III Health Insurance Plans in the California Market A Health by ramhood17

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									                          III. Health Insurance Plans in the California Market


                     A. Health Plan Product Market Analysis
                                        Sara McMenamin, MPH, and Helen H. Schauffler, Ph.D.
MOST INSURED
CALIFORNIANS ARE             Over 90% of California’s insured population under age 65 is enrolled in a
ENROLLED IN AN HMO   managed care plan. The major types of managed care plans operating in California
OR PPO PLAN          are health maintenance organizations (HMOs), preferred provider organizations
                     (PPOs), point-of-service (POS) plans, and exclusive provider organizations (EPOs).

                              Approximately 74% of insured Californians under the age of 65 are enrolled
                     in either a private HMO (51.3%) or PPO (22.6%) plan. The group POS (6.6%) and EPO
                     (0.1%) markets are quite small. Only slightly less than 10% of the non-elderly adult
                     population is covered by public or private indemnity health insurance (Exhibit 68). Of
                     these 10%, the largest group (7.8%) is comprised of traditional Medi-Cal recipients,
                     while a mere 1.7% is covered through private indemnity health insurance. Medi-Cal
                     covers nearly 18% of the insured population under 65, with more than half of Medi-
                     Cal recipients (55%) enrolled in managed care plans.

                     Exhibit 68: Insured Population under Age 65 by Type of Health Insurance Plan
                     and Market, California, 1998

                                    Enrollment in Private Plans in the     Enrollment in Public Programs for
                                      Individual and Group Markets                Eligible Individuals

                                                                           Managed     Traditional Healthy
                       Market    HMO      POS     PPO     EPO    Indemnity Medi-Cal2    Medi-Cal3 Families4    Total5

                      Individual 3.3%     0.0%   4.6%    0.0%      0.0%      9.7%        7.8%        0.2%      25.6%


                      Group1    48.0%     6.6%   18.1% 0.1%        1.7%        -           -           -       74.4%


                      Total     51.3%     6.6%   22.6% 0.1%        1.7%      9.7%        7.8%        0.2%      100.0%

                     Source: UC Berkeley Survey of California Health Plans, 1999
                     1: This includes fully-insured and self-insured employers.
                     2: Data from Department of Health Services, Managed Care Capitation Report, January 1999.
                     3: Does not include those with dual Medicare and Medi-Cal coverage; data from DHS.
                     4: Data from MRMIB web site: www.mrmib.ca.org.
                     5: N = 24,067,104 insured, non-elderly Californians.

                             The majority of insured Californians under the age of 65 receive their
                     coverage through group policies (74.4%), and 25.6% receive their coverage as
                     individuals, with the largest subgroup (17.5%) receiving individual coverage through
                     Medi-Cal.

                            The types of private plans that individuals are most likely to purchase are
                     PPOs (4.6%) and HMOs (3.3%). There is very little enrollment in individual POS and
                     indemnity plans and no enrollment in individual EPO plans.




                     III. Health Insurance Plans in the California Market                                         63
                             The ongoing trend of HMO mergers continued through 1999, with Aetna U.S.
                     Healthcare acquiring Prudential HealthCare, Universal Care acquiring HMO
                     California, and Blue Shield finalizing its acquisition of Care America. Omni
                     Healthcare is going out of business, and Blue Cross of California purchased the rights
                     to take over their accounts. Employers contracting with Omni had five months to
                     choose another health plan before their employees were enrolled in Blue Cross of
                     California by default. The Department of Corporations (DOC) seized control over
                     Greater Pacific HMO after an audit revealed fiscal instability. No new HMO plans
                     were given Knox-Keene licenses in 1998.

                     1. Types of Health Insurance Products Available in California

                             The majority of health insurance products sold in California are managed care
                     plans. There are 30 private, full-service HMOs operating in the state—14 of which also
                     offer POS plans—and 12 Medi-Cal-only HMOs. The 17 health insurance companies in
                     California all sell PPO products, one sells an EPO product, 11 offer a group indemnity
                     product, and only one offers an individual indemnity product (Exhibit 69).

