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* Departments of Pediatrics
Medicine, Columbia University College of Physicians and Surgeons, New York, New York
Department of Statistics, Columbia University, New York, New York
|| Departments of Health Policy and Management
¶ Epidemiology, Mailman School of Public Health, Columbia University, New York, New York
| ABSTRACT |
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Methods. We analyzed data from 3254 children with private health insurance sampled in the 1996 Medical Expenditure Panel Survey (MEPS) to compare total per capita health expenditures among gatekeeping versus indemnity plan enrollees. This sample represents 40.4 million privately insured American children. Total expenditures were defined as payments from all sources, including third-party and out-of-pocket payments, but excluding administrative costs. MEPS data are based on information provided by patients, health care providers, and hospitals. Gatekeeping plans included all children enrolled in health maintenance organizations or other plans requiring a primary care gatekeeper. All others were considered indemnity plan enrollees.
Results. Mean total per capita annual expenditures for children in gatekeeping versus indemnity plans differed by <1% ($887 vs $881, respectively). Third-party payments by gatekeeping plans on behalf of their beneficiaries were $636 versus $595 by indemnity plans. Out-of-pocket payments were on average $62 less for gatekeeping enrollees than for indemnity enrollees. After multivariate adjustment, mean per capita expenditures were approximately 4% lower for gatekeeping enrollees than for indemnity enrollees.
Conclusion. In 1996, total per capita annual health expenditures for children in gatekeeping plans were approximately $8 less than for those in indemnity plans. These data indicate that gatekeeping is not an effective cost-containment method for children.
Key Words: child health expenditures gatekeeping managed care
Abbreviations: HMO, health maintenance organization AHRQ, Agency for Health care Research and Quality MEPS, Medical Expenditure Panel Survey SE, standard error
| INTRODUCTION |
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Empirical evidence that gatekeeping requirements have controlled health expenditures for children is scarce. The lull in health care inflation from 1994 to 1997, which coincided with peak enrollment in gatekeeping plans, is often cited as evidence that gatekeeping requirements effectively controlled costs.1,2,911 However, recent upward trends in private health insurance premiums have raised doubts about the ability of such strategies to control expenditures.9,12,13 Previous studies that examined this issue used data that predated the managed care expansion of the 1990s5,14,15; have limited generalizability16; or, as recently reviewed,8 have focused on children with chronic illnesses, on service utilization outcomes, or on Medicaid managed care enrollees. One recent study of children in a Massachusetts managed care organization found that expenditures decreased more for privately insured children who switched to a gatekeeping plan than for those who did not, but as the authors acknowledged, these findings are limited for a variety of reasons.16
In this study, we analyzed data from the Agency for Healthcare Research and Qualitys (AHRQs) 1996 Medical Expenditure Panel Survey (MEPS)17 to determine whether health expenditures in the mid-1990s were lower for privately insured children in gatekeeping plans compared with those in indemnity plans. Gatekeeping plans included all children enrolled in HMOs or other plans requiring a primary care gatekeeper. All others were considered indemnity plan enrollees. In contrast to previous studies, this data source supports a more comprehensive approach by providing nationally representative data on total costs to all purchasers for all types of services. We also examined costs from the insurers perspective to determine whether gatekeeping decreased total third-party payments compared with indemnity plans.
| METHODS |
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23 000 individuals were interviewed in person using a computer-assisted personal instrument20 to collect detailed self-reported information on sociodemographic characteristics, health and functional status, utilization of medical care services, health insurance coverage, income, and employment. The MEPS Medical Provider Component supplements and validates information on medical care events reported in the MEPS Household Component by contacting medical providers and pharmacies identified by household respondents. The MEPS Medical Provider Component includes expenditure data provided by hospitals, medical providers, home health agencies, and pharmacies reported in the MEPS Household Component. Expenditures in MEPS are defined as payments made or received (including out-of-pocket and third-party payments) rather than the amounts charged by providers.20 MEPS estimates of health expenditures do not include administrative costs (ie, costs not directly related to patient care).21 Data from office-based physicians in a 75% sample of Household Component households receiving care through a managed care organization, and a 25% sample of the remaining households are included in the Medical Provider Component.17 Weighted sequential hot-deck imputation is used for the remainder of the sample and any missing values (missing data are imputed from the nearest respondent preceding that person in the sequence who has similar characteristics and complete information).20 The third source of data, the MEPS Insurance Component, collects data from copies of health insurance policies obtained through employers, unions, and other sources of private health insurance and links these data back to individual MEPS Household Component respondents.
