Download Case Studies of Medicare+Choice in Sixteen Selected Market Areas

Contract No.:
MPR Reference No.:
500-95-7(6)
8565-006
Case Studies of
Medicare+Choice in
Sixteen Selected Market
Areas
Final Report
July 17, 2001
Thomas Kornfield
Anna Cook
Submitted to:
Health Care Financing Administration
Office of Strategic Planning
7500 Security Boulevard, C3-21-25
Baltimore, MD 21244-1850
Project Officer:
David Skellan
Submitted by:
Mathematica Policy Research, Inc.
600 Maryland Avenue, SW
Suite 550
Washington, DC 20024-2512
(202) 484-9220
Project Director:
Anna Cook
CONTENTS
Chapter
I
Page
INTRODUCTION............................................................................................................. 1
A. POLICY CONTEXT ............................................................................................ 1
B. OBJECTIVES OF THE ANALYSIS................................................................... 2
II
III
METHODS AND DATA............................................................................................... 4
A.
DEFINITION OF MARKET AREAS ................................................................. 4
B.
SELECTION OF MARKET AREAS .................................................................. 4
C.
INDICATORS AND DATA SOURCES ............................................................. 9
CASE STUDY MARKET PROFILES.......................................................................... 13
A.
ALBUQUERQUE, NEW MEXICO .................................................................... 13
1.
Medicare+Choice Enrollment and Availability ......................................... 13
2.
Benefit Trends (Basic Package Only) ........................................................ 16
3.
Trends in Access and Quality..................................................................... 16
4.
Disenrollment Rates ................................................................................... 17
5.
Financial Performance................................................................................ 17
6.
Outlook for 2001 ........................................................................................ 17
B.
BALTIMORE, MARYLAND.............................................................................. 18
1.
Medicare+Choice Enrollment and Availability ......................................... 18
2.
Benefit Trends (Basic Package Only) ........................................................ 21
3.
Trends in Access and Quality..................................................................... 22
4.
Disenrollment Rates ................................................................................... 22
5.
Financial Performance................................................................................ 23
6.
Outlook for 2001 ........................................................................................ 23
C.
BOSTON, MASSACHUSETTS .......................................................................... 23
1.
Medicare+Choice Enrollment and Availability ......................................... 23
2.
Benefit Trends (Basic Package Only) ........................................................ 26
3.
Trends in Access and Quality..................................................................... 27
iii
CONTENTS (continued)
Chapter
Page
III
(Cont'd)
4.
5.
6.
Disenrollment Rates ................................................................................... 27
Financial Performance................................................................................ 28
Outlook for 2001 ........................................................................................ 28
D.
CINCINNATI, OHIO........................................................................................... 28
1.
Medicare+Choice Enrollment and Availability ......................................... 28
2.
Benefit Trends (Basic Package Only) ........................................................ 31
3.
Trends in Access and Quality..................................................................... 32
4.
Disenrollment Rates ................................................................................... 33
5.
Financial Performance................................................................................ 33
6.
Outlook for 2001 ........................................................................................ 33
E.
CLEVELAND, OHIO .......................................................................................... 34
1.
Medicare+Choice Enrollment and Availability ......................................... 34
2.
Benefit Trends (Basic Package Only) ........................................................ 37
3.
Trends in Access and Quality..................................................................... 37
4.
Disenrollment Rates ................................................................................... 38
5.
Financial Performance................................................................................ 38
6.
Outlook for 2001 ........................................................................................ 39
F.
HOUSTON, TEXAS ............................................................................................ 39
1.
Medicare+Choice Enrollment and Availability ......................................... 39
2.
Benefit Trends (Basic Package Only) ........................................................ 42
3.
Trends in Access and Quality..................................................................... 42
4.
Disenrollment Rates ................................................................................... 43
5.
Financial Performance................................................................................ 44
6.
Outlook for 2001 ........................................................................................ 44
G.
KANSAS CITY, MISSOURI............................................................................... 44
1.
Medicare+Choice Enrollment and Availability ......................................... 44
2.
Benefit Trends (Basic Package Only) ........................................................ 47
3.
Trends in Access and Quality..................................................................... 48
4.
Disenrollment Rates ................................................................................... 48
5.
Financial Performance................................................................................ 48
6.
Outlook for 2001 ........................................................................................ 48
H.
LOS ANGELES, CALIFORNIA ......................................................................... 48
1.
Medicare+Choice Enrollment and Availability ......................................... 48
2.
Benefit Trends (Basic Package Only) ........................................................ 51
3.
Trends in Access and Quality..................................................................... 51
4.
Disenrollment Rates ................................................................................... 54
5.
Financial Performance................................................................................ 54
6.
Outlook for 2001 ........................................................................................ 55
iv
CONTENTS (continued)
Chapter
III
(Cont'd)
Page
I.
MIAMI, FLORIDA .............................................................................................. 55
1.
Medicare+Choice Enrollment and Availability ......................................... 55
2.
Benefit Trends (Basic Package only) ......................................................... 58
3.
Trends in Access and Quality..................................................................... 58
4.
Disenrollment Rates ................................................................................... 59
5.
Financial Performance................................................................................ 59
6.
Outlook for 2001 ........................................................................................ 60
J.
MINNEAPOLIS, MINNESOTA ......................................................................... 60
1.
Medicare+Choice Enrollment and Availability ......................................... 60
2.
Benefit Trends (Basic Package only) ......................................................... 63
3.
Trends in Access and Quality..................................................................... 63
4.
Disenrollment Rates ................................................................................... 64
5.
Financial Indicators .................................................................................... 64
6.
Outlook for 2001 ........................................................................................ 65
K.
NEW ORLEANS, LOUISIANA.......................................................................... 65
1.
Medicare+Choice Enrollment and Availability ......................................... 65
2.
Benefit Trends (Basic Package only) ......................................................... 67
3.
Trends in Access and Quality..................................................................... 68
4.
Disenrollment Rates ................................................................................... 68
5.
Financial Performance................................................................................ 68
6.
Outlook for 2001 ........................................................................................ 68
L.
NEW YORK, NEW YORK ................................................................................. 69
1.
Medicare+Choice Enrollment and Availability ......................................... 69
2.
Benefit Trends (Basic Package only) ......................................................... 72
3.
Trends in Access and Quality..................................................................... 72
4.
Disenrollment Rates ................................................................................... 73
5.
Financial Performance................................................................................ 73
6.
Outlook for 2001 ........................................................................................ 73
M.
PHOENIX, ARIZONA ........................................................................................ 74
1.
Medicare+Choice Enrollment and Availability ......................................... 74
2.
Benefit Trends (Basic Package Only) ........................................................ 75
3.
Trends in Access and Quality..................................................................... 75
4.
Disenrollment Rates ................................................................................... 78
5.
Financial Performance................................................................................ 78
6.
Outlook for 2001 ........................................................................................ 78
v
CONTENTS (continued)
Chapter
III
(Cont'd)
IV
Page
N.
PORTLAND, OREGON ...................................................................................... 79
1.
Medicare+Choice Enrollment and Availability ......................................... 79
2.
Benefit Trends (Basic Package Only) ........................................................ 82
3.
Trends in Access and Quality..................................................................... 82
4.
Disenrollment Rates ................................................................................... 82
5.
Financial Performance................................................................................ 83
6.
Outlook for 2001 ........................................................................................ 83
O.
SEATTLE, WASHINGTON................................................................................ 83
1.
Medicare+Choice Enrollment and Availability ......................................... 83
2.
Benefit Trends (Basic Package Only) ........................................................ 86
3.
Trends in Access and Quality..................................................................... 86
4.
Disenrollment Rates ................................................................................... 87
5.
Financial Performance................................................................................ 87
6.
Outlook for 2001 ........................................................................................ 88
P.
TAMPA, FL ......................................................................................................... 88
1.
Medicare+Choice Enrollment and Availability ......................................... 88
2.
Benefit Trends (Basic Package Only) ........................................................ 91
3.
Trends in Access and Quality..................................................................... 91
4.
Disenrollment Rates ................................................................................... 92
5.
Financial Performance................................................................................ 92
6.
Outlook for 2001 ........................................................................................ 92
CONCLUSION AND SUMMARY OF FINDINGS ........................................................ 94
REFERENCES............................................................................................................... 97
vi
TABLES
Table
Page
II.1
CHARACTERISTICS OF THE 16 CASE STUDY MARKETS.................................... 7
II.2
OVERVIEW OF INDICATORS AND DATA SOUCES ............................................. 10
vii
FIGURES
Figure
Page
III.1
ALBUQUERQUE MSA MARKET PROFILE ................................................. 14
III.2
BALTIMORE MSA MARKET PROFILE........................................................ 19
III.3
BOSTON MSA MARKET PROFILE ............................................................... 24
III.4
CINCINNATI MSA MARKET PROFILE........................................................ 29
III.5
CLEVELAND MSA MARKET PROFILE ....................................................... 35
III.6
HOUSTON MSA MARKET PROFILE ............................................................ 40
III.7
KANSAS CITY MSA MARKET PROFILE..................................................... 45
III.8
LOS ANGELES MSA MARKET PROFILE .................................................... 52
III.9
MIAMI MSA MARKET PROFILE .................................................................. 56
III.10
MINNEAPOLIS MSA MARKET PROFILE .................................................... 61
III.11
NEW ORLEANS MSA MARKET PROFILE .................................................. 66
III.12
NEW YORK MSA MARKET PROFILE.......................................................... 70
III.13
PHOENIX MSA MARKET PROFILE ............................................................. 76
III.14
PORTLAND MSA MARKET PROFILE.......................................................... 80
III.15
SEATTLE MSA MARKET PROFILE.............................................................. 84
III.16
TAMPA MSA MARKET PROFILE ................................................................. 89
viii
I.
INTRODUCTION
A. POLICY CONTEXT
The Medicare+Choice (M+C) program introduced substantial changes to Medicare managed
care. Created under the Balanced Budget Act of 1997 (BBA), the M+C program was intended to
give Medicare beneficiaries a wider set of health plan choices. Regulatory changes under the
program included expanded eligibility requirements for managed care organizations (MCOs)
contracting with Medicare, a new method for determining capitated payments, and various new
administrative, marketing, and quality requirements for MCOs. M+C also created new plan
options, including private fee-for-service plans and medical savings accounts. These options,
however, have been slow to develop.
Since passage of the BBA, many participating MCOs have reduced their service areas or not
renewed their Medicare contracts, while at the same time, a few new types of plans have joined
the program (MedPAC 2000). The service area reductions and contract nonrenewals have
reduced the availability of M+C options. They also have had potentially important implications
for the performance of the M+C program in delivering care to Medicare beneficiaries because
remaining MCOs have tended to increase their premiums and scale back their prescription drug
benefits. In particular, several MCOs have reduced the annual cap on their prescription drug
coverage.
However, Medicare managed care—like all health care—is locally based, with
substantial variation both within and across markets. Within a market, Medicare managed care
payment rates vary because HCFA sets payment rates by counties. As a result, Medicare MCOs
may be more likely to enter or remain in those counties in a market with relatively higher
payment rates. Across markets, factors that can vary include differences in provider organization,
practice patterns, and history with managed care (Brown and Gold 1999).
1
B. OBJECTIVES OF THE ANALYSIS
This monograph provides data on M+C market trends through early 2000 in 16 case study
markets. Mathematica Policy Research (MPR) prepared the monograph under a contract from
the Health Care Financing Administration (HCFA), in which MPR is monitoring trends in the
M+C program. The report updates and extends the analysis of indicators in Chapter 6 of our first
interim report (Nelson et al. 2000) for 12 of the case study markets and adds four markets to the
analysis.
We have also added indicators that measure trends in disenrollment rates, financial
performance, and the quality of, and access to, care for M+C enrollees. The source for
disenrollment rates is the Group Health Plan Master File, a file HCFA maintains with
information on Medicare managed care enrollment. Financial performance data were obtained
from the Adjusted Community Rate (ACR) proposals for the years 2000 and 2001. MCOs were
required to include full-year financial data for 1998 (year 2000 submission) and 1999 (year 2001
submission).
The sources for the quality and access measures are the Medicare Consumer Assessment of
Health Plans Survey (CAHPS), which is a M+C enrollee survey administered by HCFA, and the
Medicare Health Plan Employer Data and Information Set (HEDIS). CAHPS covers a wide
variety of areas, including experiences with a personal doctor, experiences getting care from a
specialist, experiences of care provided during the past six months, interactions with the health
plan, including customer service, and health status and demographic information. HEDIS allows
for measurement and reporting of a health plan's performance in delivering health care services
to its members and includes data on such measures as use of services, cost of care, and access
and availability of care.
In each of the 16 case study markets, we track changes in:
2
• M+C participation and enrollment from 1997 to 2000
• M+C market concentration from 1997 to 2000
• M+C quarterly disenrollment rates for 1998 to 2000
• Benefits, including premiums and prescription drug benefits, from 1999 to 2000
• M+C financial performance, from 1998 to 1999
• Access to and quality of care from 1998 to 1999
We also look at how the indicators differ within a market. Some markets encompass multiple
counties such that the availability of MCOs, as well as benefits, can vary considerably from one
county to the next. For example, managed care may have a strong presence in certain counties
but a weak one in others, even within the same market. Some variation is attributable to
different payment rates, which are determined at the county, rather than the market, level. Some
variation may also arise from different market conditions that exist from one part of the market
to another. The ability to negotiate favorable provider contracts also may vary across counties in
a market, particularly if their delivery systems are relatively distinct.
