under the regular Medicare program.9 Shaughnessy and associates6 compared home health quality outcomes and resource utilization between Medicare patients in risk HMO and FFS plans. Data were collected on 1632 patients who received care from 38 Medicare-certified HHAs. Nine of the HHAs were HMO owned, 14 had both Medicare HMO and FFS contracts, and 15 had minimal or no HMO contracts. Data were collected until patients were discharged or until 60 days after admission. An equal number (86%-89%) of risk HMO subscribers in contract HHAs and FFS subscribers were discharged within 60 days of admission. All data comparisons were adjusted for case mix differences between the risk HMO and FFS groups. In comparison to the risk HMO patients, significantly superior outcomes were found for the FFS patients. Shaughnessy attributed the superior outcomes to the substantially larger amounts of resources used to care for the FFS patients. In the first 60 days of services, the risk HMO patients averaged 12.7 visits, whereas the FFS HOME

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patients in contract HHAs averaged 14.9 visits. In the first three weeks after HHA admission, 33% of the FFS patients were discharged, whereas 41% of the HMO patients in contract HHAs were discharged. Although nearly all patients received skilled nursing visits, a higher proportion of FFS patients received services from other disciplines. The percent of patients receiving at least one visit, by discipline type, is as follows: home health aide-42% FFS, 24% HMO, physical therapy-3 I % FFS, I 9% HMO, occupational therapy10% FFS, 6% HMO; speech pathology-3% FFS, 2% HMO; and medical social worker-21 % FFS, 12% HMO. The researchers did not publish the average number of discipline visits per patient. Although Shaughnessy’s data showed that in comparison to risk HMO patients, FFS patients received more home health services, these findings cannot be generalized to patients in cost HMOs. HMOs with Medicare cost contracts have a different set of incentives than those with risk contracts. For example, cost HMOs are paid up to 100% of their actual costs, whereas risk HMOs are paid 95% of the average cost of care for Medicare FFS beneficiaries in the region.9 Research supports the notion that cost HMOs may operate differently than risk HMOs. Adams and associates’0 compared home health outcomes of Medicare cost HMO and FFS subscribers. They found no significant difference in outcomes between the two groups.

PURPOSE This study compared the resource utilization patterns of Medicare home health patients enrolled in a cost HMO with those of patients enrolled in FFS plans.

between Medicare venience sampling

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cost HMO and FFS subscribers. procedure was used.

A con-

variables

Selected patient demographic and health status characteristics were used to describe the sample. Also, these variables were used to identify differences between the FFS and HMO patients on HHA admission. Characteristics studied were: age, race, gender, number of secondary diagnoses, marital status, mental status, ability to manage activities of daily living, mobility, willingness to participate in care, and location of the patient (home or hospital) at the time of the HHA referral. Resource utilization was measured by recording the (1) length of an episode of care in days, (2) number of registered nurse (RN) visits, and (3) the type and number of visits by the following disciplines-home health aide, physical therapist (PT), occupational therapist, speech pathologist (SP), and medical social worker (MSW). Length of an episode of care was tabulated by counting days from the patient’s admission date to and including the discharge date. Number of RN visits was the number of RN visits to the patient’s home during the episode of care. If the RN visited but the patient was not at home, the visit was not counted. Resource utilization data for disciplines other than nursing were tabulated by counting the number of patients who had referrals to each discipline. Also, the number of times the specific discipline visited each patient was recorded.

Procedure

This correlational research was a subanalysis of data collected for a larger home health outcome study. to- 12

Data were collected from patient and agency records. HHA staff members knew that a study was in progress; they did not know that Medicare HMO and FFS patients were being compared. Resource utilization data were collected by three baccalaureate nursing students who acted as research assistants. The primary investigator was present and directed the students during data collection.

Setting

RESULTS

The setting was a hospital-based, Medicare-certified HHA in the northwestern United States. The agency was accredited by the Joint Commission on Accreditation of Healthcare Organizations. Agency staff members made more than 60,000 visits annually. Cost HMO patients comprised approximately one third of the volume of the HHA’s business.