We analyzed data from the 3254 children (<18 years old) with private insurance in the 1996 MEPS. Children with publicly funded insurance including Medicaid or other government-subsidized benefits were excluded. Consistent with previous studies,10,22,23 gatekeeping plans were defined as classic staff-model HMOs or plans requiring a primary care gatekeeper based on responses from the MEPS Household Component.20 Indemnity plans were defined as traditional fee-for-service plans as well as preferred provider organization plans that reimbursed providers on a fee-for-service basis and did not have a gatekeeping requirement.10,20 Approximately 10% of hospital cases and 20% of office-based cases were reimbursed through capitation, and thus individual-level expenditure data for this group were not available.20 In these instances, AHRQ used imputation methods to estimate expenditures on the basis of discounted fee-for-service payments.20
We compared total per capita expenditures among children in gatekeeping plans versus indemnity plans. We also examined expenditures by type of service, including inpatient, ambulatory, dental, prescription medication, and home health services. Expenditures included all sources of payment (ie, out-of-pocket, private third-party payers, and other sources) but excluded administrative costs. We performed additional analyses of payments made by private third-party payers on behalf of their beneficiaries and of out-of-pocket expenses paid by beneficiaries.
Statistical Analyses
To obtain nationally representative estimates, we used 1996 person-level weights, which reflect population distributions and account for the household probability of selection, ratio adjustment to national population estimates at the household level, and adjustment for nonresponse. To obtain estimates of variability, we used a Taylor Series estimation approach.24 Variance estimation strata and primary sampling unit variables were provided with the MEPS Household Component data.19
We used
2 tests to compare distributions of categorical covariates (gender, ethnicity, parent-reported health and functional status) between children in gatekeeping and indemnity plans. We used t tests to compare differences in mean per capita expenditures between these 2 groups.
We used multivariate models to examine predicted expenditures for enrollees in gatekeeping and indemnity plans as though both groups had similar distributions of baseline characteristics. Because a significant percentage of the sample had no expenditures, predictions were done using a 2-part model and smearing retransformation methods as described by Duan et al.25,26 We calculated standard errors for predicted expenditures using bootstrapping with 2000 iterations.27
Covariates in the 2-part model included age, ethnicity, gender, poverty status (percentage of federal poverty level), parental perceived health status of the child (rating their childs ability to resist illness and comparing their childs health to other children), and functional status (ability to perform age-appropriate social roles). We also examined whether geographic region (northeast, midwest, south, or west) was a significant predictor of expenditures. Among children, expenditures were relatively high for those younger than 2 years and homogeneous for those older than 2 years. Thus, age was modeled as a categorical variable (<1 year, 12 years, and >2 years). Because expenditures are increased for pregnant women, we also included a term for the interaction of gender with teenagers of childbearing age (
15 years).
Statistical tests were 2-tailed and performed on the weighted nationally representative population using SAS-callable (SAS Institute, Cary, NC) SUDAAN.24
| RESULTS |
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We next examined expenditures by source of payment. As shown in Table 3, enrollment in a gatekeeping plan was associated with lower out-of-pocket payments. Families of children enrolled in gatekeeping plans on average paid $62 less out-of-pocket than indemnity plan enrollees (P < .05). Lower out-of pocket payments for children in gatekeeping plans were primarily attributable to lower out-of-pocket payments for ambulatory care and prescription drugs. In contrast, third-party expenditures averaged $636 (median: $173) by gatekeeping plans versus $595 (median: $120) for indemnity enrollees (P = .74). Third-party expenditures for ambulatory services were on average $45 greater for children enrolled in gatekeeping plans compared with those in indemnity plans (P < .05). This difference was primarily attributable to the fact that children in gatekeeping plans were more likely to have ambulatory care expenditures. Analysis limited to children with any ambulatory expenditures found that third-party payers outpatient expenditures averaged $762 (SE: 107) for those in gatekeeping plans versus $765 (SE: 114) for those in indemnity plans (P = .99).