The profiles of the 16 markets aim to provide a resource for those interested in understanding
particular M+C markets, as well as those who are more generally interested in understanding
how choice varies for beneficiaries at the local level.
3
II. METHODS AND DATA
This chapter describes how we defined market areas, identifies the 16 markets selected for
study, and identifies the indicators and data sources used for analysis.
A. DEFINITION OF MARKET AREAS
For purposes of analysis, we defined markets as metropolitan statistical areas (MSAs). The
U.S. Office of Management and Budget (OMB) defines an MSA as a county or group of counties
consisting of a large population nucleus and adjacent communities with a high degree of
economic and social integration with that nucleus. Each MSA includes either at least one city
with a population of at least 50,000 or an urbanized area (as defined by the Bureau of the
Census) with at least 50,000 residents and a total metropolitan population of at least 100,000.
OMB defines some large urban areas as consolidated metropolitan statistical areas
(CMSAs), which are composed of two or more primary metropolitan statistical areas (PMSAs).1
We defined markets in these large urban areas at the PMSA level rather than at the CMSA level
because we believe that PMSAs more closely approximate a health care marketplace. Such an
approach is consistent with other studies (Kemper et al. 1996; PPRC 1997).
B. SELECTION OF MARKET AREAS2
As a first step in the development of an M+C monitoring system, we analyzed trends in 12
case study markets (Nelson and Smith 1999). The first case study report had two objectives: (1)
to provide timely information on Medicare managed care activity in 12 key market areas during
1
For example, the Los Angeles-Riverside-Orange County CMSA consists of four PMSAs:
Los Angeles-Long Beach, Orange County, Riverside-San Bernardino, and Ventura.
2
For a detailed discussion of how we selected the initial 12 case study markets, see chapter II
of Nelson and Smith (1999).
4
1997 and 1998 and (2) to “test” the M+C evaluation system. As with the M+C evaluation system
that we developed later in the project, the case studies used data sources available from HCFA.
In our first case studies report (Nelson and Smith 1999) we wanted to select a small number
of markets that accounted for a significant share of Medicare risk enrollment. As of December
1997, 28 percent of all Medicare risk enrollees lived in the 12 original case study markets.3 We
also included markets that had a range of payment rates and others that had a significant number
of pullouts for 1999.
This report updates the detailed profiles developed for the 12 case study markets and adds
four more markets specified by HCFA. The following are the 16 case study markets (the new
four markets are in bold text): 4
Albuquerque, NM
Kansas City, MO
Phoenix, AZ
Baltimore, MD
Los Angeles, CA
Portland, OR
Boston, MA
Miami, FL
Seattle, WA
Cincinnati, OH
Minneapolis, MN
Tampa, FL
Cleveland, OH
New Orleans, LA
Houston, TX
New York, NY
The 16 case study markets vary on a number of measures (see Table II.1). The payment rates,
in particular, differ markedly. Three markets (Albuquerque, Minneapolis, and Portland) have a
3
The Medicare risk program was the precursor to the M+C program.
4
To simplify the discussion, we identified market areas by the largest city in the MSA or
PMSA rather than by the more formal name given by OMB. For example, we refer to the
Cleveland market area rather than to the Cleveland-Lorain-Elyria PMSA.
5
2000 weighted payment rate that is less than the 2000 United States Per Capita Cost (USPCC)5.
Five markets (Houston, Los Angeles, New Orleans, New York, and Miami) have a 2000
payment rate that is at least 30 percent greater than the USPCC. Two markets have fewer than
200,000 beneficiaries (Albuquerque and New Orleans), and two have more than 1 million
beneficiaries (Los Angeles and New York). M+C penetration rates vary widely as well, from a
low of 14.7 percent for Minneapolis as of March 2000 to a high of 47.1 percent in Portland.
Pullouts (contract nonrenewals and service area reductions) are hitting several markets
severely in 2001. In six markets (Baltimore, Cleveland, Cincinnati, Houston, Minneapolis, and
Seattle), at least one in four M+C enrollees needed to find another M+C contract or return to
original fee-for-service (FFS) Medicare. In two of these markets, Baltimore and Houston, the
pullouts affected 90 and 84 percent of M+C enrollees, respectively. In five other markets
(Boston, Kansas City, Miami, Los Angeles, New York) contract pullouts affected less than 4
percent of M+C enrollees. In Phoenix and Portland, no MCO reduced its service area or did not
renew its contract for 2001.
5
The weighted M+C payment rate for 2000 is a weighted average of the 2000 payment rates
for each county in the market area. The weights reflect the number of Medicare beneficiaries in a
county. For example, consider a market area with two counties, A and B. A has a payment rate
of $500 and 200,000 beneficiaries, and B has a payment rate of $400 and 50,000 beneficiaries.
The weighted average for the market area is $500 (200,000/250,000) + $400 (50,000/250,000) =
$400 + $80 = $480. A straight average of the payment rates is $450= ($500 + $400)/2. The
USPCC represents the average cost in the United States of treating a Medicare beneficiary in that
year. HCFA estimates the USPCC for each year.
6
TABLE II.1
CHARACTERISTICS OF THE 16 CASE STUDY MARKETS
2000 Payment
Information
Market
7
Albuquerque, NM
Baltimore, MD
Boston, MA
Cincinnati, OH
Cleveland, OH
Houston, TX
Kansas City, MO
Los Angeles, CA
Miami, FL
Minneapolis, MN
New Orleans, LA
New York, NY
Phoenix, AZ
Portland, OR
Seattle, WA
Tampa, FL
Ratio of
2000
Weighted
Weighted
Payment Number of
M+C
Number of
M+C Payment Rate to
contracts M+C Enrollees
USPCC
Rate
$424.48
602.56
589.62
496.42
553.89
633.67
520.05
660.65
794.02
451.46
670.68
723.03
526.14
444.21
476.98
537.69
0.89
1.26
1.24
1.04
1.16
1.33
1.09
1.38
1.66
0.95
1.41
1.51
1.10
0.93
1.00
1.13
Contract Pullouts, 2001a
M+C Participation & Enrollment, March 2000
4
4
6
7
10
7
6
10
12
3
6
10
7
6
7
8
36,044
52,240
157,287
51,923
83,325
88,126
58,603
363,433
142,362
47,271
46,975
218,323
174,788
106,386
92,468
161,197
Number of
Beneficiaries
91,286
341,887
667,906
230,212
363,351
345,343
231,611
1,006,876
313,271
322,325
181,988
1,201,443
395,825
225,816
273,563
475,164
Number of
M+C Penetration Contracts with a
Pullout
Percentage Rate
39.5
15.3
23.5
22.6
22.9
25.5
25.3
36.1
45.4
14.7
25.8
18.2
44.2
47.1
33.8
33.9
1
3
1
4
3
5
1
1
2
1
3
2
0
0
4
4
Number of
Enrollees
Affected
Percent of M+C
Enrollees
Affected
2,109
44,578
4,914
22,033
29,807
74,848
1,788
11,432
1,959
14,159
4,399
5,344
0
0
23,309
24,031
6
90
3
43
36
84
3
3
1
30
9
2
0
0
25
15
Table II.1 (Continued)
Benefit Information, 2000
Market
Disenrollment Rates, 2000
Number of
Quarterly
Percent of
Contracts with Percent of
Percent of
M+C
Disenrollees
Benefit
Contracts with Contracts with Disenrollment Who Joined
Information Zero Premium Drug Coverage
Rate
Another MCO
Financial Performance, 1999
Percent of
Disenrollees
Who Had Been
Average
Average
Enrolled For Three
Operating Overall Profit
Months or Less
Profit Margin
Margin
Average
Current
Ratio
8
Albuquerque, NM
3
100
100
2.3
76
3
-0.04
-0.03
0.92
Baltimore, MD
4
50
100
5.8
42
6
-0.01
-0.01
1.16
Boston, MA
5
80
80
3.1
57
3
-0.03
-0.03
0.65
Cincinnati, OH
7
42.9
86
6.4
53
6
0.09
0
0.17
Cleveland, OH
9
77.8
89
4.1
71
7
0
0
1.1
Houston, TX
7
100
100
3.6
73
5
-0.07
-0.05
0.83
Kansas City, MO
5
60
100
2.3
68
5
0.01
0
1.08
Los Angeles, CA
10
100
100
2.6
79
11
0
0.01
0.96
Miami, FL
11
100
100
5.9
83
12
-0.01
0
0.94
Minneapolis, MN
3
0
0
0.9
34
5
-0.01
0.01
0.87
New Orleans, LA
6
83.3
100
NA
NA
NA
NA
NA
NA
New York, NY
10
90
100
3.1
42
5
0
0.02
0.81
Phoenix, AZ
7
87.5
100
4.5
85
7
0.02
0.03
1.13
Portland, OR
6
0
100
1.6
43
3
-0.02
0
0.74
Seattle, WA
7
28.6
0
2.8
69
6
-0.09
0
1.5
Tampa, FL
7
42.9
85.7
9.1
75
9
-0.01
0
0.66
a
Includes both contract nonrenewals and service area reductions.
NA: Not Available
C. INDICATORS AND DATA SOURCES
We constructed indicators within the following six sets of topics:
•
Enrollment in, and availability of, Medicare+Choice contracts, 1997–20006
•
Market stability (e.g., contract withdrawals and service area reductions), 1999–2001
•
Benefits in basic package, 1999–2000, including annual limits on prescription drugs
•
Medicare+Choice quarterly disenrollment rates, 1998–2000;
•
M+C financial performance7
•
Access and quality measures, 1998–19998
We used a variety of data sources to calculate the indicators. All data were obtained from
HCFAs Web site or directly from HCFA. Table II.2 presents the set of indicators used in this
analysis, the period for which each indicator was constructed, and the data sources used. We
constructed indicators at the market level for each of the 16 case study markets.
In this report, we incorporate analyses and indicators used in previous MPR reports on the
M+C program (see Nelson et al. 2000; Kornfield et al. 2000; Schmitz and Kornfield 2001; and
Lake and Rosenbach 2000a and 2000b). We extended the analysis of market stability to include
2001; a previous report covered pullouts for 1999 and 2000 (see Nelson et al. 2000).
6
To simplify the discussion, we refer to contracts in place in 1997 and 1998 as M+C
contracts, although they were still called risk contracts.
7
For a more detailed discussion of the selected financial performance measures, see Schmitz
and Kornfield (2001).
8
For a more detailed discussion of the selected access and quality measures, see Lake and
Rosenbach (2000) and Lake and Rosenbach (2001).
9
TABLE II.2
OVERVIEW OF INDICATORS AND DATA SOURCES
Indicators
Data Sources
MEDICARE+CHOICE ENROLLMENT AND AVAILABILITY (DECEMBER 1997–MARCH 2000)
Number of M+C contracts with MCOs
HCFA’s Geographic Service Area (GSA) File for
various quarters
Percent distribution of Medicare beneficiaries by the number
of M+C contracts available in their county of residence
HCFA’s State/County Plan Market File
HCFA’s GSA File for various quarters
HCFA’s State/County/Plan Market Penetration
File for various quarters
HCFA’s State/County/Plan Market Penetration
File for various quarters
HCFA’s State/County Penetration File for various
quarters
HCFA’s State/County/Plan Market Penetration
File for various quarters
Number of M+C enrollees divided by number of
beneficiaries
Market share of largest M+C contract
Number of Medicare beneficiaries
Number of M+C enrollees
M+C penetration rate
MARKET STABILITY (1999–2001)
Number of M+C contracts with a pullout (withdrawal or HCFA data files on nonrenewals and service area
service area reduction)
reductions
Number of enrollees affected by pullouts
State/County/Plan Market Penetration Files
Percent of enrollees affected by pullouts
HCFA data files on nonrenewals and service area
reductions
State/County/Plan Market Penetration Files
HCFA data files on nonrenewals and service area
reductions
BENEFITS IN BASIC PACKAGE (1999 AND 2000)
Medicare Compare for 1999 and 2000
Percent of contracts offering coverage for:
Prescription drugs
Vision
Dental examinations
Physical examinations
Percent of M+C contracts with a zero premium
Medicare Compare for 1999 and 2000
Average premium
Medicare Compare for 1999 and 2000
Distribution of annual prescription drug caps
Medicare Compare for 1999 and 2000
10
TABLE II.2 (continued)
Indicators
Data Sources
ACCESS AND QUALITY MEASURES
Percentage of Medicare MCO enrollees who:
Consumer Assessment of Health Plans Survey
(CAHPS), 1998 and 1999
Gave their health plan a rating of 8 or more (on a scale of
0 to 10)
Said that their personal doctor usually or always listened
carefully, among those who visited a doctor in the past six
months
Had no problems gaining access to a specialist, among
those who needed a specialist during the past six months
Said that customer service was usually or always helpful,
among those who contacted customer service during the
past six months
Received a flu shot from the health plan or personal doctor
last winter
Percentage of Medicare MCO enrollees with:
At least one ambulatory visit in the past yeara
Breast cancer screening in the past two yearsb
Eye exam in the past year for diabeticsc
Health Plan Employer Data and Information Set
(HEDIS), 1999 (data covers health care services
for 1998)
VOLUNTARY DISENROLLMENT RATES
Group Health Plans Files, 1998, 1999 and 2000
Quarterly disenrollment rates
GSA file for same years
Percentage of disenrollees who returned to traditional
State/County/Plan Market Penetration Files
Medicare
Percentage of disenrollees who had been enrolled for three
months or less
FINANCIAL PERFORMANCE MEASURESD
Adjusted Community Rate Proposal Submissions,
Average operating profit margin
2000 and 2001 (data are for 1998 and 1999)
Average overall profit margin
Average overall expense ratio
Average current ratio
Average cash and long-term bonds divided by current
liabilities
Average days in unpaid claims
a
Includes only enrollees age 65 or older who were continuously enrolled in a Medicare MCO in 1998
Includes only female enrollees age 65 to 69 who were continuously enrolled in a Medicare MCO during 1997 and
1998
c
Includes only enrollees with diabetes who were continuously enrolled in a Medicare MCO in 1998.
d
Definitions of financial performance measures:
Operating profit margin: Ratio of operating profit to operating revenue. Higher values indicate higher performance.