                     Exhibit 69: Type and Number of Health Insurance Plans by Market, California,
                     1998

                                                                                           Plans Offered Through
                                                       Private Plans                          Public Programs

                                                                                         Medi-Cal          Healthy
                      Market           HMO       POS       PPO         EPO   Indemnity Managed Care        Families

                      Individual        11        1         3           0        1             27             26

                      Group             30        14        17          1        11            NA            NA

                      Number of
                                        30        14        17          1        12            271           262
                      plans

                     Source: UC Berkeley Survey of California Health Plans, 1999
                     1: Does not include plan partners of Local Initiatives in California. Data from the Department
                     of Health Services, Managed Care Capitation Report, January 1999.
                     2: Data from MRMIB web site.
FOUR HMOS ENROLLED
69% OF HMO                   For the past four years, there have only been four HMOs in California with
ENROLLEES IN         non-Medicare enrollment greater than one million members. Prior to that, in 1994,
CALIFORNIA IN 1998   there were only three HMOs with enrollment over one million. The four largest plans
                     enroll an increasing share of the private HMO market (Exhibit 70). In 1995, the four
                     largest HMOs represented 56% of the market, and by 1998 the market share for the
                     four largest HMOs in California had grown to 69% of the non-Medicare private
                     market, or 10.7 million members. Increasingly, California’s insured population is
                     concentrated in only a handful of health plans. This trend raises concerns regarding
                     the development of oligopoly power and non-competitive practices in the industry,
                     which place both purchasers and health care providers at a disadvantage in
                     negotiating prices for premiums and the delivery of services, respectively.




                     64                                         The State of Health Insurance in California, 1999
Exhibit 70: Trends in Combined Non-Medicare Enrollment in the Four Largest
Private HMOs, California, 1995-1998
                                   80%
                                                                           68%           69%




 Percent of Total HMO Enrollment
                                   70%
                                                              61%
                                   60%   56%

                                   50%

                                   40%

                                   30%

                                   20%

                                   10%

                                   0%
                                         1995                 1996         1997          1998
Source: UC Berkeley Surveys of California Health Plans, 1996-1999

        The health plans that responded to survey questions regarding health plan
products (23) represent 97.5% of the total HMO enrollment in California. Measured in
terms of both total enrollment and the number of plans available, HMOs, as a group,
are the largest provider of health coverage in California (Exhibit 68 and Exhibit 69).
There are several types of private HMOs operating in California: IPA/network
HMOs, which contract with many doctors, either individually, in medical groups, or
in independent practice associations (IPAs); staff or group HMOs, which either
employ physicians on staff or contract exclusively with one group of providers; and
mixed model HMOs, which include both staff or group and IPA/network
arrangements with physicians. Exhibit 71 shows total enrollment in private HMOs by
model type.

Exhibit 71: Non-Medicare Enrollment in Private HMOs by Model Type, California,
1998


                                                Mixed

                                                        26%                IPA/Network
                                                                     37%




                                                          37%


                                               Staff/Group

Source: UC Berkeley Survey of California Health Plans, 1999

        Increasingly, HMOs in California are adopting a mixed model of care
delivery, meaning that they use a combination of model types: staff models, groups,
IPAs, and networks of independent group practices. Thirty-seven percent of HMO
members in California are in IPA/network model HMOs, while another 37% are in



III. Health Insurance Plans in the California Market                                            65
                      staff/group model HMOs. The majority of members in staff/group models are
                      enrolled in Kaiser Permanente, the largest HMO operating in California.

                              The number of HMOs licensed to sell health insurance varies by county, from
                      as few as two HMOs Alpine county to as many as 21 HMOs in Los Angeles County
                      (Exhibit 72). The vast majority of California’s counties (93%) are served by four or
                      more private HMOs. Californians living in Los Angeles, Riverside, Orange, and San
                      Bernardino counties have the greatest choice of private HMOs, with 18 or more plans.
AT LEAST THREE HMOS
WERE LICENSED TO               The number of private HMOs licensed to sell in rural counties in California
SELL PLANS IN ALL     has increased from past years. However, Californians living in rural counties continue
COUNTIES IN           to have the least choice of HMOs. In 1996, there were three counties with no HMOs
CALIFORNIA BUT ONE    licensed to serve their residents and eight counties with two or fewer HMOs. In 1998,
                      54 of 58 counties were served by at least three HMOs, Alpine was served by two, and
                      Imperial, Sierra, and Siskiyou counties were served by three HMOs. This represents
                      an increase in the number of HMOs licensed to sell in Alpine, Inyo, and Mono
                      counties, which had no HMOs in 1996.