The average age of the 50 HMO patients was 78.7 years (SD = 7.69 years). The 50 FFS patients’ average age was 79.3 years (SD = 7.47 years). These age differences were not significantly different (t = -0.422, df = 98, P = 0.674). Reflecting the region’s low minority population, all patients were white. The patients had multiple health problems. On admission, the HMO patients averaged 1.9 secondary diagnoses (SD = 0.5 12). The FFS patients averaged 2.1 secondary diagnoses (SD = 0.488). HMO and FFS patients were not significantly different in the number of secondary diagnoses (t = -1.400, df = 98, P = 0.165). Chi-square tests were used to compare the other admission characteristics (Table 1). The cost HMO and FFS subscribers were not significantly different (P > 0.05) on any characteristic compared. The amount of HHA resources used to care for the

METHODOLOGY Design

Sample The sample was 50 Medicare beneficiaries enrolled in a cost HMO and 50 beneficiaries enrolled in FFS plans. Congestive heart failure was the primary diagnosis of 3 1 cost HMO and 3 1 FFS enrollees. Diabetes mellitus was the primary diagnosis of 19 cost HMO and 19 FFS enrollees. The patients were the same patients used by Adams and associates10 to compare quality outcomes 138 HOME

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HMO and FFS patients was compared using descriptive statistics (Table 2) and analysis of variance (Table 3). Category factors in the analyses of variance were payer source (HMO and FFS) and diagnosis (congestive heart failure and diabetes mellitus). Diagnosis was used because different diagnoses may require different types and amounts of resources.13 The average length of an episode of care was 46.3 days (SD = 47.46 days) for the HMO patients and 62.0 days (SD = 115.71 days) for the FFSpatients. The analysis of variance showed that neither payer source nor diagnosis significantly (P > 0.05) influenced length of an episode of care. All patients received at least one RN visit. For the HMO patients, the average number of RN visits was 17.7 (SD = 3 1.28 visits). The FFS patients averaged 15.6 RN visits (SD = 25.95 visits). Neither payer source nor diagnosis significantly (P > 0.05) influenced number of RN visits. Twenty-two of the HMO and 20 of the FFS patients received aide visits. For these patients, the HMO patients averaged 14.2 visits (SD = 19.07 visits). For the FFS patients, the average number of visits was 12 (SD = 11.13 visits). Neither payer source nor diagnosis significantly (P > 0.05) influenced number of aide visits. An equal number (I 5) of the HMO and FFS patients MAY/JUNE

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received MSW visits. For these patients, the HMO patients averaged 1.3 visits (SD = 0.59 visit). FFS patients averaged 1.5 MSW visits (SD = 0.74 visit). Analyses of variances showed that neither payer source nor diagnosis significantly (P > 0.05) influenced number of social worker visits. However, the interaction between payer source and diagnosis was significant (P < 0.05). Numbers of PT, occupational therapist, and SP visits were small (Table 2); they were evaluated using descriptive statistics. Six cost HMO and six FFS patients received PT visits. For the HMO patients, the average number of visits was 9.7 (SD = 8.85 visits). The FFS patients averaged 8.7 PT visits (SD = 6.28 visits). Three HMO and three FFS patients received occupational therapist visits. The average number of visits was 2.3 (SD = 2.31 visits) and 2.7 (SD = 2.89 visits) for the HMO and FFS patients, respectively. One HMO patient received one SP visit. No FFS patients received an SP visit.

DISCUSSION The data analysis determined whether Medicare cost HMO and FFS subscribers used different types and amounts of home health resources. The data analyses showed no significant differences between the two payer HOME

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sources for the resource utilization measures analyzed. The data represent one HHA’s experience with one cost HMO. However, they show that HMO case managers were not authorizing fewer home health services for HMO subscribers than physicians order for FFS subscribers. In fact, in some instances, the frequency of referrals and mean number of referrals (Table 2) indicate that cost HMO subscribers received slightly more home health services than FFS subscribers, For example, although numbers of RN, MSW, PT and occupational therapist referrals were identical between the HMO and FFS subscribers, two more HMO patients received aide referrals. One HMO patient received an SP referral, whereas no FFS patients received such a referral. The mean number of visits (Table 2) showed that HMO subscribers received more visits than FFS subscribers in four of the six disciplines. HMO subscribers averaged two more RN and aide visits and one more PT visit than FFS subscribers. The mean length of an episode of care was 62 days for the FFS group and 46.3 days for the HMO group, a difference of 16 days. The FFS group’s standard deviation of 115.71 days shows that there were extreme values in the FFS distribution. When extreme values influence the mean, the median is a better description of central tendency.14 The median length of an episode of care for the FFS group was 30 days, almost identical to the median of 30.5 days for the HMO group. Helbergi3 found that patients with different primary 140