Overall profit margin: Ratio of total profit to total revenue. Higher values indicate higher performance.
Overall expense ratio: ratio of direct medical cost plus administrative cost to operating revenue. Higher values indicate
lower performance.
Current ratio: Ratio of current assets to current liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current liabilities: Ratio of the sum of current assets and long-term
bonds to current liabilities. Higher values indicate higher liquidity.
Days in unpaid claims. Ratio of claims payable to hospital and medical expenses divided by 365. Higher values
indicate lower efficiency.
b
11
We restricted the analysis of benefits to 1999 and 2000 because the 1998 Medicare Compare
data were missing for about one-quarter of the plans. In addition, we focus on market stability
for 1999 to 2001 because the surge of pullouts began in 1999. In 1998, only five participating
MCOs did not renew their Medicare contracts while, in 1999, 43 MCOs did not renew their
contracts (Nelson et al. 2000).
12
III. CASE STUDY MARKET PROFILES
A. ALBUQUERQUE, NEW MEXICO
1. Medicare+Choice Enrollment and Availability
The Albuquerque market, made up of three counties (Bernalillo, Sandoval, and Valencia)
has seen some moderate instability in its Medicare+Choice market over the past few years (see
Figure III.1). Four M+C contracts served the market from December 1997 to March 2000.
However, the composition of the four contracts changed during this period. Two contracts
merged and another entered the market. Effective January 1, 1999, Presbyterian Health Plan
acquired FHP of New Mexico, and its two M+C contracts were consolidated into a single
contract. The one new contract, St. Joseph Healthcare, which is the first qualifying Provider
Sponsored Organization to enter the M+C program, signed an M+C contract in 1999 and,
effective February 1, 1999, began serving the entire market.
Two MCOs have dominated the Albuquerque market over the past several years. In March
2000, the largest MCO, Presbyterian Health Plan, had a market share of 42 percent while
Lovelace Health Plan had a share of 39 percent. Presbyterian Health Plan’s share has dropped
slightly, from 48 percent in December 1997 to 42 percent in March 2000. Nonetheless, these two
MCOs still controlled 80 percent of the market in March 2000.
From December 1997 to March 2000, M+C enrollment increased faster than the total
number of Medicare beneficiaries in the market. In particular, M+C enrollment in the market
increased by about 11 percent (32,555 to 36,044), while the number of Medicare beneficiaries
13
FIGURE III.1
ALBUQUERQUE MSA MARKET PROFILE
M+C Enrollment and Availability
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
Two – four
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
Dec.
1997
4
June
1998
4
CAHPS Measures
June
1999
4
Percentage of Medicare
MCO enrollees:
With overall health plan
rating of 8 or more
Who said doctor usually
or always listens
carefully
Who had no problems
accessing a specialist
Who said customer
service was usually or
always helpful
Who received a flu shot
from their health plan
last winter
March
2000
4
100%
100%
100%
100%
48.3%
44.5%
47.9%
41.7%
87.4
88.3
90
91.3
32.6
33.4
35.1
36.0
37.2%
37.8%
39.0%
39.5%
1998
1999
81.9
81.5
Difference
-0.4
93.0
94.4
1.4
84.3
80.9
-3.4
83.7
85.1
1.4
70.2
67.1
-3.1
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
Market Stability
Number of contracts
with a pullout
(withdrawal or service
area reduction)
Number of enrollees
affected by pullouts
Percent of enrollees
Affected by pullouts
1999
0
2000
0
2001
1
0
0
2,109
0
0
6.1
$1-$999
100%
Benefits in Basic Package1
Percent of contracts
1999
2000
offering coverage for:
Prescription drugs
100
100
Vision
100
100
Dental exams
0
100
Physical exams
100
0
Percent of contracts with
100
100
zero premium
Average premium
0
0
1
Benefit information available for three contracts in
both years.
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
$1-$999
100%
14
FIGURE III.1
ALBUQUERQUE MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
1.6%
1999
2.9%
2000
2.3%
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
HEDIS Measures
27%
19%
24%
73%
81%
76%
5%
12%
3%
95%
88%
97%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
1998
4
1999
4
3
2
0.04
0.00
1.01
0.96
1.19
-0.04
-0.03
-0.16
0.92
0.93
41.09
36.58
1999
95.7
89.6
80.3
69.6
61.4
60.9
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
15
increased by only 4.4 percent (87,416 to 91,286). As a result, the M+C penetration rate increased
from 37.2 to 39.5 percent.9
2.
Benefit Trends (Basic Package Only)
Benefit information for 1999 and 2000 is available in Medicare Compare for three of the
four M+C contracts.
10
All three contracts offered similar benefits in their basic package. For
each year, the contracts covered prescription drugs and vision care and did not charge a
premium. In 1999, all three contracts covered physical examinations, yet none covered dental
examinations. That situation reversed in 2000, when all three contracts covered dental but not
physical examinations. Enrollees faced limits in drug coverage. In 1999 and 2000, two contracts
had an annual prescription coverage limit of $500 and a third an annual limit of $450.
3.
Trends in Access and Quality
a.
CAHPS Measures
From 1998 to 1999, health plans scored slightly lower on three of the five CAHPS measures
calculated for the market (see Figure III.1). None of these changes were statistically significant,
however (p<0.05). The largest decrease occurred in the measure of access to a specialist. In
1998, 84.3 percent of enrollees reported no problems in gaining access to a specialist; in 1999,
this figure fell to 80.9 percent. The percentage of enrollees who received a flu shot also
decreased, from 70.2 to 67.1 percent. However, enrollees gave a higher rating to their primary
care physician in 1999 than in 1998 (94.4 versus 93 percent) and had a better opinion of
customer service (85.1 versus 83.7 percent).
9
In Figures III.1 to III.16, some of the percentages reported for the M+C penetration rate
may be slightly different than the number obtained by dividing the reported number of M+C
enrollees by the number of Medicare beneficiaries. Such discrepancies are due to rounding.
10
No benefit information was available for St. Joseph’s Health Plan for 1999 or 2000.
16
b. HEDIS Measures
In 1998, 96 percent of all enrollees had at least one ambulatory visit. In 1999, that figure
fell to 90 percent (see Figure III.1). Eighty percent of female enrollees age 65 to 69 had a breast
cancer screening in 1997 or 1998. For the 1998 to 1999 period, that figure fell to 70 percent.
Approximately 6 of every 10 diabetic enrollees had an eye exam in both 1998 and 1999.
4. Disenrollment Rates
From 1998 to 1999, the quarterly M+C disenrollment rate in the Albuquerque market
increased from 1.6 percent to 2.9 percent and then decreased to 2.3 percent in 2000. Most
disenrollees joined another MCO.
The percentage of disenrollees joining another MCO
increased from 73 percent in 1998 to 81 percent in 1999, and then decreased to 76 percent in
2000. In addition, as Figure III.1 shows, most of the disenrollees had been enrolled for at least
four months.
5.
Financial Performance
MCO financial performance appeared to worsen from 1998 to 1999 (see Figure III.1). In
1998, the average operating profit margin was 0.04, while the average overall profit margin was
nearly zero. In 1999, these ratios declined to -0.04 and -0.03, respectively. Liquidity also
appeared to worsen as the current ratio decreased from 0.96 to 0.92. It should be noted,
however, that the MCOs that remained in the market in 2001 had worse financial data than those
who left the market. Data for 1999 were only available for MCOs who are participating in the
M+C program in 2001.
6.
Outlook for 2001
In 2001, three M+C contracts serve the market because one MCO— Qualmed, New
Mexico—did not renew its M+C contract. As a result, 6 percent of enrollees (2,176
17
beneficiaries) needed to join another MCO or return to fee-for-service (FFS) Medicare. St.
Joseph Healthcare had announced its intention to withdraw from the market, but decided to
reenter the market in early 2001. The Benefits Improvement and Protection Act of 2000 allowed
MCOs that either reduced their service areas or did not renew their contract to reenter the M+C
program by resubmitting an Adjusted Community Rate proposal in January 2001.
The three remaining contracts in the market are Presbyterian Health Plan, Lovelace Health
Plan, and St. Joseph Healthcare. However, Presbyterian Health Plan has closed enrollment to
new beneficiaries for 2000 and 2001 (HCFA 2001).
B. BALTIMORE, MARYLAND
1.
Medicare+Choice Enrollment and Availability
During the past few years, Baltimore has been an unstable M+C market (see Figure III.2).
The market registered a net decrease of three contracts from December 1997 to June 1999, and in
2000, the market had four M+C contracts.
Seven jurisdictions make up the Baltimore market: Anne Arundel, Baltimore, Carroll,
Harford, Howard, and Queen Anne’s counties, and Baltimore City. Most beneficiaries in the
Baltimore market had a choice of between two and four contracts in 1999 and 2000, although
availability varied by county. Beneficiaries living in Anne Arundel, Baltimore, and Howard
counties and Baltimore City had four M+C contracts available in 1999 and 2000. Harford
County had three contracts in both years, and Carroll County had three in 1999 but only two in
2000. In Queen Anne’s County, beneficiaries had one M+C contract available in 1999 and none
in 2000.
In 1999, four of the eight MCOs in the market did not renew their M+C contract, affecting
nearly one-third (more than 17,000) of the market’s M+C enrollees. In 2000, no MCO serving
Baltimore withdrew from the M+C program, although one MCO reduced its service area for
18
FIGURE III.2
BALTIMORE MSA MARKET PROFILE
M+C Enrollment and Availability
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
Zero contracts
One contract
Two – four
contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
Dec.
1997
7
June
1998
8
June
1999
4
March
2000
4
0%
0%
1.4%
0%
0%
1.4%
0%
1.4%
98.6%
1.4%
0%
98.6%
98.6%
98.6%
0%
0%
34.9%
33.9%
61.2%
54.0%
339.0
340.3
341.8
341.9
45.2
52.0
54.3
52.2
13.3%
15.3%
15.9%
15.3%
1999
5
2000
1
2001
3
17,523
2,612
44,578
33.7
4.8
90.3
CAHPS Measures
Percentage of Medicare
DiffMCO enrollees:
1998 1999
erence
With overall health plan 78.7
76.1
-2.6
rating of 8 or more
Who said doctor usually 95.2
94.2
-1.0
or always listens
carefully
Who had no problems
83.8
80.8
-3.0
accessing a specialist
82.6
76.8
-5.8a
Who said customer
service was usually or
always helpful
Who received a flu shot
61.1
57.3
-3.8
from their health plan
last winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
Market Stability
Number of contracts with
a pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees
affected by pullouts
$1,000
50%
$1-$999
50%
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
Benefits in Basic Package1
Percent of contracts
1999
2000
offering coverage for:
Prescription drugs
100
100
Vision
100
100
Dental exams
75
50
Physical exams
100
100
Percent of contracts with
100
50
zero premium
Average premium
0
17.25
1
Benefit information available for four M+C contracts
in both years.
$1-$999
25%
$1,000
75%
19
FIGURE III.2
BALTIMORE MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
3.5%
1999
3.4%
HEDIS Measures
2000
5.8%
42%
38%
58%
58%
62%
42%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
17%
35%
6%
83%
65%
94%
1998
8
1999
4
3
1
-0.01
0.00
1.01
0.90
1.35
-0.01
-0.01
1.16
1.16
1.17
58.19
42.90
1999
82.1
76.0
63.2
66.6
41.6
55.3
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999)
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999)
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
20
2000 in two counties (Carroll and Queen Anne’s), affecting 2,612 beneficiaries (5 percent of
local M+C enrollees) and leaving no M+C contracts on the Eastern Shore.
In spite of the pullouts, enrollment increased by 20 percent from December 1997 to June
1999, from 45,228 to 54,268. Because the number of Medicare beneficiaries remained stable, the
M+C penetration rate increased from 13.3 to 15.9 percent. From June 1999 to March 2000,
however, M+C enrollment fell by 2,028 beneficiaries, and the M+C penetration rate fell from
15.9 to 15.3 percent.
As a result of MCO pullouts, the largest Medicare MCO in Baltimore, Free State Health
Plan, has experienced an increase in enrollment and growth in market share. The latter increased
from 35 percent in December 1997 to 61 percent in June 1999 and then declined to 54 percent in
March 2000. The second largest MCO, United Healthcare, accounted for 29 percent of the
market in December 1997 and about one-quarter in June 1999 and March 2000.