                      Exhibit 72: Number of HMOs by County, California, 1998




                      Source: California Association of Health Plans, Profile and Annual Report, 1999

                      2. Increasing Access to Specialists

                               In 1998, more than three-quarters of the HMOs in California offered products
                      that provide direct access to specialists without prior approval or authorization from
                      a primary care provider (PCP) or the health plan (Exhibit 73). Of the 23 private HMOs
                      in California, 83% (19 plans) reported that they offered at least one product with
                      direct access to specialists without prior plan authorization in 1998. Of these 19 plans,
                      two plans charged a higher premium and two required an increased copayment for
                      specialist visits. Slightly fewer plans (16 plans, or 70%) offered products that allowed



                      66                                       The State of Health Insurance in California, 1999
                     specialist visits without a PCP referral. Of these plans, four charged a higher
                     premium, and five required an increased copayment for specialist visits.
MORE THAN THREE-
QUARTERS OF HMOS              Recently enacted legislation could increase direct access to specialists for
IN CALIFORNIA        many Californians. AB 1181, enacted during the 1998 session of the California
OFFERED PRODUCTS     Legislature, requires all HMOs to adopt a process for standing referrals for specialist
PERMITTING MEMBERS   care for persons with chronic conditions and other health problems.
TO GO DIRECTLY TO
SPECIALISTS          Exhibit 73: HMO Plans Allowing Specialist Visits/Referrals Without Prior Plan
                     Authorization or PCP Referral, California, 1998

                                                                         Without HMO      Without PCP
                      HMO Direct Access Products                          Approval         Referral

                      HMOs that have direct access products                   83%            70%

                      Product requires increase in premium rate               11%1           25%2

                      Product requires increase in copayment
                                                                              11%1           31%2
                       for specialist visit

                      Number of HMOs                                           23             23

                     Source: UC Berkeley Survey of California Health Plans, 1999
                     1: 19 plans reporting.
                     2: 16 plans reporting.

                             The number of HMOs with direct-access products has increased over the last
                     three years, from 48% of HMOs offering a plan that allowed a specialist visit without
                     prior approval in 1996, to 83% in 1998 (Exhibit 74). This is in direct response to
                     consumer dissatisfaction and frustration with the referral process in HMOs.

                     Exhibit 74: HMO Plans Allowing Specialist Visits/Referrals Without Prior Plan
                     Authorization, California, 1996-1998
                       90%
                                                                                   83%
                       80%
                       70%
                                                           63%
                       60%

                       50%           48%

                       40%

                       30%

                       20%
                       10%

                        0%
                                     1996                  1997                    1998

                     Source: UC Berkeley Survey of California Health Plans, 1997-1999




                     III. Health Insurance Plans in the California Market                                67
                      3. HMO Coverage of Benefits, Coverage Limits, and Cost-Sharing
THE VAST MAJORITY
OF CALIFORNIANS                More than 80% of Californians covered through private managed care plans
COVERED BY PRIVATE    were covered for physician office visits, home care, abortion services, outpatient
HEALTH PLANS HAD      mental health, outpatient substance abuse, inpatient mental health, inpatient
COMPREHENSIVE         substance abuse, and pharmaceuticals (Exhibit 75). Although there were not many
BENEFITS
                      differences in the level of coverage between HMO and PPO plans, HMOs were more
                      likely to cover all reversible contraceptives and infertility treatments, while PPOs
                      were more likely to cover chiropractic care.

                      Exhibit 75: Coverage in Best-Selling HMO and PPO Group (50+ Members)
                      Products, California, 1998

                                                             % of HMOs        % of PPOs
                           Covered Services                  Covering         Covering

                           Physician office visits              100%            100%

                           Home care                            100%            100%

                           Abortion services                    100%                92%

                           Outpatient mental health              96%            100%

                           Outpatient substance abuse            91%                92%

                           Inpatient mental health               83%                92%

                           Inpatient substance abuse             83%                92%

                           Pharmaceuticals                       83%                75%

                           Oral contraceptives                   78%                67%

                           All reversible contraceptives         74%                50%

                           Infertility treatments                39%                17%

                           Vision care                           30%                17%

                           Chiropractic care                     26%                67%

                           Dental care                           4%                 0%

                           Number of HMOs                        23                 12

                      Source: UC Berkeley Survey of California Health Plans, 1999
HMO COVERAGE LIMITS
FOR MENTAL HEALTH             There was a wide range of coverage limits imposed by HMOs on specific
AND SUBSTANCE         benefits in their best-selling group products. For example, the mean level of coverage
ABUSE TREATMENT       for inpatient mental health was 29 days, but coverage limits varied across HMOs from
SERVICES VARIED       eight to 45 days (Exhibit 76). Similarly, the mean level of inpatient substance abuse
CONSIDERABLY
                      coverage was 25 days, with coverage limits across HMOs ranging from eight days to
ACROSS PLANS
                      unlimited days. Similar variation was found in coverage for outpatient mental health
                      and substance abuse services.