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diagnoses used different amounts of home health services. In the current study, resource utilization was unrelated to diagnosis. Helberg used all age groups and a wide array of diagnoses in her study. Perhaps, in this study the homogeneity of the sample-both in terms of age and diagnosesaccounted for the similarity in resource utilization between the patients with congestive heart failure and diabetes mellitus. Payer-diagnosis interactions were not significant for length of an episode of care and average number of RN and aide visits. The payer-diagnosis interaction was significant for average number of MSW visits. Chance may have contributed to this significance. With large numbers of analyses, there is the chance that some will be statistically significant by chance.14 On the other hand, payers may refer more patients with one diagnosis than another diagnosis for social work services. Comparisons of resource utilization patterns between this study and Shaughnessy’s study6 showed noteworthy differences, As aforementioned, the current study found only slight resource utilization differences between the cost HMO and FFS subscribers. However, Shaughnessy found 18% more of the FFS than risk HMO subscribers received aide services and 12% more received PT services. The differences for MSW, occupational therapist, and SP services were 9%, 4%, and I%, respectively, with FFS subscribers receiving more services. Apparently, the cost HMO philosophy of authorization of services was similar MAY/JUNE

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to that of FFS plans, both of which differed from the philosophy of Shaughnessy’s risk HMOs. Shaughnessy’s research6 and that of the current investigators suggest a relationship between home health outcomes and resource utilization volumes. Shaughnessy found superior outcomes occurred when increased resources were used-e.g., with FFS subscribers-and inferior outcomes when fewer resources were used-e.g., with risk HMO subscribers. For this sample, both resource utilization and outcomeslo were similar between the cost HMO and FFS subscribers. Although these studies suggest that resource utilization influences home health outcomes, the types of research design and statistical tests used in both studies preclude this conclusion. Both Shaughnessy and associates and the current investigators used a correlational research design. With correlational designs, variables other than the ones being studied can influence or cause the results.14 Neither study used statistics that tested the relationship between resource utilization and outcomes. Future research using experimental research designs and inferential statistical tests are needed to determine the exact relationship between resource utilization volumes and outcomes in home health. The present study and Shaughnessy’s study6 each provides parts of the resource authorization picture among different types of health plans. A comprehensive picture is needed that includes comparisons among all types of health plans, i.e., cost HMOs, risk HMOs, and FFS plans. Also, consistent measurement protocols are needed among researchers who investigate resource utilization. Shaughnessy studied patients until discharge or 60 days after admission, whereas the current researchers studied patients until discharge. These choices limited resource utilization comparisons between the two studies. MAY/JUNE

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IMPLICATIONS Although home health administrators are justifiably skeptical of Medicare beneficiary movement into risk HMOs,s,6 their skepticism should not extend to Medicare beneficiary movement into cost HMOs. This study found that a cost HMO provided its subscribers with slightly more home health resources than those received by FFS subscribers. The results apply to one HHAs experience with one HMO. To confirm the results, administrators can investigate resource utilization patterns between cost HMO and FFS subscribers in their own agencies. Even though the study findings indicate that cost HMOs do not skimp on Medicare patients’ home health services, home health administrators need to carefully craft provider agreements with cost HMOs for services to Medicare patients, The HHA should make sure that there are dispute-resolution mechanisms in the agreement related to service authorization. For example, a dispute could develop when the HHA nurse believes a patient needs additional visits and the case manager thinks additional visits are unnecessary. When the HHA-HMO contract does not define a mechanism to handle disputes, an HHA may find itself making unpaid patient visits out of patient need or perceived ethical or legal responsibility, e.g., patient abandonment. The HHA-HMO contract should carefully spell out the process for authorizing HHA visits to HMO patients. This process should not be cumbersome for the HHA staff. The HMO should have sufficient case managers who are readily available by telephone to the HHA staff. Also, when possible, the HHA should encourage the HMO to use home health case managers who are knowledgeable about home health benefits and medical care as a whole. One HHA staff member tells a story about trying HOME