2.
Benefit Trends (Basic Package Only)
Beneficiaries in the Baltimore market saw a modest reduction in benefits from 1999 to 2000
as measured by premiums and annual limits on prescription drug coverage. In 1999, no MCO
charged a premium for its basic package, but, in 2000, two of the four M+C contracts serving the
market charged a premium. The average premium was $17.25.11
All contracts covered prescription drugs in their basic packages in both 1999 and 2000. In
1999, three of the four MCOs had an annual prescription drug cap of $1,000 while Cigna
imposed a limit of $600. In 2000, two of the four imposed an annual limit of $1,000. However,
United Healthcare reduced its cap from $1,000 to $500 in Anne Arundel, Baltimore, and Howard
11
Plans with a zero premium in their basic package were included in the calculation of the
average premium for the market (an unweighted average).
21
counties and Baltimore City and to $300 in Carroll and Harford counties. Cigna lowered its cap
in the six counties it served (except Queen Anne’s) to $400 from $600.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the Baltimore market scored lower on all five CAHPS measures we
calculated for the market in 1999 than in 1998 (see Figure III.2). The largest decrease, which
was also statistically significant, occurred in the measure of customer service satisfaction
(p<0.05). In 1998, 82.6 percent of enrollees said that customer service was usually or always
helpful. By 1999, this figure had fallen to 76.8 percent.
b. HEDIS Measures
In 1998, 82 percent of enrollees had at least one ambulatory visit. In 1999, that figure fell to
76 percent. Sixty-three percent female enrollees age 65 to 69 had a breast cancer screening in
1997 or 1998. During the 1998 to 1999 period that figure increased to 67 percent. Houston was
the only case study market with a lower proportion of female enrollees estimated to have
received a breast cancer screening over the same time periods. Forty-two percent of diabetic
enrollees had an eye exam in 1998, and 55 percent had an eye exam in 1999. Baltimore was one
of four case study markets where the proportion of diabetics receiving an eye exam fell below 50
percent in either 1998 or 1999. (The other three case study markets where this occurred were
Cincinnati, Houston and Tampa).
4.
Disenrollment Rates
From 1998 to 1999, the quarterly M+C disenrollment rate remained fairly constant (see
Figure III.2).
However, in 2000, this rate increased to 5.8 percent.
The percentage of
disenrollees joining another MCO increased slightly from 58 percent in 1998 to 62 percent in
22
1999, and then declined dramatically to 42 percent in 2000. The rapid disenrollment rate, as
measured by the percentage of disenrollees who had been enrolled for three months or less,
increased from 17 percent in 1998 to 35 percent in 1999. However, this rate declined to 6 percent
in 2000.
5.
Financial Performance
The financial performance indicators reported in Figure III.2 should be interpreted with
caution. Financial data for 1999 are available for only one MCO. Interestingly, that MCO’s
operating profit margin and overall profit margin for 1999 were identical to the average
corresponding figures for 1998.
6.
Outlook for 2001
In 2001, only two M+C contracts serve the Baltimore market: Kaiser and Elder Health
Maryland HMO. Three MCOs exited from the market in 2001, affecting nearly 90 percent of
current M+C enrollees. Both Kaiser and Elder Health Maryland HMOs have closed enrollment
to new enrollees for 2001 in the Baltimore market. As a result, Medicare beneficiaries in
Baltimore not already enrolled in a M+C contract do not have a M+C option (HCFA 2001).
C. BOSTON, MASSACHUSETTS
1.
Medicare+Choice Enrollment and Availability
The Boston M+C market, made up of six counties (Bristol, Essex, Middlesex, Norfolk,
Plymouth, and Suffolk) has been relatively stable over the past several years (see Figure III.3).
Pilgrim Healthcare did not renew its contract for 1998, and Aetna U.S. Healthcare did not renew
its contract for 1999. The number of M+C contracts fell from seven in December 1997 to six in
June 1999 and remained at six in March 2000. In both 1999 and 2000, beneficiaries in Norfolk
23
FIGURE III.3
BOSTON MSA MARKET PROFILE
M+C Enrollment and Availability
Number of M+C
contracts
Percent of
beneficiaries
with choice of:
Two – four
Contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of M+C
enrollees
(thousands)
M+C pen. rate
Dec.
1997
7
June
1998
7
June
1999
6
March
2000
6
0%
0%
0%
0%
100%
100%
100%
100%
46.0%
46.1%
48.5%
51.4%
668.0
668.0
669.6
667.9
129.1
143.5
159.7
157.3
19.3%
21.5%
23.9%
CAHPS Measures
Percentage of Medicare
1998 1999
DiffMCO enrollees
erence
with overall health
88.2
85.0
-3.2a
plan rating of 8 or
more
who said doctor
96.7
96.2
-0.5
usually or always
listens carefully
who had no problems
91.1
87.9
-3.2
accessing a specialist
who said customer
91.1
91.2
0.1
service was usually or
always helpful
57.5
57.2
-0.3
who received a flu
shot from their health
plan last winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
23.5%
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees affected
by pullouts
1999
1
2000
0
2001
2
11,252
0
5,809
7.8
0
3.7
$1-$999
100%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
Benefits in Basic Package1
Percent of contracts
1999
2000
offering coverage for:
Prescription drugs
100
80
Vision
100
100
Dental Exams
100
80
Physical Exams
100
100
Percent of contracts with
100
80
zero premium
Average premium
0
5
1
Benefit information available for five M+C contracts
in both years.
$1-$999
100%
24
FIGURE III.3
BOSTON MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
1.2%
1999
1.5%
HEDIS Measures
2000
3.1%
41%
34%
43%
59%
66%
57%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening in
the past two yearsb
Eye exam in the past year
for diabeticsc
a
18%
13%
3%
82%
87%
97%
1998
7
1999
6
5
4
-0.25
-0.01
1.03
0.83
1.29
-0.03
-0.03
1.02
0.65
1.11
48.45
43.88
1999
95.2
94.5
83.0
83.2
67.6
72.8
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
25
County had access to six M+C contracts. Beneficiaries living in the other counties, however, had
access only to five. Fifteen percent of beneficiaries in the market live in Norfolk County.
M+C enrollment grew by nearly 25 percent from December 1997 to June 1999, increasing
from 129,069 to 159,739. Given that the number of Medicare beneficiaries remained stable, the
M+C penetration rate increased from 19.3 to 23.9 percent. Enrollment fell slightly from June
1999 to March 2000, by about 2,400 enrollees.
Two MCOs have dominated the Boston market over the past few years: Tufts Health Plan
and Harvard Pilgrim.
These two MCOs accounted for 80 percent of total M+C market
enrollment in December 1997, 85 percent in June 1999, and 83 percent in March 2000. Tufts
Health Plan had more enrollees than Harvard Pilgrim in each of the three years, and its
enrollment has steadily increased while Harvard Pilgrim’s enrollment increased in 1998 and
1999 before falling in 2000. The other three MCOs had market shares between 3 and 8 percent
each.
Tufts Health Plan and Harvard Pilgrim have had financial difficulties in the past few years,
but appear to be on more solid footing currently.
In January 2000, Massachusetts placed
Harvard Pilgrim in receivership after it had lost $227 million in 1999. Tufts Health Plan lost $42
million in 1999. In 2000, however, the financial condition of both MCOs improved. Harvard
Pilgrim lost $9.7 million, a dramatic improvement from 1999, and Tufts Health Plan had a net
gain of $54 million (American HealthLine, March 2, 2001).
2.
Benefit Trends (Basic Package Only)
Benefits for M+C enrollees in the Boston market were reduced slightly from 1999 to 2000.
In 1999, no MCO charged a premium while, in 2000, Blue Cross/Blue Shield charged a premium
of $25; the other four MCOs with benefit data available did not charge a premium. Blue
26
Cross/Blue Shield also dropped coverage for dental examinations in 2000 even though the other
four contracts continued to offer the dental benefit as they had in 1999.
All M+C enrollees had a prescription drug benefit in 1999 but faced annual caps of less than
$1,000. Limits ranged from $300 for United Healthcare to $800 for Harvard Pilgrim. Annual
limits did not vary by county within the market in 1999 or 2000. In 2000, four of the five MCOs
covered prescription drugs and kept the same annual limit. United Healthcare dropped drug
coverage in 2000.
3.
Trends in Access and Quality
a.
CAHPS Measures
Health plans scored slightly lower on four of the five CAHPS measures in 1999 than in
1998. Two measures decreased by 3.2 percentage points: overall health plan rating (from 88.2 to
85 percent) and enrollees who had no problems seeing a specialist (91.1 to 87.9 percent). The
change in the overall health plan rating was statistically significant, while the change in the
measure of access to a specialist was not (p<0.05).
b. HEDIS Measures
MCOs in the Boston market are performing well on these measures (see Figure III.3). In
1998 and 1999, 95 percent of enrollees in the market had at least one ambulatory visit. More
than 80 percent of female enrollees had a breast cancer screening during the 1997-98 and 199899 periods. Sixty-eight percent of diabetic enrollees had an eye exam in 1998. That figure rose
to 73 percent in 1999.
4.
Disenrollment Rates
In 1998 and 1999, the quarterly M+C disenrollment rates for the Boston market were among
the lowest of the case study markets at 1.2 percent and 1.5 percent. In 2000, however, this rate
27
doubled to 3.1 percent. The percentage of disenrollees joining another MCO increased from 59
percent to 66 percent from 1998 to 1999, and then declined to 57 percent in 2000. The rapid
disenrollment rate decreased from 18 percent in 1998 to 13 percent in 1999, and then fell further
to 3 percent in 2000.
5.
Financial Performance
Financial performance was mixed in the market. On the one hand, the average operating
profit margin increased from -0.25 in 1998 to -0.03 in 1999, which indicates that MCOs were
losing less money in 1999 than in 1998. On the other hand, the current ratio decreased from 0.83
in 1998 to 0.65 in 1999, which may indicate that MCOs could have difficulty meeting current
financial obligations. The current ratio measures a company’s ability to cover debt from shortterm assets.
6.
Outlook for 2001
MCO pullouts for 2001 in the Boston market are limited. Two MCOs reduced their service
area: Harvard Pilgrim (which withdrew from Bristol and Plymouth counties) and Fallon
Community Health Plan (which withdrew from Essex and Suffolk counties). The pullouts
affected 5,809 enrollees living in these four counties. These two MCOs continue to serve other
counties in the market, however. As a result, the Boston market still has six M+C contracts in
2001.
D. CINCINNATI, OHIO
1.
Medicare+Choice Enrollment and Availability
Cincinnati has had some growth in its M+C market over the past few years (see Figure III.4).
In December 1997, six MCOs served part of the area, and, in 1998, two new MCOs entered the
market, bringing the total number of MCOs to eight. In 1999, however, the contract held by
28
FIGURE III.4
CINCINNATI MSA MARKET PROFILE
M+C Enrollment and Availability
CAHPS Measures
Number of M+C
contracts
Percent of
beneficiaries
with choice of:
Zero contracts
Dec.
1997
6
June
1998
8
June
1999
7
March
2000
7
5.5%
3.8%
5.5%
5.6%
One contract
2.4%
4.1%
0%
0%
Two – four
contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of M+C
enrollees
(thousands)
M+C pen. rate
24.3%
0%
2.4%
27.5%
67.8%
92.1%
92.0%
66.9%
32.0%
28.0%
25.4%
29.1%
229.1
230.0
230.3
230.2
35.8
44.6
53.4
51.9
15.6%
19.4%
23.2%
22.6%
Percentage of Medicare
1998 1999
DiffMCO enrollees
erence
81.8
80.3
-1.5
With overall health
plan rating of 8 or
more
Who said doctor
96.2
94.4
-1.8a
usually or always
listens carefully
Who had no problems
85.1
83.1
-2.1
accessing a specialist
85.5
85.4
-0.1
Who said customer
service was usually or
always helpful
Who received a flu
60.0
61.1
1.1
shot from their health
plan last winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
$1,000
17%
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees affected
by pullouts
1999
2
2000
0
2001
4
2
0
22,033
0
0
43.2
$1-$999
83%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
Benefits in Basic Package
Percent of contracts
19991
2000
offering coverage for:
Prescription drugs
100.0
85.7
Vision
100.0
100.0
Dental exams
83.3
40.02
Physical exams
100.0
100.0
Percent of contracts with
100.0
42.9
zero premium
Average premium
0
22.57
1
Benefit information available for six contracts.
2
Dental benefit information available for six contracts
(available for seven contracts for all other measures).
$1-$999
100%
29
FIGURE III.4
CINCINNATI MSA MARKET PROFILE, CONTINUED
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
2.1%
1999
3.7%
2000
6.4%
HEDIS Measures
42%
32%
47%
58%
68%
53%
26%
33%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
67%
92.1
91.8
70.9
68.5
42.7
51.6
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
94%
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1999
6%
a
74%
1998
1998
8
1999
7
7
4
0.03
0.04
0.98
0.75
1.46
0.09
0.00
1.02
0.17
0.61
46.30
60.15
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
30
Choice Care Health Plans was consolidated into Humana’s contract, and the number of MCOs
fell to seven. As of March 2000, seven MCOs served the market.
