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Related Experiment Videos

Selection bias in TEFRA at-risk HMOs.

R Lichtenstein1, J W Thomas, J Adams-Watson

  • 1Department of Health Services Management and Policy, School of Public Health, University of Michigan, Ann Arbor 48109.

Medical Care
|April 1, 1991
PubMed
Summary

This study on Medicare beneficiaries in Tax Equity and Fiscal Responsibility Act (TEFRA) health plans found no adverse selection. Most health plans showed favorable selection, suggesting beneficiaries choose plans based on health needs.

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Area of Science:

  • Health Services Research
  • Health Economics
  • Public Health Policy

Background:

  • Selection bias is a critical issue in Medicare managed care.
  • Previous studies often used older Medicare Demonstration Programs.
  • Understanding enrollment patterns in current risk programs is essential.

Purpose of the Study:

  • To investigate selection bias in Health Maintenance Organizations (HMOs) enrolling Medicare beneficiaries under the TEFRA risk program.
  • To analyze beneficiary functional health status at enrollment as an indicator of selection bias.
  • To examine selection bias at the mean and tails of the health status distribution.

Main Methods:

  • Compared functional health status of recent Medicare enrollees in 22 HMOs with a control group of fee-for-service beneficiaries.

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  • Utilized data from Tax Equity and Fiscal Responsibility Act (TEFRA) at-risk contracts.
  • Analyzed selection bias across the entire health status distribution.

    • Main Results:

    • No HMOs exhibited adverse selection based on overall or tail-specific health status.
    • Nine HMOs demonstrated favorable selection based on mean health status.
    • Ten additional HMOs showed favorable selection in one or both tails of the health status distribution.

    Conclusions:

    • Beneficiary self-selection appears to be a more significant driver of enrollment patterns than HMOs actively discouraging sicker enrollees ('skimming').
    • Findings suggest that Medicare beneficiaries may be actively choosing plans that align with their health needs.
    • Further research is needed to identify specific factors influencing these enrollment patterns.