                           There was little difference between the mean level of coverage offered by
                      HMO and PPO plans, although HMOs were more likely not to have coverage limits



                      68                                       The State of Health Insurance in California, 1999
                 on inpatient substance abuse, outpatient substance abuse, home care, and vision care,
                 while PPO plans were more likely not to have coverage limits on outpatient mental
                 health.

                 Exhibit 76: Coverage Limits in Best-Selling HMO and PPO Group (50+ Members)
                 Products, California, 1998

                                                                       HMO                   PPO

                    Covered Services                            Mean           Max    Mean         Max

                    Inpatient mental health (days)                29           45      25          30

                    Outpatient mental health (visits)             21           30      28       No Limit

                    Inpatient substance abuse (days)              25      No Limit     24          30

                    Outpatient substance abuse (visits)           21      No Limit     26          50

                    Home care (visits)                            96      No Limit     100         100

                    Vision care (visits)                          1       No Limit      1           1

                    Chiropractic care (visits)                    23           30      27          30

                 Source: UC Berkeley Survey of California Health Plans, 1999

                         There was a significant increase in the level of coverage for inpatient and
                 outpatient mental health and substance abuse treatment from 1997 to 1998. The mean
                 number of inpatient mental health days covered increased from 18 to 29, and the
                 maximum number of days covered increased from 30 to 45. Similarly, the mean
                 number of inpatient substance abuse days covered increased from 15 to 25, and one
                 HMO imposed no limit on the number of covered days. Other benefits for which one
                 or more HMOs did not impose coverage limits include outpatient substance abuse,
                 home care, and vision care services.

                         Persons who anticipate needing any of these services should carefully
                 compare the coverage limits imposed on these services in the benefit packages
                 defined by HMOs and select the health plan that best meets their health care needs.

                          In response to consumer concerns over coverage of needed benefits, the
                 California Legislature enacted, and the Governor signed, a large number of mandated
                 benefits bills in 1999, including parity of coverage for mental health benefits for severe
                 mental illness, contraceptive coverage, cancer screening, breast cancer diagnosis and
                 treatment, hospice care, and PKU screening (see Section VI. Policy Recommendations,
                 page 107, for a review of these bills).

                          In addition to coverage limitations, another barrier consumers face in
ENROLLEE COST-   receiving needed services is the out-of-pocket cost-sharing required to use specific
SHARING IS       services. In 1996, 37% of HMO group products required $10 copayments for office
INCREASING IN    visits (Exhibit 77). In 1998, the percentage of HMOs requiring $10 copayments rose to
PRIVATE HMOS     52%. This trend was also observed in individual HMO products. In 1996, 62% of
                 individual HMO plans required copayments of $10 or more for office visits. This




                 III. Health Insurance Plans in the California Market                                    69
                     percentage rose in 1998 to 87%, with 37% of individual HMO products requiring a
                     copayment of $15 or more for office visits.

                             This trend toward increased enrollee cost-sharing is troubling, because higher
                     copayments for office visits act as economic disincentives for HMO members to
                     receive regular check-ups and other health care, including preventive care. However,
                     employers and employees face a difficult trade-off in balancing their choice between
                     higher copayments with lower premiums and lower copayments with higher
                     premiums.
ENROLLEES WITH
GROUP HMO            Exhibit 77: Office Visit Copayments in Best-Selling HMO Individual and Group
COVERAGE HAD         (50+ Employees) Products, California, 1996-1998
LOWER OFFICE VISIT
COPAYMENTS THAN           HMO Office              Group Products                        Individual Products
THOSE WITH                Visit
                          Copayment        1996        1997        1998        1996           1997            1998
INDIVIDUAL HMO
COVERAGE                  $0               10%          9%         10%             8%          0%             0%

                          $5               53%         41%         38%          31%            20%            13%

                          $10              37%         50%         52%          54%            50%            50%

                          $15 or more       0%          0%          0%             8%          30%            37%

                          Number of
                                            30          22          21             13          10              8
                          HMOs

                     Source: UC Berkeley Surveys of California Health Plans, 1997-1999

                              It is not surprising that consumers with group HMO coverage had lower
                     office visit copayments than those with individual HMO coverage. Most employer
                     groups subsidize the cost of premiums, enabling enrollees to choose plans with higher
                     premiums and lower copayments (see Section II. Employer-Sponsored Health Plans,
                     page 45). In the individual market, one of the easiest ways to decrease premium costs
                     is to choose a plan with high cost-sharing (i.e., higher copayments).