The Cincinnati market spans three states: Kentucky, Ohio, and Indiana. In particular, six
counties in Kentucky (Boone, Campbell, Gallatin, Grant, Pendleton, and Kenton), four counties
in Ohio (Brown, Clermont, Hamilton, and Warren), and two counties in Indiana (Dearborn and
Ohio) make up the Cincinnati market. About 5 percent of the beneficiaries in the area did not
have access to an M+C contract from December 1997 through March 2000. About two-thirds of
the beneficiaries living in the Cincinnati area had access to five or more M+C contracts in both
December 1997 and March 2000.
The Cincinnati market is not heavily concentrated, as enrollment is spread fairly evenly
across the MCOs. This trend did not change dramatically over the time period we studied. In
December 1997, four of the six MCOs had market shares between 13 and 32 percent. In March
2000, five of the seven MCOs had market shares between 11 and 29 percent. Two contracts—
Anthem Health Plans of Kentucky and Community Health Plan of Ohio—served counties in the
Cincinnati market in March 2000 but had few enrollees—(938 and 22 enrollees, respectively).
M+C enrollment increased in the Cincinnati market between 1997 and 1999. During this
period, enrollment increased by nearly 50 percent (35,809 to 53,356). Enrollment then declined
slightly, falling by 1,433 from June 1999 to March 2000. Pacificare lost more than the overall
decrease, as its enrollment fell by 7,932 (13,547 to 5,615) during this period.
2.
Benefit Trends (Basic Package Only)
Benefits were relatively similar across MCOs in 1999 but became more diverse in 2000, as
some MCOs began charging a premium or reducing annual limits on prescription drug coverage.
In 1999, all MCOs covered prescription drugs in their basic package. Among MCOs reporting
data on dental benefits (six in 1999, five in 2000), one did not cover dental examinations in 1999
31
and three did not cover the examinations in 2000. None of the MCOs that reported benefits in
1999 charged a premium for the basic package.
However, in 2000, three of the seven MCOs charged a premium, ranging from $10 to $65.
One MCO, Aetna U.S. Healthcare, dropped drug coverage in 2000. The other MCOs reporting
drug coverage in 1999 lowered their annual caps slightly. In 1999, annual caps in basic packages
ranged from $700 to $1,000; in 2000, they ranged from $500 to $800.
3.
Trends in Access and Quality
a.
CAHPS Measures
In the Cincinnati market, MCOs’ scores on four of the five CAHPS measures declined
slightly in 1999, as compared with 1998 (see Figure III.4).
The largest decrease, at 2.1
percentage points, occurred in the measure of problems in gaining access to a specialist. This
decrease was not statistically significant, however (p<0.05). In 1998, 85.1 percent of enrollees
reported no problems in gaining access to a specialist. This percentage dropped to 83 percent in
1999. The second largest decrease, at 1.8 percentage points, was in enrollees’ rating of the
doctor’s listening skills. This decrease was statistically significant. In 1998, 96.2 percent of
enrollees reported that their doctor usually or always listens carefully. In 1999, this percentage
dropped to 94.4 percent.
b. HEDIS Measures
In 1998 and 1999, more than 90 percent of enrollees had at least one ambulatory visit. And
close to 70 percent of female enrollees had a breast cancer screening over both the 1997 to 1998
and 1998 to 1999 periods. However, only 43 percent of diabetic enrollees had an eye exam in
1998, and only 52 percent had an eye exam in 1999. Cincinnati was one of the four lowest
performing case study markets in this dimension.
32
4.
Disenrollment Rates
In the Cincinnati market, the quarterly M+C disenrollment rate increased dramatically from
1998 to 2000. In 1998, this rate was 2.1 percent, while in 1999, this rate was 3.7 percent. By
2000, the quarterly M+C disenrollment rate increased to 6.4 percent.
For 2000, this
disenrollment rate was the second highest (behind Tampa) among the case study markets. A
larger percentage of disenrollees -- 68 percent versus 58 percent -- joined another MCO in 1999
than in 1998. In 2000, this rate decreased to 53 percent. The rapid disenrollment rate increased
from 26 percent in 1998 to 33 percent in 1999, and then declined to 6 percent in 2000.
5.
Financial Performance
Trends in the financial performance of MCOs serving the market were mixed (see Figure
III.4). The average operating profit margin increased from 0.03 to 0.09 during this period.
However, the overall profit margin decreased from 0.04 to 0.00. Liquidity could be a problem in
the market. The average current ratio fell dramatically, from 0.75 to 0.17; such a low current
ratio suggests that MCOs in the market might have considerable difficulty meeting current debt
obligations. In addition, the average ratio of cash and long-term bonds to current liabilities,
another ratio that measures liquidity, decreased from 1.46 to 0.61. The average number of days
in unpaid claims increased from 46 days to 60 days.
6.
Outlook for 2001
M+C plan pullouts for 2001 affected more than 40 percent of all enrollees in the market.
Three of the seven MCOs exited from the market completely: Aetna, Humana, and Pacificare. A
fourth, Community Health Plan of Ohio, withdrew from three of the four counties it had served.
In 2001, the Cincinnati area has four M+C contracts, and one of those serves only Hamilton
County, Ohio. One M+C contract, held by Community Insurance Company/Anthem, is closed to
33
beneficiaries living in Brown County.
Beneficiaries living in other counties served by
Community Insurance Company/Anthem can still join this contract, however (HCFA 2001).
E. CLEVELAND, OHIO
1.
Medicare+Choice Enrollment and Availability
Within the Cleveland market, made up of six Ohio counties (Ashtabula, Cuyahoga, Geauga,
Lake, Lorain, and Medina), availability varies by county, and no county is served by all the
contracts in the market. The number of M+C contracts in the market remained at 11 from
December 1997 through June 1999 and then dropped to 10 in March 2000 (see Figure III.5).
Ashtabula County had one M+C contract in December 1997 and two in June 1998 and 1999
but none as of March 2000 because of a contract nonrenewal and a service area reduction.
Ashtabula is one of the smaller counties in the market, accounting for 5 percent of the market’s
beneficiaries as of March 2000. On the other hand, two-thirds of the Medicare population in the
market area lived in Cuyahoga County (where the city of Cleveland is located), as of March
2000. Not surprisingly, then, only Cuyahoga County has had more than nine contracts during the
past few years. The other four counties (not including Ashtabula) have had between four and
eight contracts each.
Two contracts reduced their service area in 1999, affecting Lake and Lorain counties. In
2000, Cigna did not renew its contract, and Qualchoice Health Plan reduced its service area in
certain counties. Because no contract entered any county in the market in either 1999 or 2000,
three counties lost two contracts in 2000 (Ashtabula, Geauga, and Lorain) and two lost one
contract (Cuyahoga and Lake). The 1999 and 2000 pullouts affected about 4,000 enrollees (5
percent).
The M+C market in Cleveland is not heavily concentrated. The largest MCO, Kaiser, had a
market share of 31 percent in December 1997 and 28 percent in March 2000. During these
34
FIGURE III.5
CLEVELAND MSA MARKET PROFILE
M+C Enrollment and Availability
CAHPS Measures
Dec.
1997
11
June
1998
11
June
1999
11
March
2000
10
0%
3.8%
5.5%
5.6%
One contract
4.8%
4.1%
0%
0%
Two – four
contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of M+C
enrollees
(thousands)
M+C pen. rate
10.8%
0%
2.4%
27.5%
95.2%
92.1%
92.1%
66.9%
31.2%
27.8%
26.2%
27.7%
366.6
366.2
365.3
363.4
65.4
75.9
84.8
83.3
17.8%
20.7%
23.2%
22.9%
1999
2
2000
2
2001
3
3,943
4,036
29,807
5.2
4.8
35.9
Number of M+C
contracts
Percent of
beneficiaries
with choice of:
Zero contracts
Percentage of Medicare
1998 1999
DiffMCO enrollees
erence
With overall health
81.2
76.7
-4.5a
plan rating of 8 or
more
94.2
94.3
0.1
Who said doctor
usually or always
listens carefully
Who had no problems
82.4
80.8
-1.6
accessing a specialist
84.4
80.8
-3.6
Who said customer
service was usually or
always helpful
Who received a flu
62.2
62.0
-0.2
shot from their health
plan last winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription Drug Caps in Basic
Package, 1999
$1,500 $2,000
22%
$1-$999
78%
Market Stability
Number of contracts with
a pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees
affected by pullouts
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
$1,000
14%
Benefits in Basic Package
Percent of contracts
19991
2000
offering coverage for:
Prescription drugs
100.0
88.9
Vision
100.0
77.8
Dental exams
55.6
50.02
Physical exams
100.0
100.0
Percent of contracts with
100.0
77.8
zero premium
Average premium
0
6.11
1
Benefit information available for nine contracts.
2
Dental information available for eight contracts
(available for nine contracts for all other measures).
$1-$999
86%
35
FIGURE III.5
CLEVELAND MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
3.1%
1999
1.9%
HEDIS Measures
2000
4.1%
35%
41%
29%
65%
59%
71%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past year
for diabeticsc
a
17%
19%
7%
83%
81%
93%
1998
11
1999
11
9
7
-0.01
-0.01
1.03
0.53
0.72
0.00
0.00
1.00
1.10
1.18
39.46
39.37
1999
85.2
90.3
75.8
75.3
59.4
62.8
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
36
periods, another five MCOs had market shares between 8 percent and 22 percent. The other four
MCOs claimed small market shares–none had a share greater than 3 percent during this period.
M+C enrollment increased from December 1997 to June 1999 by about 30 percent, or nearly
20,000 enrollees. The enrollment increase, combined with a decrease in the number of Medicare
beneficiaries, meant that the M+C penetration rate also increased, from 17.8 to 23.2 percent.
From June 1999 to March 2000, however, enrollment fell slightly, by about 1,500 enrollees.
2.
Benefit Trends (Basic Package Only)
Most MCOs operating in the market maintained the same premiums and basic benefits (for
example, drug coverage) from 1999 to 2000. In 1999, the nine MCOs reporting data all offered a
zero premium basic package with coverage for prescription drugs, vision care, and physical
examinations. In 1999, five MCOs covered preventive dental care. In 2000, Aetna dropped drug
coverage and charged a $10 premium, and Summacare retained drug coverage but charged a $45
premium. The other MCOs offered a drug benefit without charging a premium. Four of the eight
MCOs reporting data on dental benefits covered dental care in 2000.
Except for Kaiser, however, all MCOs that offered a drug benefit in 1999 and 2000 reduced
their annual prescription drug caps. In 1999, MCOs imposed annual caps from $600 to $2,000.
By contrast, in 2000, annual caps ranged from $300 to $1,000, and only one contract had a limit
of $1,000.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the Cleveland market scored lower in 1999 than in 1998 on four of the five
performance measures. On two measures, overall health plan rating and customer service rating,
the scores fell by over 3 percentage points. The change in health plan rating was statistically
37
significant, while the change in customer service rating was not (p<0.05). In 1998, 81.2 percent
gave their health plan a rating of 8 or more (on a scale of 1 to 10), and, in 1999, this figure fell to
76.7 percent. As for customer service, 84.4 percent of enrollees stated in 1998 that customer
service was usually or always helpful compared with 80.8 percent in 1999.
b. HEDIS Measures
In 1998, 85 percent of enrollees had at least one ambulatory visit. That figure increased to
90 percent in 1999. About 75 percent of female enrollees age 65 to 69 had a breast cancer
screening during both the 1997-98 and 1998-99 periods (see Figure III.5). And close to 60
percent of diabetic enrollees had an eye exam in both 1998 and 1999.
4.
Disenrollment Rates
In the Cleveland market, the quarterly M+C disenrollment rate dropped from 3.1 percent to
1.9 percent from 1998 to 1999 (see Figure III.5). However, this rate increased to 4.1 percent in
2000. In 1998, 65 percent of disenrollees joined another MCO. This percentage dropped
slightly in 1999, to 59 percent, and then increased to 71 percent in 2000. Rapid disenrollment
rates remained about the same in 1998 and 1999, at 17 and 19 percent, respectively, but this rate
dropped to 7 percent in 2000.
5.
Financial Performance
MCOs in the Cleveland market appeared to break even in 1998 and 1999. In 1998, the
average operating profit margin was -0.01, and the average overall profit margin was -0.01. In
1999, these figures were both 0.0. The average current ratio did change dramatically, increasing
from 0.53 in 1998 to 1.1 in 1999. In addition, the average ratio of cash and long term bonds to
current liabilities also increased from 0.72 to 1.18.
38
6.
Outlook for 2001
Two MCOs, Aetna and Prudential, withdrew completely from the Cleveland market in 2001,
and another, Summacare, exited from Cuyahoga County. As a result, 29,807 enrollees, or about
36 percent of the market’s enrollees, needed to select another MCO or return to fee-for-service
Medicare. In the Cleveland market, only Cuyahoga County was served by nine M+C contracts
in 2000, and it is losing three of these contracts. Two contracts in the market are not accepting
new enrollees. Kaiser Foundation Health Plan of Ohio has closed enrollment in all counties it
serves in the Cleveland market, while QualChoice Health Plan is closed to beneficiaries living in
Cuyahoga County (HCFA 2001).
F. HOUSTON, TEXAS
1.