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an HMO case manager to understand why a highrisk obstetric patient needed additional visits, only to learn that the case manager had a degree in psychology and no medical background. In this study, all of the home health case managers employed by the HMO had previous experience as home health nurses. Their experience may have influenced the volume of resources authorized for the cost HMO patients. The HHA-HMO contract should clearly state that HMO visit authorization guarantees that the HMO pays the HHA for the visits.5 On occasion, HHAs have reported that visits were authorized by HHA case managers and made in good faith by the HHA staff. Then, the HMO realized that the patient discontinued membership and refused to pay the HHA for the visits. HHA administrators will want to know that the HMO has an efficient system for providing case managers with up-to-date subscriber enrollment information. Frequently, HHAs that sign contracts with HMOs agree to provide HMO patient visits at discounted rates. Also, market demands are pressuring HHAs to further lower the visit rates. To stay financially solvent, the HHA must make sure that their set rates will cover visit costs. To project the cost of a visit for a typical HMO patient, HHAs can request actuarial data or clinical and historical profiles on HMO subscribers. Composite pictures of typical HMO patients coupled with HHA information on average visit length and cost provides the HHA with information to project cost per visit. The majority of home health patients are still enrolled in Medicare FFS plans. Some HHA staff do not know that HMOs require preauthorization for visits. Also, staff members often are surprised when an HMO case manager refuses to approve further patient visits. HHA administrators need to spend time orienting staff to the philosophy and operations of HMOs. This type of up-front staff education will prevent frustrations for staff and potential loss of HHA money as HHA-HMO contracts are implemented. This research did not investigate the number of times that the HMO authorized supportive (e.g., personal care) attendants for the HMO patients in the study; therefore, to get

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the number of patients with HMO-paid personal care attendants is not known. The InterStudy found that more than one quarter of HMOs studied provided supportive home care to subscribers. HHAs that anticipate doing a lot of business with HMOs may want to investigate adding personal care services so their agencies can serve as “one stop shopping” for HMOs. REFERENCES I. National Association for Home Care. Basic statistics about home care 1994. Washington, DC: National Association for Home Care, 1994. 2. Levit KR, Senrenig AL, Cowan CA, et al. National health expenditures. Health Care Financing Rev 1994;16(1):247-93. 3. Vladeck BC, Miller NA. The Medicare home health initiative. Health Care Financing Rev 1994;16(1):7-16. 4. Hasson J, Keen 1. Doctors prescribe health-care vouchers. USA Today 199S;June 28:6A. 5. Dombi W. Home care coverage through HMOs. Caring 1993;12(6):58-60. 6. Shaughnessy PW, Schlenker RE, Hittle DE A study of home health care quality and cost under capitated and fee-for-service payment systems. Denver: Center for Health Policy Research, 1994. 7. Goldberg HB, Schmitz RJ. Contemplating home health PPS: Medicare service use. Health Care Financing Rev 1994;16(1):109-30. 8. Krasner WL, Goff AR. HMOs and home health agencies: legal issues. Home Care Econ 1987;1( l):2-8. 9. Parker M, Polich CL, Fischer LR, et al. The provision of home health care services through health maintenance organizations. Home Health Care Serv Q 1987/1988;8(4):5-24. IO. Adams CE, Kramer S, Wilson M. Home care quality outcomes: fee-for-service versus health maintenance organization enrollees. J Nurs Admin 1995;25( Il):39-46. I I. Adams CE, Wilson M. Enhanced quality through outcome-focused standardized care plans. ] Nurs Admin 1995;2S(9):27-34. 12. Adams CE, Biggerstaff N. Reduced resource utilization through standardized outcome-focused care plans. ] Nurs Admin 1995;25(10):43-50. 13. Helberg JL. Resource utilization in home care: methods and issues. Nurs Health Care 1990;11(9):464-8. 14. Polit DF, Hungler BF. Nursing research: principles and methods. Philadelphia: JB Lippincott, 1991.

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