                     B. Quality Assessment
                                                      Helen H. Schauffler, Ph.D.

                             Exhibit 78 presents the performance of California's private HMOs on selected
                     HEDIS (Health Plan and Employer Data and Information Set) quality measures for
                     1996 and 1998. For each measure, the mean performance across all HMOs
                     participating in the California Cooperative Healthcare Reporting Initiative (CCHRI) is
                     presented. All data were collected using HEDIS methodologies and were audited by a
                     third party. More complete information on individual health plan performance can be
                     found on the PBGH website, www.healthscope.org.




                     70                                       The State of Health Insurance in California, 1999
HMO PERFORMANCE                 There is considerable variability across plans and a great deal of room for
ON HEDIS MEASURES IS   improvement. Ideally, each of these performance measures should approach 100%.
VARIABLE AND FALLS
                       Although health plan performance on these measures has been improving over the
BELOW RECOMMENDED
TARGETS                last two years, it is still alarming that only 68% of children in HMOs are fully
                       immunized by age 2 (up from 62% in 1996); only 73% of women in California's HMOs
                       have received a Pap smear in the last three years (up from 67% in 1997); and only 74%
                       of women over 50 in California's HMOs have received a mammogram in the last two
                       years (up from 69%). Childhood immunizations are cost-saving to the health care
                       system; Pap smears and mammograms are relatively cost-effective and have been
                       demonstrated to prevent premature death in women. Even worse, the rate at which
                       smokers were advised to quit may have declined from 62% in 1996 to 60% in 1998.
                       Every effort should be made to increase access to and utilization of effective
                       treatments for tobacco dependence, including provider advice to quit smoking. Not
                       only is smoking the leading preventable cause of disease and death in the United
                       States, but smoking cessation treatments are the “gold standard” for cost-effective
                       medical care.

                       Exhibit 78: HEDIS Performance for California's HMOs, 1996 and 1998

                                                                                            Advice to
                         HMO          Pap        Childhood                       Prenatal     Quit
                         Average     Smear     Immunization      Mammogram         Care     Smoking

                         1996         67%           62%              69%             82%      62%

                         1998         73%           68%              74%             88%      60%

                       Source: PBGH California Consumer HealthScope, 1997 and 1999
QUALITY OF CARE IN
PPOS IS NOT BEING              While a majority of HMOs collect data and report on HEDIS measures, very
ASSESSED               few plans offer any incentives to providers to improve their performance on these
                       measures (Exhibit 79). HEDIS reporting and National Committee on Quality
                       Assurance (NCQA) accreditation apply only to HMOs. PPOs have no system of
                       quality assurance or accreditation to which they are subject. The result is an
                       inequitable burden on the HMOs in terms of data collection, reporting, and quality
                       improvement. Increasingly, this puts HMOs at a competitive disadvantage, as the
                       costs associated with monitoring performance and improving quality are significant.
                       There is a need to develop a parallel system for assessing and improving quality in
                       California's PPOs, which cover 22% of the insured population under age 65.

                               The number of HMOs that reported on their activities around quality
                       improvement (25) represents 99.6% of the total HMO enrollment. While a majority of
                       HMOs collected data and report on HEDIS measures, very few plans offered any
                       incentives to providers to improve their performance on these measures (Exhibit 79).
                       One-fifth of plans offered incentives to physicians, with only one plan offering
                       individual physicians a financial bonus based on their rates of utilization of HEDIS
                       preventive services. Additionally, only one-fifth of the HMOs reported offering bonus
                       incentives to medical groups to increase performance on HEDIS measures.




                       III. Health Insurance Plans in the California Market                              71
                     Exhibit 79: Provider Incentives to Improve Performance on
                     HEDIS Quality Measures, California, 1998

                          Physician Incentives                    Private HMOs

                          Any incentives to physicians                 20%

                          Bonus incentives to individual
                                                                        4%
                          physicians

                          Incentives to medical groups                 20%

                          Bonus to medical groups                      20%

                          Number of HMOs                                25

FEW HMOS OFFERED     Sources: UC Berkeley Survey of California Health Plans, 1999
ANY INCENTIVES TO
PROVIDERS TO                   Almost half of HMOs in California offered incentives to their members to
IMPROVE              increase performance on HEDIS quality measures (Exhibit 80). Most commonly
PERFORMANCE ON       offered were free gifts and free health education materials. Only four plans offered
HEDIS MEASURES       gift certificates as incentives for members. The percentage of HMOs offering member
                     incentives for compliance with HEDIS measures has been increasing over the last two
                     years, from 31% in 1996 to nearly half (48%) in 1998.