Medicare+Choice Enrollment and Availability
In the Houston market, made up of six counties (Chambers, Fort Bend, Harris, Liberty,
Montgomery, and Waller), more than 96 percent of beneficiaries had access to five or more M+C
contracts from December 1997 to March 2000 (see Figure III.6). Availability varies somewhat
by county of residence. For example, in March 2000, four contracts served Waller County, five
served Liberty County, and seven served Harris and Montgomery counties.
Ten contracts served the market from December 1997 to June 1998. The number dropped to
eight in June 1999 and seven in March 2000. Two MCOs, Aetna and PCA Health Plans of
Texas, withdrew in 1999. Another two MCOs reduced their service area in 1999 but continued
to serve other counties in the market. In total, the 1999 pullouts affected about 8,000 enrollees
(10 percent). In 2000, one MCO did not renew its contract, and another had a service area
reduction. The 2000 pullouts affected less than 800 (1 percent) enrollees.
M+C enrollment continually increased from 1997 to 2000 in the Houston market, growing by
16 percent, or from 76,164 to 88,126 enrollees. During this same period, the number of Medicare
39
FIGURE III.6
HOUSTON MSA MARKET PROFILE
M+C Enrollment and Availability
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
Two – four
contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
Dec.
1997
10
June
1998
10
June
1999
8
CAHPS Measures
Percentage of Medicare
MCO enrollees
With overall health
plan rating of 8 or more
Who said doctor
usually or always
listens carefully
Who had no problems
accessing a specialist
Who said customer
service was usually or
always helpful
Who received a flu shot
from their health plan
last winter
March
2000
7
2.7%
0%
3.6%
0.9%
97.3%
100%
96.4%
99.1%
39.4%
40.4%
47.1%
50.2%
329.0
332.8
340.5
345.3
76.2
80.8
84.9
88.1
23.1%
24.3%
24.9%
25.5%
2000
2
2001
6
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees
affected by pullouts
8,286
779
74,848
10.3
0.9
84.4
1999
79.4
78.8
Difference
-0.6
92.4
91.5
-0.9
75.6
75.6
0.0
78.7
81.4
2.7
56.9
55.9
-1.0
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
$1,501 $2,000
42%
Market Stability
1999
4
1998
Greater than
$2,000
29%
$1,000 $1,500
29%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
Benefits in Basic Package:
Percent of contracts
1999
2000
offering coverage for
Prescription drugs
100.0
100.0
Vision
100.0
85.7
Dental exams
60.01
20.0
Physical exams
100.0
100.0
Percent of contracts with
100.0
100.0
zero premium
Average premium
0
0
1
In 1999 and 2000, Dental benefit information available
for six contracts (available for seven contracts for other
measures in both years).
$1,501 $2,000
29%
$1 - $999
14%
$1,000 $1,500
57%
40
FIGURE III.6
HOUSTON MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
3.7%
1999
3.7%
HEDIS Measures, 1998
2000
3.6%
38%
30%
27%
62%
70%
73%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
24%
18%
5%
76%
82%
95%
1998
10
1999
8
6
3
-0.02
-0.01
1.03
0.88
1.13
-0.07
-0.05
1.07
0.83
0.94
43.13
37.05
1999
65.2
74.4
59.0
63.9
45.4
41.2
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
41
beneficiaries increased by only 5 percent. Thus, the M+C penetration rate increased slightly,
from 23.1 percent in December 1997 to 25.5 percent in March 2000.
The market is heavily concentrated among the three contracts held by Aetna (formerly NYL
Care’s contract), Humana, and Pacificare. In December 1997, the three contracts accounted for
about 75 percent of enrollment and, in March 2000, for 84 percent. Over the past three years,
Aetna and Humana recorded enrollment increases of about 50 percent and 70 percent,
respectively, while Pacificare’s fell by 17 percent.
2.
Benefit Trends (Basic Package Only)
All MCOs serving the Houston market for which benefit data were available in 1999 and
2000 offered a zero premium package along with prescription drug coverage and coverage for
physical examinations. All MCOs offered vision coverage in 1999, and all except Prudential
covered vision care in 2000.
In both 1999 and 2000, MCOs offered fairly generous prescription drug coverage as
measured by annual caps, although they reduced coverage in 2000. In 1999, annual caps on drug
coverage ranged from $1,400 to $2,400, with most MCOs imposing annual limits of between
$1,500 and $2,000. In 2000, the limits ranged from $750 to $1,600. Prudential had one of the
larger decreases, lowering the cap from $2,100 to $750. Given, however, that Prudential had a
market share of only 8 percent as of March 2000, the reduction affected a small proportion of
enrollees.
3.
Trends in Access and Quality
a.
CAHPS Measures
In the Houston market, MCOs’ scores on three of the five CAHPS measures decreased from
1998 to 1999, but by 1 percentage point or less. None of these changes was statistically
42
significant (p<0.05). The percentage of individuals who had no problem in gaining access to a
specialist remained constant at 75.6 percent, and enrollees’ rating of customer service increased.
In 1998, 78.7 percent of enrollees stated that customer service was usually or always helpful, and
81.4 percent made the same claim in 1999.
b. HEDIS Measures
Houston was one of the poorest performing case study markets in the dimensions measured
by the HEDIS indicators. In 1998, a lower percentage of enrollees —65 percent— had at least
one ambulatory visit in 1998 in Houston than in any of the other case study markets for which
we calculated HEDIS measures. And while that figure increased to 74 percent in 1999, it
remained the lowest across the case study markets. Fifty-nine percent of female enrollees aged
65 to 69 had a breast cancer screening in 1997 or 1998, and 64 percent did so over the 1998 to
1999 period. Those reported percentages for breast cancer screening were lower than for any
other case study market in both 1998 and 1999. Forty-five percent of diabetic enrollees received
an eye exam in 1998. This figure fell to 41 percent in 1999. Houston was one of only four case
study markets where this proportion fell below 50 percent in either 1998 or 1999.
4.
Disenrollment Rates
The quarterly M+C disenrollment rates for the Minneapolis market, from 1998 to 2000,
were consistently among the lowest of the case study markets. In 1998, this rate was 1.1 percent,
and increased to 2.0 percent in 1999 before declining to 0.9 percent in 2000. Perhaps due in part
to the relatively low number of M+C contracts in the market (3 from 1997 to 2000), a smaller
percentage of disenrollees joined another MCO in Minneapolis than in the other case study
markets during the past three years. Just over one-quarter of disenrollees joined another MCO in
1998. This percentage fell to 19 percent in 1999 before increasing to 34 percent in 2000. Rapid
43
disenrollment rates in the market were relatively low, as 7 percent of beneficiaries who
disenrolled in the first three months of 1998 had been enrolled in their MCO for three months or
less. This percentage was 8 percent in 1999 and 5 percent in 2000.
5.
Financial Performance
MCOs in the Minneapolis market appeared to break even in 1998 and 1999. In 1998 and
1999, the average operating profit margins were -0.01. The average overall profit margin was
0.00 in 1998 and 0.01 in 1999. From 1998 to 1999, the average current ratio decreased slightly,
from .88 to .87, and the average ratio of cash and long term bonds to current liabilities also
declined, from 1.51 to 1.44.
6.
Outlook for 2001
Six of the seven contracts serving the market in 2000 withdrew completely in 2001. The
pullouts affected 84 percent of M+C enrollees in 2000. In 2001, only one MCO serves parts of
the Houston market, Pacificare. And that MCO has closed enrollment to new beneficiaries in all
of the counties it serves in the Houston market (HCFA 2001). As in Baltimore, the pullouts
effectively put an end to a competitive M+C market.
G. KANSAS CITY, MISSOURI
1.
Medicare+Choice Enrollment and Availability
The Kansas City market had six M+C contracts in March 2000, representing a decrease from
June 1999 (seven contracts) but an increase over December 1997 (five) (see Figure III.7). The
market encompasses seven counties in Missouri (Cass, Clay, Clinton, Jackson, Lafayette, Platte,
and Ray) and four counties in Kansas (Johnson, Leavenworth, Miami, and Wyandotte).
Availability varies from one part of the market to another; beneficiaries living in less-populated
counties have fewer options. Clinton and Lafayette counties had no M+C contracts between
44
FIGURE III.7
KANSAS CITY MSA MARKET PROFILE
M+C Enrollment and Availability
CAHPS Measures
Number of M+C
contracts
Percent of
beneficiaries
with choice of:
Zero contracts
Dec.
1997
5
June
1998
7
June
1999
7
March
2000
6
9.8%
3.8%
3.8%
3.8%
One contract
0%
1.3%
1.3%
5.9%
Two – four
Contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of M+C
enrollees
(thousands)
M+C pen. rate
4.3%
4.6%
4.6%
0%
85.9%
90.2%
90.2%
90.2%
50.7%
50.0%
43.2%
40.3%
228.2
229.0
231.1
231.6
42.7
47.4
56.1
58.6
18.7%
20.7%
24.3%
25.3%
Percentage of Medicare
1998 1999
DiffMCO enrollees:
erence
With overall health
81.6
79.3
-2.3a
plan rating of 8 or
more
94.9
94.6
-0.3
Who said doctor
usually or always
listens carefully
Who had no problems
87.0
86.8
-0.2
accessing a specialist
Who said customer
90.8
84.3
-6.5a
service was usually or
always helpful
65.9
62.6
-3.3a
Who received a flu
shot from their health
plan last winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription Drug Caps in
Basic Package, 1999
$1,000
17%
$1-$999
83%
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees affected
by pullouts
1999
0
2000
3
2001
1
0
3,451
1,788
0
6.2
3.0
Distribution of Annual Prescription Drug Caps in Basic
Package, 2000
$1-$999
100%
Benefits in Basic Package
1
Percent of contracts
1999
2000
offering coverage for:
Prescription drugs
85.7
100.0
Vision
85.7
100.0
Dental exams
28.6
25.02
Physical exams
100.0
100.0
Percent of contracts with
85.7
60.0
zero premium
Average premium
15.71
24
1
Benefit information available for seven contracts.
2
Dental benefit information available for four contracts
(available for five contracts for all other measures).
45
FIGURE III.7
KANSAS CITY MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
2.0%
1999
2.4%
HEDIS Measures
2000
2.3%
36%
26%
32%
64%
74%
68%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
9%
10%
5%
91%
90%
95%
1998
7
1999
7
3
4
-0.01
0.01
1.01
1.21
1.33
0.01
0.00
1.00
1.08
1.34
47.29
57.77
1999
91.2
84.2
75.5
76.8
65.2
64.3
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
46
December 1997 and March 2000. Miami, Leavenworth, and Ray counties had no contracts in
December 1997, two in June 1999 (with the exception of Ray which had only one in 1999), and
one in March 2000. In contrast, the remaining six counties, which account for 90 percent of the
Medicare beneficiaries in the market, each had six M+C contracts in March 2000.
No MCO serving the Kansas City market either reduced its service area or did not renew its
contract in 1999. In 2000, however, United HealthCare and Cigna both did not renew their
contracts, and Humana reduced its service area, pulling out of Leavenworth and Johnson
counties. The pullouts affected about 3,400 enrollees (6 percent of the market). Given that
neither United Healthcare nor Cigna had a market share higher than 2.6 percent in June 1999, the
companies’ decision to withdraw may have resulted from their inability to attract enrollees.
M+C enrollment has increased significantly over the past few years. From December 1997 to
June 1999, it grew by more than 30 percent (42,736 to 56,058); it continued to increase by
another 4.5 percent by March 2000 to 58,603. Because the number of beneficiaries in the market
did not increase at a corresponding rate, the M+C penetration rate increased from 18.7 percent in
December 1997 to 25.3 percent in March 2000.
Although the market share of the largest MCO, Humana, has declined during the past few
years, the market remains heavily concentrated. Three MCOs--Humana, Healthnet, and Good
Health HMO—had a combined market share of 85 percent from December 1997 to March 2000.
Healthnet’s market share increased from 20 to 32 percent during this period while Good Health
HMO’s fell from 16 to 12 percent.
2.
Benefit Trends (Basic Package Only)
In 1999, all MCOs in the Kansas City market except Total Health Care (which charged a
premium of $110) offered a zero premium basic benefit package. Six of the seven MCOs in the
market covered prescription drugs in their basic package. Only Good Health HMO did not cover
47
prescription drugs. All MCOs covered physical examinations, but only two offered dental
benefits. In 1999, most MCOs’ basic packages included an annual drug cap of less than $1,000.
In 2000, however, all MCOs capped their prescription drug benefit at less than $1,000. All
MCOs also covered vision care and physical examinations, and two MCOs, instead of one,
charged a premium for their basic benefit package.12
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the Kansas City market scored lower on all five CAHPS measures in 1999
than in 1998 (see Figure III.7). Declines in three measures —health plan rating, customer service
rating, and number receiving flu shots— were statistically significant (p<0.05). The largest
decrease occurred in the measure of customer service (6.5 percentage points). In 1998, 90.8
percent of enrollees said that customer service was usually or always helpful. By 1999, this
figure had fallen to 84.3 percent. The percentage of enrollees who received a flu shot declined
from 65.9 to 62.6 percent.
b. HEDIS Measures
More than 91 percent of M+C enrollees in the Kansas City market had at least one
ambulatory visit in 1998. That figure fell to 84 percent in 1999. About three of every four
female enrollees age 65 to 69 had a breast cancer screening over both the 1997-98 and 1998-99
periods. And close to 65 percent of diabetic enrollees had an eye exam in both 1998 and 1999.
