Evaluating Medicaid HMOs when encounter data are missing: case of developmentally delayed children

Area of Science:

• Health Services Research
• Pediatric Health
• Healthcare Economics

Background:

• Evaluating Medicaid Health Maintenance Organizations (HMOs) is challenging due to missing patient severity of illness data.
• Encounter data is often unavailable, hindering comprehensive assessments of HMO performance.
• Assessing patient populations in closed systems, where individuals do not migrate between plans, is critical.

Purpose of the Study:

• To infer the severity of illness among patients enrolled in Medicaid Health Maintenance Organizations (HMOs).
• To evaluate the effectiveness of HMO services for developmentally delayed children.
• To determine if HMOs attract sicker patients compared to fee-for-service (FFS) plans.

Main Methods:

• Applied a novel approach assuming a closed system where patients are either in HMOs or FFS plans.
• Deduced HMO patient severity by analyzing encounter data from FFS patients.
• Utilized a 12-month period to track changes in patient severity within the FFS population.

Main Results:

• The assumption of a closed system was supported by the data.
• A decline in the severity of illness among fee-for-service patients was observed over 12 months.
• The Health Maintenance Organization was inferred to be attracting sicker patients.

Conclusions:

• Medicaid HMOs may be attracting a disproportionately higher number of sicker patients.
• The HMO received lower reimbursement rates than FFS plans, despite managing a sicker patient cohort.
• This highlights potential inequities in payment structures for managed care organizations serving vulnerable populations.