                     Exhibit 80: Member Incentives for Compliance with HEDIS Quality Measures,
                     California, 1996-1998
SINCE 1996, HMOS
HAVE INCREASINGLY         Incentives for Members                1996            1997         1998
OFFERED INCENTIVES
                          Any incentives                         31%             32%          48%
TO MEMBERS TO
IMPROVE                   Free health education materials        22%             29%          40%
PERFORMANCE ON
HEDIS MEASURES            Free gifts                             13%             14%          20%

                          Gift certificates                      6%                 4%        16%

                          Number of plans                        32                 28        25

                     Source: UC Berkeley Surveys of California Health Plans, 1997-1999

                             A great deal more effort should be made by employers to hold plans
                     accountable for improving performance, by health plans to hold medical groups and
                     providers accountable, and by consumers to demand from their plans regular
                     preventive care and full coverage for these services.
CONSUMER
SATISFACTION WITH            Consumer satisfaction with California’s health plans, as measured and
POS PLANS WAS MUCH   reported by PBGH in their HealthScope (www.healthscope.com), increased from 77% to
LOWER THAN WITH      79% overall satisfaction. The health plan with the lowest satisfaction rating increased
PPOS OR HMOS         from 67% to 73% of consumers satisfied. Satisfaction with HMOs and PPO plans is
                     highest, with 80% and 82%, respectively, reporting overall satisfaction in 1998. In
                     sharp contrast, satisfaction with POS plans is very low, with only 56% of persons in
                     POS plans reporting they were satisfied in 1998 (Exhibit 81).




                     72                                       The State of Health Insurance in California, 1999
Exhibit 81: Overall Consumer Satisfaction by Plan Type, California, 1998

                      90%                            82%
                            80%
                      80%

                      70%




 Satisfaction Rates
                      60%                                                56%

                      50%
                      40%
                      30%
                      20%

                      10%
                       0%
                            HMO                  PPO/Indemnity           POS

Source: PBGH HealthScope, 1999

C. Chronic Conditions and Disease Management Programs
                                         Helen H. Schauffler, Ph.D.

         One criticism of HMOs has been that they were designed to care for healthy,
young populations and were not set up to care for members with chronic conditions.
In fact, HMO enrollees had much lower rates of poor health status and chronic
conditions compared to some other insured populations (Exhibit 82). PPO
populations also reported low rates of poor health status. In contrast, the rates of
poor health status were much higher in the population of enrollees in private
indemnity health insurance (17%), and higher still among Medi-Cal recipients (33%).

Exhibit 82: Percentage of Enrollees by Health Status, by Insurance Status and
Type of Health Plan, Ages 18-64, California, 1999

                                                     Medi-Cal
                                                    Recipients         Private Plan Enrollees

          Health Status/Chronic Condition                        Indemnity     HMO          PPO

          Fair/poor health status                       33%        17%          9%              7%

          6+ days of poor mental health in
                                                        37%        18%          14%             14%
          the last month

          6+ days of poor physical health in
                                                        30%        21%          10%             9%
          the last month

          6+ days of restricted activityin the
                                                        24%        16%          7%              5%
          last month

Source: California Behavioral Risk Factor Survey, 1999




III. Health Insurance Plans in the California Market                                                  73
                               Self-reported health status and the prevalence of specific chronic conditions
                       among the employed population varies by firm size. A much smaller proportion of
SINGLE-EMPLOYEE        workers in the largest firms (501+ employees) reported fair or poor health status
FIRMS HAVE THE         compared to workers in all other firm sizes. Workers in single-employee firms
HIGHEST RATES OF
                       reported a higher rate of six or more days of restricted activity in the last month
DAYS OF RESTRICTED
ACTIVITY IN THE LAST   compared to workers in the largest firms. These findings have important policy
MONTH                  implications for proposed risk segmentation and risk pooling for those working in
                       single-employee firms.

                              Small to mid-size firms (2-100 employees) reported higher rates of six or more
                       poor physical health days in the last month compared to the largest firms (101+
                       employees) and workers in single-employee firms. Firms of 500 or more employees
                       have the highest rates of asthma (Exhibit 83), suggesting the need for asthma
                       management programs.