12
In 2000, six MCOs served the Kansas City area, but Medicare Compare contained data on
only five of these contracts.
48
4.
Disenrollment Rates
In the Kansas City market, the quarterly M+C disenrollment rate was 2.0 percent in 1998,
2.4 percent in 1999, and 2.3 percent in 2000. The percentage of disenrollees who joined another
MCO increased from 64 percent in 1998 to 74 percent in 1999, and then declined to 68 percent
in 2000. Rapid disenrollment rates for 1998 and 1999 were 9 and 10 percent, respectively, and
then declined to 5 percent in 2000.
5.
Financial Performance
MCOs in the Kansas City market appeared to break even in 1998 and 1999. In 1998, the
average operating profit margin was -0.01 while the average overall profit margin was 0.01. In
1999, the average operating profit margin was 0.01 and the average overall profit margin was
0.00. The average current ratio was greater than 1 in both years, which means that current assets
exceeded current liabilities. The average ratio of cash and long-term bonds to current liabilities
remained constant.
6.
Outlook for 2001
The Kansas City area was spared the extensive pullouts that occurred in Baltimore and
Houston.
Because no MCO withdrew completely from the market in 2001, the same six
contracts continue to serve portions of the Kansas City market. Only one MCO reduced its
service area. Humana withdrew from Cass County, affecting 1,788 people, or 3 percent of all
enrollees. By contrast, 2000 pullouts affected 6 percent of M+C enrollees in the market.
H. LOS ANGELES, CALIFORNIA
1.
Medicare+Choice Enrollment and Availability
The Los Angeles market (which includes only one county, Los Angeles) has seen a 33
percent drop in the number of M+C contracts serving the market, but the area remains one of the
49
largest case study markets in terms of the number of available M+C contracts (see Figure III.8).
From December 1997 to June 1999, the number of M+C contracts in Los Angeles decreased
from 15 to 11 and then fell to 10 in March 2000. Three M+C contracts in Los Angeles were
eliminated due to consolidations in the HMO industry, and three MCOs did not renew their
contract (one each in 1998, 1999, and 2000). The consolidations that eliminated the three M+C
contracts were the merger of Foundation Health Plan and Health Net, the acquisition of FHP by
PacifiCare, and the acquisition of Care America by Blue Shield of California. In each case, the
MCOs held separate contracts before the consolidation but only one contract after the
consolidation.
The M+C contract nonrenewals in Los Angeles had a minimal effect on enrollees, affecting
less than 1 percent of total enrollees in 1999 and 2000. The MCO that did not renew its contract
for 1998 had no enrollees, and the MCO that did not renew its contract for 1999 had 1,806
enrollees (0.5 percent). Prudential did not renew its contract in 2000, affecting 478 enrollees (0.1
percent).
The Los Angeles market is one of the largest M+C markets in the United States accounting
for 6 percent of all M+C enrollees in the nation. as of March 2000. Enrollment increased by 2.5
percent from December 1997 to March 2000 while the number of Medicare beneficiaries
increased at a slightly lower rate (1.6 percent). The M+C penetration rate for the Los Angeles
market therefore increased slightly, from 35.8 percent in December 1997 to 36.1 percent in
March 2000.
Although 10 to 15 MCOs served the market during the past three years, Kaiser and
Pacificare had a combined market share of 72 percent in December 1999 and 71 percent in
March 2000. The only MCO making sizable gains in market share has been California
50
Physicians’ Services Corporation, whose share was only 0.3 percent in December 1997 but 11.6
percent in March 2000.
2.
Benefit Trends (Basic Package Only)
MCOs offered generous benefits in Los Angeles in 1999 and 2000. In both years, all MCOs
had a zero premium package that covered prescription drugs, vision care, and physical
examinations. All MCOs covered preventive dental care in 1999 while all but one offered the
benefit in 2000.
Los Angeles is one of the few case study markets in which several MCOs did not cap their
prescription drug benefit in either 1999 or 2000. In 1999, four MCOs, including the two with the
largest market share, offered an unlimited drug benefit. The other MCOs set annual caps in the
range of $1,500 to $4,500. In 2000, three MCOs had an unlimited drug benefit. Kaiser still did
not have an annual cap, but Pacificare imposed a $2,000 cap. Among the other MCOs, annual
caps ranged from $1,000 to $4,000.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs in the Los Angeles market had better scores on three of the five CAHPS measures in
1999 than in 1998 (see Figure III.8). The largest increase was in the percentage of enrollees who
received a flu shot—from 57.7 to 62.9 percent.
This change was statistically significant
(p<0.05). In two other areas—interactions with a primary care doctor and gaining access to a
specialist—the scores declined.
51
FIGURE III.8
LOS ANGELES MSA MARKET PROFILE
M+C Enrollment and Availability
Number of M+C
contracts
Percent of
beneficiaries with
choice of:
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of M+C
enrollees
(thousands)
M+C pen. rate
CAHPS Measures
Dec.
1997
15
June
1998
13
June
1999
11
March
2000
10
100%
100%
100%
100%
43.7%
41.9%
40.0%
38.3%
991.0
994.2
1,003.3
1,006.9
354.4
355.2
362.1
363.4
35.8%
35.7%
36.1%
36.1%
1999
1
2000
1
2001
1
1,806
478
11,432
0.5
0.1
3.1
Percentage of Medicare
1998 1999 DiffMCO enrollees:
erence
With overall health plan
78.4 79.0 0.6
rating of 8 or more
Who said doctor usually
92.8 92.6 -0.2
or always listens
carefully
Who had no problems
76.7 75.0 -1.7
accessing a specialist
81.9 82.7 0.8
Who said customer
service was usually or
always helpful
Who received a flu shot
57.7 62.9 5.2a
from their health plan last
Winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
$1,501 $2,000
Unlimited
27%
36%
Market Stability
Number of contracts with a
pullout (withdrawal or service
area reduction)
Number of enrollees in
previous June in contracts that
pulled out
Percent of enrollees affected
by pullouts
Greater than
$2,000
36%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
Benefits in Basic Package
Percent of contracts offering
19991 2000
coverage for:
Prescription drugs
100.0 100.0
Vision
100.0 100.0
Dental exams
100.0 87.52
Physical exams
100.0 100.0
Percent of contracts with zero 100.0 100.0
premium
Average premium
0
0
1
Benefit information available for ten contracts.
2
Dental benefit information available for seven contracts
(available for nine contracts for other measures).
Unlimited
30%
Greater than
$2,000
30%
52
$1,000
10%
$1,501 $2,000
30%
FIGURE III.8
LOS ANGELES MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
2.5%
1999
2.0%
HEDIS Measures
2000
2.6%
26%
27%
21%
74%
73%
79%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
43%
26%
11%
57%
74%
89%
1998
13
1999
11
9
8
0.01
0.01
0.99
1.08
1.28
0.00
0.01
0.99
0.96
1.09
33.13
35.03
1999
82.5
80.6
73.6
73.1
59.8
64.6
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
53
b.
HEDIS Measures
In 1998 and 1999 just over 80 percent of enrollees had at least one ambulatory visit. About
seventy-three percent of female enrollees age 65 to 69 had a breast cancer screening over the
1997-98 and 1998-99 periods. Sixty percent of diabetic enrollees had an eye exam in 1998 and
this figure rose to 65 percent in 1999.
4.
Disenrollment Rates
In the Los Angeles market, the quarterly M+C disenrollment rate decreased from 2.5 percent
in 1998 to 2.0 percent in 1999, and then increased to 2.6 percent in 2000 (see Figure III.8). The
percentage of disenrollees joining another MCO remained fairly constant, which could be due to
the high number of MCOs in the market, relative to other markets such as Albuquerque or
Minneapolis. In 1998 and 1999, about three of every four disenrollees joined another MCO. In
2000, almost 80 percent of disenrollees joined another MCO. The rapid disenrollment rate in the
market for 1998 was 43 percent, which is a much higher rate than any of the other case study
markets for that year. By 1999, this rate declined to 26 percent, and it fell further to 11 percent
in 2000.
5.
Financial Performance
MCOs in the Los Angeles market appeared to break even in 1998 and 1999. In 1998, the
average operating and overall profit margins were 0.01. In 1999, the average operating profit
margin was 0.00 and the average overall profit margin remained at 0.01. From 1998 to 1999, the
average current ratio decreased from 1.08 to .96, and the average ratio of cash and long-term
bonds to current liabilities also declined, from 1.28 to 1.09.
54
6. Outlook for 2001
Only Cigna left the Los Angeles market in 2001, affecting 11,432 enrollees. Nine MCOs
serve the market in 2001. As is the case in Kansas City, most MCOs have tended to remain in
Los Angeles over the past several years and continue to serve beneficiaries there in 2001.
I.
MIAMI, FLORIDA
1.
Medicare+Choice Enrollment and Availability
The Miami market, which consists of one county (Dade), is one of the few case study
markets in which the number of M+C contracts increased over the past three years (see Figure
III.9). In December 1997, the market had nine M+C contracts; by June 1999, this number
increased to 10 and, by March 2000, to 12. Four new MCOs entered the market: one in 1998,
two in 1999,13 and one in 2000. The number of M+C contracts did not increase from 1998 to
1999 because of a consolidation. In particular, two M+C contracts were consolidated when
Humana acquired PCA Health Plans of Florida. No MCO withdrew from the Miami area in 1999
or 2000.
M+C enrollment increased by 14 percent from December 1997 to March 2000 (124,548 to
142,362), with much of the increase occurring between December 1997 and June 1999
(enrollment grew by 10 percent). Because the number of Medicare beneficiaries increased by
only 2 percent from December 1997 to March 2000, the M+C penetration rate increased from
40.6 to 45.4 percent for that period. As of March 2000, nearly one out of every two beneficiaries
belonged to an M+C contract.
13
One MCO that entered the market in 1999, Preferred Medical Plan, Inc., (H1030) began
serving beneficiaries in Dade County in May 1999. This contract is not included in the number
of contracts for June 1999, however, because it was not in the June 1999 State/County/Plan
Penetration File.
55
FIGURE III.9
MIAMI MSA MARKET PROFILE
M+C Enrollment and Availability
Number of M+C
contracts
Percent of
beneficiaries
with choice of:
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of M+C
enrollees
(thousands)
M+C pen. rate
Dec.
1997
9
June
1998
10
CAHPS Measures
June
1999
10
100%
100%
100%
100%
32.8%
33.2%
33.2%
32.2%
306.6
124.5
40.6%
308.1
311.4
130.0
138.6
42.2%
44.5%
Percentage of Medicare
MCO enrollees:
With overall health
plan rating of 8 or
more
Who said doctor
usually or always
listens carefully
Who had no problems
accessing a specialist
Who said customer
service was usually or
always helpful
Who received a flu
shot from their health
plan last winter
March
2000
12
313.3
1999
83.8
82.2
Difference
-1.6
92.9
94.8
1.9
74.0
77.3
3.3
84.5
79.7
-4.8
51.5
51.4
-0.1
142.4
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
45.4%
Market Stability
Number of contracts with a
pullout (withdrawal or service
area reduction)
Number of enrollees in
previous June in contracts that
pulled out
Percent of enrollees affected
by pullouts
1998
1999
0
2000
0
2001
2
0
0
1,959
0
0
1.4
Unlimited
89%
Greater than
$2,000
11%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
$1,001 $1,500
Unlimited
22%
56%
Greater than
$2,000
22%
Benefits in Basic Package
Percent of contracts offering
19991 2000
coverage for
Prescription drugs
100.0 100.0
Vision
100.0
90.0
Dental exams
100.0 88.92
Physical exams
100.0 100.0
Percent of contracts with zero 100.0 100.0
premium
Average premium
0
0
1
Benefit information available for nine contracts.
2
Dental benefit information available for nine contracts
(available for ten contracts for other measures).
56
FIGURE III.9
MIAMI MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
3.5%
1999
5.0%
HEDIS Measures
2000
5.9%
31%
18%
17%
69%
82%
83%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
18%
19%
12%
82%
81%
88%
1998
10
1999
10
9
9
0.01
0.00
1.01
0.89
1.21
-0.01
0.00
1.01
0.94
1.15
55.70
57.60
1999
85.5
83.2
70.4
71.8
55.7
60.3
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
57
In spite of the high number of contracts, three MCOs have controlled well over half of the
market over the past few years. Health Options (which is a subsidiary of Blue Cross/Blue Shield
of Florida), Humana, and United Healthcare had a combined market share of around 65 percent
from December 1997 to March 2000. United Healthcare had the largest market share (32.2
percent as of March 2000), followed by Humana (20.4 percent), and Health Options (11.3
percent).
2.
Benefit Trends (Basic Package only)
In 1999 and 2000, MCOs in Miami offered the most generous benefits of the 16 case study
markets. They can offer such benefits because Miami has the highest payment rate of the 16
markets. The 2000 weighted payment rate for the market was 66 percent higher than the
USPCC.
All MCOs serving Miami in 1999 and 2000 offered a zero premium basic package that
included coverage for prescription drugs and physical examinations. All MCOs covered
preventive dental examinations and vision care in 1999; all MCOs except one offered the same
benefits in 2000.