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| DISCUSSION |
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We also performed expenditure analyses from the insurers perspective. Third-party payments for health care services provided through gatekeeping plans were slightly greater than third-party payments in indemnity arrangements. This was attributable mainly to greater payments for ambulatory services resulting from higher rates of ambulatory visits by children in gatekeeping plans compared with indemnity plans. Thus, gatekeeping was not an effective cost containment strategy for insurers. Conversely, out-of-pocket health expenditures for consumers averaged $62 less for children enrolled in gatekeeping plans than in indemnity plans. This was attributable mainly to lower copayments for ambulatory visits and medications gatekeeping beneficiaries than indemnity plan enrollees.
Previous studies have produced mixed findings. Some studies16,22,2931 have shown similar patterns of utilization for children enrolled in gatekeeping and indemnity plans. In the ambulatory setting, we found that children in gatekeeping plans were slightly more likely to have any outpatient expenditure than those in indemnity plans, but overall outpatient expenditures were similar for both groups. Other studies5,16 have shown decreased subspecialty utilization for children in gatekeeping plans, and these findings have raised concerns about the impact on the quality and accessibility of specialty care, especially for children with chronic conditions.6,8,30
Several caveats apply to our study. First, our study addressed the impact of gatekeeping only on expenditures. We did not explore the impact of gatekeeping on quality of care, including items such as improvements in access to care and coordination of care. A recent literature review30 reported some evidence that privately insured children have improved access to primary preventive health care services in managed care gatekeeping arrangements. Consistent with these findings, we found that privately insured children in gatekeeping plans were slightly more likely to have a visit within the past year compared with those in indemnity plans. As gatekeeping proponents have argued, this suggests that such plans may improve the provision of primary pediatric care in the ambulatory setting. In contrast, enrollment of low-income children in Medicaid managed care plans has led to decreased use of primary care services.30 Evaluations of the mandatory implementation of managed care enrollment for Medicaid recipients in nearly all 50 states may provide additional data on publicly insured children.32 Second, MEPS estimates do not include most administrative costs. Although insurers do not routinely publish administrative costs for each of type of health plan, some have estimated administrative costs as high as 20% of operating expenses in some HMOs and gatekeeping plans,33,34 whereas these costs are only 2% in the predominantly fee-for-service Medicare plan.35,36 Third, our study is a cross-sectional analysis that cannot address longitudinal effects of gatekeeping on health care expenditures. A recent study of health care expenditures from 1991 to 1994 among 1839 children in Massachusetts found that switching to enrollment in a gatekeeping plan was associated with a 42% reduction in expenditures compared with remaining in an indemnity plan.16 However, this study was conducted among children of hospital employees who switched plans and does not provide nationally representative data. Finally, there is substantial heterogeneity among gatekeeping plans. For example, some plans require a primary care provider referral only for the initial visit to a specialist, whereas other plans require referrals for each specialty visit. Our analysis cannot compare costs among these various gatekeeping arrangements.
For the vast majority of children, pediatricians have historically served as the de facto source of primary care. In an attempt to control costs, managed care organizations mandated systematic gatekeeping in the 1990s. Such arrangements have often created unnecessary administrative burdens and difficulties in gaining access to needed care for children with special health care needs.8,37,38 Our analysis of nationally representative 1996 data shows that such a gatekeeping requirement was not associated with lower costs compared with costs for children enrolled in nongatekeeping plans. Many analysts9,11,13,39 believe that managed care organizations priced premiums below cost in the 1990s to gain market share as part of the insurance underwriting cycle. In the last few years, employers and insurance companies have begun abandoning stringent gatekeeper requirements in favor of less restrictive preferred provider arrangements. Contributing factors to this trend may have included "managed care backlash" from patients and providers and threats of tighter governmental regulation. However, as health care costs continue to escalate, some are calling for a return of the cost-containment strategies of the early 1990s.40 Our analysis suggests that gatekeeping is not an effective cost containment method for children.
| ACKNOWLEDGMENTS |
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| FOOTNOTES |
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Reprint requests to (O.C.) Division of General Medicine, Columbia University College of Physicians and Surgeons, PH 9 East, Rm 105, 622 West 168th St, New York, NY 10032. E-mail: oc6{at}columbia.edu
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