                       Exhibit 83: Percentage of Employees with Chronic Conditions by Firm Size, Ages
                       18-64, California, 1999

                                                                          Number of Employees in Firm

                            Chronic Condition                    1        2-50      51-100    101-500      501+

                            Asthma                              11%       12%        12%        13%         20%

                            Fair/poor health status             10%       11%        10%         8%          3%

                            6+ days of poor physical health
                                                                7%        10%        12%         9%          6%
                            in the last month

                            6+ days of restricted activity in
                                                                11%        5%         4%         5%          3%
                            the last month

                       Source: California Behavioral Risk Factor Survey, 1999

                               The distribution of chronic conditions among the employed population also
                       varied across industries (Exhibit 84). Workers in education, government, and the
                       entertainment industry reported higher rates of asthma compared to workers in the
                       manufacturing, retail, and service industries. There were no differences in the rates at
                       which workers reported six or more poor mental health days in the last month by
                       industry, with a mean of 14% reporting this level of mental illness. Workers in
                       education reported higher rates of six or more days of poor physical health in the last
                       month compared to workers in the health care industry and high technology.

                               These findings suggest that employers should seek to purchase health plans
                       that provide coverage for and offer disease management programs addressing the
                       chronic conditions most prevalent in their industry, and, at a minimum, addressing
                       asthma and mental health.




                       74                                        The State of Health Insurance in California, 1999
                      Exhibit 84: Percentage of Employees with Chronic Conditions by Industry, Ages
                      18-64, California, 1999




                                                           Entertainment




                                                                                                                   Manufacturing
                                                                           Government



                                                                                        Health Care




                                                                                                      Technology
                                               Education




                                                                                                                                            Service
                                                                                                                                   Retail
                                                                                                      High
                         Chronic Condition

                         Asthma                20%         20%             23%          16%            15%            7%           12%      11%

                         6+ days of poor
                         mental health in      12%         21%             13%          12%            12%         13%             14%      16%
                         the last month

                         6+ days of poor
                         physical health in    13%         10%             11%             5%           5%         10%              9%        9%
                         the last month

                      Source: California Behavioral Risk Factor Survey, 1999

                               Many HMOs have developed or are in the process of developing disease
THE ONLY CONDITIONS   management programs targeting specific chronic conditions, although there is
FOR WHICH A           considerable variation across plans (Exhibit 85). The chronic conditions for which a
MAJORITY OF HMOS
                      majority of HMOs have developed or are developing disease management programs
HAVE DEVELOPED
DISEASE MANAGEMENT    are asthma, diabetes, and congestive heart failure. HMOs were less likely to offer
PROGRAMS ARE          disease management programs for high-risk pregnancy, depression, hypertension,
ASTHMA, DIABETES,     breast cancer, or hypercholesterolemia, although an additional two to five plans had
AND CONGESTIVE        programs in development for these conditions. Conditions for which HMOs were
HEART FAILURE
                      least likely either to offer or to be developing disease management programs include
                      osteoporosis, arthritis, HIV/AIDS, and peptic ulcer disease. No HMOs were
                      developing or offering a disease management program targeting prostate cancer.




                      III. Health Insurance Plans in the California Market                                                                            75
                       Exhibit 85: Chronic Conditions Targeted by Disease Management Programs in
                       HMOs, California, 1998

                            Type of Disease Management      # of Programs     # of Programs in
                            Program                         Implemented        Development        % of HMOs

                            Asthma                                15                 4               76%

                            Diabetes                              13                 6               76%

                            Congestive heart failure              9                  5               56%

                            High risk pregnancy                   8                  2               40%

                            Depression                            4                  4               32%

                            Breast cancer                         4                  2               24%

                            Hypercholesterolemia                  3                  3               24%

                            Hypertension                          2                  5               28%

                            Arthritis                             2                  2               16%

                            HIV/AIDS                              2                  1               12%

                            Peptic ulcer                          2                  0               8%

                            Osteoporosis                          1                  3               16%

                            Prostate cancer                       0                  0               0%

                            Number of HMOs                                                           25

                       Source: UC Berkeley Survey of California Health Plans, 1999
THERE IS VERY LITTLE
STANDARDIZATION                Thus, there is considerable variability in the number and type of disease
ACROSS DISEASE         management programs across HMOs in California. Some plans may be better suited
MANAGEMENT             than others to offer care designed specifically to help manage certain illnesses or to
PROGRAMS OFFERED       prevent the worsening of, or complications from, such conditions. Employers and
BY CALIFORNIA'S HMOS
                       persons with chronic conditions should be cognizant of these differences when
                       choosing a plan.

