HMOs Beat PPOs on Cost and Quality

HMO

California’s commercial HMOs outperform commercial PPOs on most clinical quality measures. They also consistently provide less costly care. The average yearly cost is $4,245 per HMO enrollee versus $4,455 per PPO enrollee, according to the California Regional Health Care Cost & Quality Atlas. The report comes from the Integrated Healthcare Assn., the California Health Care Foundation, and the California Health and Human Services Agency. Differences in benefit designs don’t explain the cost variation since the total cost of care includes enrollee cost-sharing (deductibles and coinsurance) as well as insurance payments to providers.

HMOs may be performing better because they rely on integrated care networks, which generally accept capitation (fixed per-member, per-month payments). So they are accountable for the patients’ health and are generally rewarded for it, according to the report. So why is HMO enrollment declining? PPOs are often less costly for employers since they reduce premiums with higher enrollee cost-sharing, such as deductibles and coinsurance. But employers should look at the whole picture since HMOs produce superior results when you consider quality and the total cost of care, according to the report.

Quality of Care
California’s commercial HMOs perform better than their national counterparts on every clinical quality measure except asthma medication management. At the same time, California’s commercial PPOs perform worse than the national average on five of the six measures.

When Kaiser Permanente is removed from the analysis, the difference in clinical quality between HMOs and PPOs is cut by about half. Also, the performance difference on risk-adjusted total cost of care narrows substantially, but HMOs still outperform PPOs.

Quality is highest in Northern California, solid in Southern California, and weakest in Central California. The study reveals these regional differences is quality:

  • Northern California outperforms Central and Southern California on clinical quality.
  • Central California falls below the statewide average on key clinical measures for cancer, diabetes, and asthma.
  • The lowest performing region is the Eastern region 13, which includes Central California counties Mono, Inyo, and Imperial.
  • The highest performing region is Contra Costa County region in Northern California.
  • Clinical quality scores vary significantly on some measures. For example, 33% of commercial enrollees with diabetes in Alameda County region six have poorly controlled blood sugar, compared to 75% in the Eastern region 13.
  • In Southern California, San Diego County region 19 is the highest performing region, outperforming Northern California regions: San Mateo County region eight and San Francisco County region four.

If all commercially insured Californians got the same quality of care as top-performing regions, nearly 200,000 more people would have been screened for colorectal cancer and 50,000 more women would have been screened for breast cancer in 2013. If care is provided to all Californians at the same cost as in San Diego, the cost of care would decrease 10% for commercially enrolled people. Many factors contribute to regional performance, including socioeconomic characteristics and the availability of medical services.

Medicare Advantage
The quality and cost of care varies widely for seniors enrolled in Medicare Advantage. For example, in North Bay counties, 91% of women have gotten appropriate breast cancer screening compared to 70% in the Eastern region 13. The average annual per-enrollee total cost of care for Medicare Advantage enrollees ranges from $11,500 in San Diego County to $14,500 a year in Los Angeles region.

Cost of Care
Geographic variation in cost of care is dramatic—a difference of $1,800 in the average annual per-enrollee total cost of care between the most costly and least costly regions. With one exception, all Northern California regions have higher annual per-enrollee costs than the statewide commercial average of $4,300 while all Southern California regions fall below the statewide average. Central California regions show mixed results on cost. HMOs have a lower average total cost of care than do PPOs in 12 of the 18 regions. More tightly managed care in HMOs may contribute to a lower cost of care. Yet, inpatient bed days and readmission rates are similar for HMOs and PPOs. Emergency department visit rates are actually higher for HMOs. The statewide average annual per-enrollee cost of care for commercially insured Californians is $4,300. Kern County is the least costly HMO region. It’s $1,800 per enrollee, per year less than in Santa Clara County, which is the costliest HMO region. The least costly PPO region is Los Angeles at $2,400 less than San Francisco County, which is the costliest PPO region.

Coverage Makes a Difference When It Comes to Surviving Cancer

Coverage Makes a Difference When It Comes to Surviving Cancer


Medi-Cal patients with breast, colon, and rectal cancer are more likely to be diagnosed at an advanced stage of disease and have lower five-year survival rates compared to those with other sources of health insurance, according to a survey by the UC Davis Health System. Medicare-Medi-Cal dual eligible patients are the least likely to get recommended treatment for breast and colon cancer.

VA patients have the longest intervals between diagnosis and treatment for breast, colon, rectal, lung, and prostate cancers, but their treatment outcomes compare favorably to patients with other types of health insurance, and they are generally more likely to get recommended treatment.

Researchers were not surprised that Medi-Cal and Medicare-Medi-Cal dual eligible, and uninsured patients were getting diagnosed at a later stage of cancer and had lower survival rates since adverse social factors affect these populations. But the lower quality of care cannot be as readily explained. In light of the rapid growth of Medi-Cal, the findings highlight the need to investigate the disparities in cancer care, according to the study

CMS chief touts quality of Medicare Advantage plans

Medicare Advantage plans are improving, earning higher star ratings and attracting more subscribers, outgoing CMS Administrator Marilyn Tavenner wrote in a memo to CMS staff. “In 2015, we project that 40 percent of our Medicare Advantage contracts will achieve 4 stars or more in our star rating system, and more importantly we project that 60 percent of Medicare Advantage enrollees will be in plans with 4 stars or more,” Tavenner wrote in the memo. The Motley Fool (1/21)

Will Medicare Cuts Reduce the Quality of Hospital Care?

The Affordable Care Act (ACA) permanently slows the growth of Medicare payment rates for inpatient hospital care, raising concerns that hospitals will raise prices for private payers in order to offset lower Medicare revenue. But if history holds true, nonprofit hospitals will reduce operating expenses instead, according to a study by the Center for Studying Health System Change (HSC).

The claim that the ACA will drive large numbers of hospitals to insolvency appears to only hold true with for-profit hospitals. For-profit hospitals, which tend to have lower operating costs, will see profits decline.

But not-for-profit hospitals will adjust their operating expenses to match lower revenues. Hospitals will offset about 90% of lost revenues by through savings on personnel and non-personnel costs. Hospitals will also delay or forgo capital improvements. According to researchers, “Newhouse (1970) describes the hospital industry as aspiring to a Cadillac level of quality. Our results suggest that hospitals, if forced to, will instead turn out Buicks.” If hospitals can maintain or improve their quality of care, the result will be improved efficiency. For more information, visit www.hschange.org/CONTENT/1385/.

Anthem Blue Cross, University of California Health Form Alliance

Anthem Blue Cross and University of California Health have formed the California Health Alliance to look at how to improve access to affordable, quality health care for California residents. Among some of the initial areas of focus of this alliance will be the development of accountable care models to better manage costly chronic conditions and the expansion of alternate delivery systems, such as telemedicine to encourage wellness and prevention and, provide access to health care for residents in rural areas. In addition, this new alliance is expected to provide opportunities for research, analysis, literature development and policy recommendations. Visit www.anthem.com.

Last Updated 01/19/2022

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