Academic managed care organizations and adverse selection under medicaid managed care in Tennessee

James Bailey, David L. Van Brunt, David M. Mirvis, Scott McDaniel, Chauncey R. Spears, Cyril F. Chang, Dennis R. Schaberg

Research output: Contribution to journalArticle

27 Citations (Scopus)

Abstract

Context: Health plans competing in a managed care system may face serious financial consequences if they are disproportionately selected by enrollees with expensive health conditions. Academic medical centers (AMCs) have traditionally provided medical care for the sickest patients and may be at particularly high risk for adverse selection, but whether this occurs is not known. Objective: To determine whether managed care organizations (MCOs) representing AMCs are adversely selected by Medicaid managed care (MMC) enrollees with expensive chronic health conditions. Design and Setting: Observational study using state Medicaid claims data from all of 1994 and January to August 1995 for Tennessee's statewide MMC program (TennCare). Participants: All 12 capitated MCOs in Tennessee, which collectively provided services for 1.2 million Medicaid enrollees from January 1994 through August 1995 following the initiation of TennCare. Main Outcome Measures: Prevalence of 6 state-specified high-cost chronic conditions - acquired immunodeficiency syndrome (AIDS), coagulation defects, cystic fibrosis, pregnancy, prematurity, and organ transplantation - and 27 additional high-cost conditions compared by academic, statewide, and regional MCOs. Results: The prevalence of state-specified high-cost chronic conditions was generally higher for academic MCOs compared with other MCOs. Specifically, prevalence of AIDS was 14.1 times higher in academic MCOs than in statewide MCOs; coagulation defects, 6.4 times higher; transplantations, 4.4; pregnancy, 3.3; cystic fibrosis, 2.4; and prevalence of prematurity was equivalent. Prevalence was higher for academic than for statewide MCOs for 22 of the additional 27 high-cost conditions considered and similar for the remaining 5 conditions. Conclusions: Our results suggest that academic MCOs in an MMC system are selected by a large percentage of the sickest patients. Adverse selection may present serious financial risks for AMCs participating in managed care.

Original languageEnglish (US)
Pages (from-to)1067-1072
Number of pages6
JournalJournal of the American Medical Association
Volume282
Issue number11
DOIs
StatePublished - Sep 15 1999

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Medicaid
Managed Care Programs
Organizations
Costs and Cost Analysis
Cystic Fibrosis
Health
Acquired Immunodeficiency Syndrome
Pregnancy
Organ Transplantation
Observational Studies
Patient Care

All Science Journal Classification (ASJC) codes

  • Medicine(all)

Cite this

Bailey, J., Van Brunt, D. L., Mirvis, D. M., McDaniel, S., Spears, C. R., Chang, C. F., & Schaberg, D. R. (1999). Academic managed care organizations and adverse selection under medicaid managed care in Tennessee. Journal of the American Medical Association, 282(11), 1067-1072. https://doi.org/10.1001/jama.282.11.1067

Academic managed care organizations and adverse selection under medicaid managed care in Tennessee. / Bailey, James; Van Brunt, David L.; Mirvis, David M.; McDaniel, Scott; Spears, Chauncey R.; Chang, Cyril F.; Schaberg, Dennis R.

In: Journal of the American Medical Association, Vol. 282, No. 11, 15.09.1999, p. 1067-1072.

Research output: Contribution to journalArticle

Bailey, James ; Van Brunt, David L. ; Mirvis, David M. ; McDaniel, Scott ; Spears, Chauncey R. ; Chang, Cyril F. ; Schaberg, Dennis R. / Academic managed care organizations and adverse selection under medicaid managed care in Tennessee. In: Journal of the American Medical Association. 1999 ; Vol. 282, No. 11. pp. 1067-1072.
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abstract = "Context: Health plans competing in a managed care system may face serious financial consequences if they are disproportionately selected by enrollees with expensive health conditions. Academic medical centers (AMCs) have traditionally provided medical care for the sickest patients and may be at particularly high risk for adverse selection, but whether this occurs is not known. Objective: To determine whether managed care organizations (MCOs) representing AMCs are adversely selected by Medicaid managed care (MMC) enrollees with expensive chronic health conditions. Design and Setting: Observational study using state Medicaid claims data from all of 1994 and January to August 1995 for Tennessee's statewide MMC program (TennCare). Participants: All 12 capitated MCOs in Tennessee, which collectively provided services for 1.2 million Medicaid enrollees from January 1994 through August 1995 following the initiation of TennCare. Main Outcome Measures: Prevalence of 6 state-specified high-cost chronic conditions - acquired immunodeficiency syndrome (AIDS), coagulation defects, cystic fibrosis, pregnancy, prematurity, and organ transplantation - and 27 additional high-cost conditions compared by academic, statewide, and regional MCOs. Results: The prevalence of state-specified high-cost chronic conditions was generally higher for academic MCOs compared with other MCOs. Specifically, prevalence of AIDS was 14.1 times higher in academic MCOs than in statewide MCOs; coagulation defects, 6.4 times higher; transplantations, 4.4; pregnancy, 3.3; cystic fibrosis, 2.4; and prevalence of prematurity was equivalent. Prevalence was higher for academic than for statewide MCOs for 22 of the additional 27 high-cost conditions considered and similar for the remaining 5 conditions. Conclusions: Our results suggest that academic MCOs in an MMC system are selected by a large percentage of the sickest patients. Adverse selection may present serious financial risks for AMCs participating in managed care.",
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