                               Of the HMOs offering disease management programs, more than eight out of
                       ten used protocols or guidelines (Exhibit 86). Approximately three-fourths of the
                       plans offering disease management programs reported that they captured and used
                       health care data to assess the quality and effectiveness of their programs. Only half
                       reported using performance measures or offering any training to their primary care
                       providers, and 40% reported providing training to specialists on the disease
                       management programs available through the plan.




                       76                                       The State of Health Insurance in California, 1999
Exhibit 86: Components of HMO Disease Management Programs, California, 1998

   Components                                       % of HMOs

   Use of protocols or guidelines                      84%

   Capture and use of health care data                 76%

   Partnerships with other organizations               68%

   Use of performance measures                         52%

   Training of primary care physicians                 52%

   Training of specialty physicians                    40%

   Linking information systems                         24%

   Additional provider compensation                     0%

   Number of HMOs                                       25

Source: UC Berkeley Survey of California Health Plans, 1999

         Of the 22 HMOs that reported evaluating their disease management
programs, the majority tracked a wide range of outcomes, such as changes in patient
health status, number of inpatient stays, and patient satisfaction (Exhibit 87), although
fewer than half reported tracking the number of outpatient visits, length of hospital
stay, pharmacy expenditures, overall health care costs, or use of diagnostic testing.
This level of evaluation suggests that over time, HMOs will gain knowledge about the
most effective and efficient approaches to managing chronic diseases. It will be
important to identify best practices that can be shared across health plans to the
benefit of all Californians.

Exhibit 87: Measures Used to Evaluate HMO Disease Management Programs,
California, 1998

   Measures                                          % of HMOs

   Use any measures                                      88%

   Change in patient health status                       56%

   Number of inpatient stays                             52%

   Patient satisfaction                                  52%

   Number of outpatient visits                           44%

   Length of hospital stay                               36%

   Pharmacy expenditures                                 36%

   Overall health care costs                             36%

   Utilization of diagnostic testing                     12%

   Number of HMOs                                        25

Source: UC Berkeley Survey of California Health Plans, 1999




III. Health Insurance Plans in the California Market                                  77
                               PBGH reports on HMO performance in the management of specific chronic
                       diseases. This evaluation includes assessment of the percentage of patients who are
                       taking beta blockers following a heart attack, are managing their cholesterol following
                       a heart attack or surgery, and assessment of the percentage of patients with diabetes
                       who have had an eye exam in the last year to prevent blindness (Exhibit 88).

                       Exhibit 88: Percentage of Persons Receiving Disease Management Services for
                       Heart Disease and Diabetes in HMOs, California, 1998

                                          Beta Blocker          Cholesterol          Eye Exam to Prevent
                                           after Heart    Management after Heart        Blindness from
                                              Attack         Attack or Surgery             Diabetes

                            Average           79%                   57%                      43%

                            Highest           94%                   79%                      57%

                            Lowest            58%                   19%                      30%

                       Source: PBGH HealthScope, 1999

                               Performance on the management of heart disease and diabetes in HMOs
HMO PERFORMANCE        varies widely. On average, 79% of HMO patients who have had heart attacks are on
ON MANAGING HEART      beta blockers following their attack, with individual health plan performance ranging
DISEASE AND DIABETES   from a high of 94% of patients to a low of only 58%. Similarly, an average of 57% of
VARIES WIDELY
                       HMO patients who have had a heart attack or heart surgery are managing their
                       cholesterol, with individual health plan performance ranging from a high of 79% of
                       patients to a low of only 19%. Finally, health plan performance on the prevention of
                       blindness for persons with diabetes is poor. Only an average of 43% of HMO
                       members with diabetes had an annual eye exam, with the top-performing plan
                       reporting eye exams for only 57% of persons with diabetes and the lowest-performing
                       plan reporting 30%.

                               Particularly for persons with chronic conditions, differences in the degree to
                       which health plans help their members manage chronic disease are important with
                       respect to both complications associated with chronic conditions and to members'
                       overall health outcomes. Collection and reporting of quality information regarding
                       disease management programs may help to increase HMO efforts to manage chronic
                       disease effectively and ultimately to improve the health of their members.




                       78                                    The State of Health Insurance in California, 1999

								
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