Of the nine MCOs reporting information on drug caps, eight offered unlimited drug
coverage in 1999, and one capped its drug benefit at $2,400 per year. In 2000, five had unlimited
drug coverage, and the other four imposed caps ranging from $1,200 to $2,500.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the Miami market scored lower on three of the five CAHPS measures in
1999 compared with 1998 (see Figure III.9). None of these changes was statistically significant,
58
however (p<0.05). The largest decrease was in the measure of customer service (4.8 percentage
points), followed by the overall health plan rating (3.5 percentage points).
b. HEDIS Measures
Over 80 percent of enrollees had at least one ambulatory visit in both 1998 and 1999. Just
over 70 percent of female enrollees had a breast cancer screening over both the 1997-98 and
1998-99 periods. Fifty-six percent of diabetic enrollees had an eye exam in 1998. And this
figure rose to 60 percent in 1999.
4.
Disenrollment Rates
The quarterly M+C disenrollment rate increased in each of the past three years in the Miami
market. In 1998, this rate was 3.5 percent. By 1999, it had climbed to 5.0 percent, and by 2000,
to 5.9 percent. In addition, the percentage of disenrollees joining another MCO also increased,
which could be due to the entry of new MCOs into the market, thereby increasing choice for
beneficiaries.
In 1998, 69 percent of disenrollees joined another MCO. This percentage
increased to 82 percent in 1999, and 83 percent in 2000. The rapid disenrollment rate stayed
fairly constant from 1998 to 1999, going from 18 to 19 percent, before declining to 12 percent in
2000.
5.
Financial Performance
The average overall profit margin for MCOs in the market was 0.00 in 1998 and 1999, while
the average operating profit margin declined from 0.01 to -0.01. The average current ratio
increased slightly, from 0.89 to 0.94. However, the ratio of cash and long-term bonds to current
liabilities fell, from 1.21 to 1.15.
59
6.
Outlook for 2001
Two contracts withdrew from the Miami market in 2001. The departure of these two MCOs
may have more to do with their inability to attract enrollees than with other factors such as
increased costs. The two MCOs had a combined market share of less than 2 percent as of March
2000. Ten MCOs continue to serve the market in 2001. One MCO, Health Options, Inc./Blue
Cross Blue Shield of Florida, has closed enrollment to new beneficiaries (HCFA 2001).
J.
MINNEAPOLIS, MINNESOTA
1.
Medicare+Choice Enrollment and Availability
Over the past few years, only three or four MCOs have served the Minneapolis market (made
up of 11 counties in Minnesota and two in Wisconsin), and they have not been the same MCOs
(see Figure III.10). One new MCO, UCARE Minnesota, entered the market in 1998, and another
MCO, Blue Plus, did not renew its contract for 1999, affecting about 1,500 enrollees.
Beneficiaries who live in some parts of the market are more likely to have access to an M+C
contract than those living in other parts of the market. From December 1997 to March 2000, the
two counties in Wisconsin did not have any M+C contracts. In 1998, four of the eleven
Minnesota counties were served by two or fewer contracts and this increased to eight of the
eleven counties in 2000. However, 90 to 95 percent of the beneficiaries in the market lived in
counties served by at least three contracts over this same period. One MCO reduced its service
area in 1999 and 2000. In 1999, Medica, pulled out of three counties, affecting about 2,500
enrollees and, in 2000, it pulled out of another county, affecting 2,823 enrollees.
From December 1997 to March 2000, M+C enrollment decreased by 16 percent (from
56,176 to 47,271). Much of the decrease occurred between December 1997 and June 1999. The
M+C penetration rate fell from 17.8 percent in December 1997 to 14.7 percent in March 2000.
Among the 16 case study markets, Minneapolis has one of the lowest M+C penetration rates.
60
FIGURE III.10
MINNEAPOLIS MSA MARKET PROFILE
M+C Enrollment and Availability
Dec.
1997
3
June
1998
4
CAHPS Measures
June
1999
3
Percentage of Medicare
MCO enrollees:
With overall health
plan rating of 8 or
more
Who said doctor
usually or always
listens carefully
Who had no problems
accessing a specialist
Who said customer
service was usually or
always helpful
Who received a flu
shot from their health
plan last winter
March
2000
3
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
Zero contracts
3.4%
3.4%
3.4%
3.4%
One contract
6.8%
1.1%
1.1%
1.1%
Two – four
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
89.8%
95.6%
95.6%
95.5%
62.5%
61.3%
49.9%
37.3%
315.9
317.8
321.2
322.3
56.2
55.6
48.0
47.3
17.8%
17.5%
15.0%
14.7%
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees affected
by pullouts
1999
2
2000
1
2001
1
3,980
2,823
14,159
7.2
5.9
30.0
Benefits in Basic Package1
Percent of contracts
1999
2000
offering coverage for:
Prescription drugs
0
0
Vision
100
100
Dental exams
0
0
Physical exams
100
100
Percent of contracts with
0
0
zero premium
Average premium
65.32
69.57
1
Benefit information available for three contracts in
both years.
61
1998
1999
80.7
82.7
Difference
2.0
95.2
95.6
0.4
86.9
87.0
0.1
87.1
91.0
3.9
77.8
78.7
0.9
FIGURE III.10
MINNEAPOLIS MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
1.1%
1999
2.0%
HEDIS Measures
2000
0.9%
72%
81%
66%
28%
19%
34%
7%
8%
5%
93%
92%
95%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
b
1998
4
1999
3
2
2
-0.01
0.00
1.02
0.88
1.51
-0.01
0.01
1.01
0.87
1.44
28.56
3.57
1999
90.1
91.3
75.9
82.8
56.5
72.5
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001
a
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
.
62
UCARE’s entry in 1998 dramatically altered local market dynamics. UCARE’s market
share increased to 12.9 percent in June 1999 and to 32 percent in March 2000. Of the two MCOs
that served the market in December 1997, one recorded a slight increase in enrollment and the
other a large drop in enrollment. Group Health Plan’s market share increased from 35 percent in
December 1997 to 37 percent in March 2000, and Medica’s dropped from 63 to 30 percent; as a
result, Medica was no longer the largest Medicare MCO in the market. While Medica’s service
area reductions account for about 6,500 beneficiaries, the MCO lost about 20,000 enrollees
between June 1998 and March 2000. Beneficiaries appear to have switched in large numbers
from Medica to UCARE following Medica’s decision to withdraw from certain counties.
2.
Benefit Trends (Basic Package only)
In both 1999 and 2000, MCOs in Minneapolis offered very modest benefits in their basic
packages. All MCOs charged a premium for their basic package, and none covered prescription
drugs or preventive dental care. Medica charged $60.95 and $63.95, and Group Health Plan
charged $85 and $94.75 in 1999 and 2000, respectively. UCARE charged a premium of $50 in
both years. The high premiums, combined with the lack of drug coverage, may be a response to
the market area’s low payment rate (5 percent lower than the USPCC in 2000).
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the Minneapolis market scored higher on all five CAHPS measures in 1999
than in 1998 (see Figure III.10). None of these changes were statistically significant, however
(p<0.05). The largest increase was in the assessment of customer service, which increased by
3.9 percentage points. The overall health plan rating grew by 2 percentage points as 82.7 percent
of enrollees gave their health plan a rating of 8 or higher (with 10 the highest) in 1999. The
63
percentage of enrollees receiving a flu shot increased slightly, from 77.8 to 78.7 percent. A larger
percentage of individuals received the flu shot in both years in Minneapolis than in any other
case study market.
b. HEDIS Measures
About 90 percent of enrollees in the Minneapolis market had at least one ambulatory visit in
both 1998 and 1999. Three of every four female enrollees age 65 to 69 had a breast cancer
screening in 1997 or 1998. That figure rose to 83 percent over the 1998 to 1999 period. And
fifty-seven percent of diabetic enrollees had an eye exam in 1998. That figure rose to 73 percent
in 1999.
4.
Disenrollment Rates
The quarterly M+C disenrollment rates for the Minneapolis market, from 1998 to 2000,
were consistently among the lowest of the case study markets. In 1998, this rate was 1.1 percent,
and increased to 2.0 percent in 1999 before declining to 0.9 percent in 2000. Perhaps due in part
to the relatively low number of M+C contracts in the market (3 from 1997 to 2000), a smaller
percentage of disenrollees joined another MCO in Minneapolis than in the other case study
markets during the past three years. Just over one-quarter of disenrollees joined another MCO in
1998. This percentage fell to 19 percent in 1999 before increasing to 34 percent in 2000. Rapid
disenrollment rates in the market were relatively low, as 7 percent of beneficiaries who
disenrolled in the first three months of 1998 had been enrolled in their MCO for three months or
less. This percentage was 8 percent in 1999 and 5 percent in 2000.
5.
Financial Indicators
MCOs in the Minneapolis market appeared to break even in 1998 and 1999. In 1998 and
1999, the average operating profit margins were -0.01. The average overall profit margin was
64
0.00 in 1998 and 0.01 in 1999. From 1998 to 1999, the average current ratio decreased slightly,
from .88 to .87, and the average ratio of cash and long term bonds to current liabilities also
declined, from 1.51 to 1.44.
6.
Outlook for 2001
Medica did not renew its contract for 2001, affecting more than 14,000 beneficiaries in six
counties. As a result, only two M+C contracts serve the market in 2001.
K. NEW ORLEANS, LOUISIANA
1.
Medicare+Choice Enrollment and Availability
In the New Orleans market, made up of eight parishes (Jefferson, Orleans, Plaquemines, St.
Bernard, St. Charles, St. James, St. John Baptist, and St. Tammany), the number of M+C
contracts has stayed at six over the past few years (see Figure III.11). However, some MCOs
have left New Orleans and others have entered the market. Contract nonrenewals by Advantage
MCO in 1999 and United Healthcare in 2000 affected more than 6,000 enrollees in each year (15
percent in 1999, 14 percent in 2000). The contracts had each served all eight counties in the
market; however, Maxicare and HMO Louisiana entered some of these counties in 1999, slightly
offsetting the contract departures. Ochsner Health Plan reduced its service area in 2000 by
withdrawing from St. James County, affecting only 73 enrollees.
While availability varies somewhat, nearly all beneficiaries had access to five or more M+C
contracts from December 1997 to March 2000. Five of the eight counties had at least five
contracts from December 1997 to March 2000. Two others, Plaquemines and St. John Baptist,
had four or more contracts during this period, and St. James went from five contracts in
December 1997 to two in March 2000. The last three counties are the smallest in the market area
as measured by the number of Medicare beneficiaries.
65
FIGURE III.11
NEW ORLEANS MSA MARKET PROFILE
M+C Enrollment and Availability
Number of M+C
contracts
Percent of
beneficiaries
with choice of:
Two – four
Contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of M+C
enrollees
(thousands)
M+C pen. rate
CAHPS Measures (not available)
Dec.
1997
6
June
1998
6
June
1999
6
March
2000
6
0%
0%
3.3%
5.7%
100%
100%
96.7%
94.3%
45.5%
45.2%
47.2%
48.5%
181.9
182.2
182.2
182.0
41.5
44.3
46.8
47.0
22.8%
24.3%
25.7%
25.8%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
$1,000
50%
$1-$999
50%
Market Stability
Number of contracts with
a pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees
affected by pullouts
1999
1
2000
2
2001
3
6,617
6,560
4,399
15.0
13.9
9.1
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
$1,001 $1,500
50%
Benefits in Basic Package1
Percent of contracts
1999
2000
offering coverage for
Prescription drugs
100.0 100.0
Vision
100.0 100.0
Dental exams
16.7
0.0
Physical exams
100.0 100.0
Percent of contracts with
100.0
83.3
zero premium
Average premium
0
4.83
1
Benefit information available for six contracts in both
years.
$1 - $999
33%
$1,000
17%
66
M+C enrollment increased in the New Orleans market by 13 percent (41,458 to 46,975) over
the past three years while the number of beneficiaries remained at about 182,000. Thus, the M+C
penetration rate increased from 22.8 percent in December 1997 to 25.8 percent in March 2000.
Ochsner Health Plan has been the dominant MCO during the past several years. In
December 1997, it had a market share of 45.5 percent. By March 2000, however, its market
share had risen to 48.5 percent. Other large MCOs included SMA Health Plan (19.8 percent
market share as of March 2000) and Gulf South Health Plans (14.7 percent market share as of
March 2000).
2.
Benefit Trends (Basic Package only)
MCOs offered a fairly generous benefit package in both 1999 and 2000 in the New Orleans
market. In 1999, all six MCOs offered a zero premium package that covered prescription drugs,
vision care, and physical examinations. In 2000, all six MCOs except Aetna continued to offer
the same benefits. Aetna covered prescription drugs and vision care but charged a premium of
$29 in 2000. Only United Healthcare covered preventive dental examinations in 1999. In 2000,
no MCO covered dental examinations.
In 2000, two MCOs modestly reduced their prescription drug caps from 1999 levels, two did
not change their caps, and one increased its cap (from $1,000 to $1,200). Caps ranged from
$1,000 to $1,400 in 1999 and from $500 to $1,400 in 2000. Aetna, which charged a premium in
2000 but not in 1999, lowered its cap from $1,000 to $500. Ochsner Health Plan offered the most
generous cap in the market—$1,400 in both years.
67
3.
Trends in Access and Quality
We did not calculate access and quality measures for New Orleans because that market was
not among the 69 markets in MPR’s M+C monitoring system.
4.
Disenrollment Rates
We did not calculate disenrollment rates for New Orleans because that market was not
among the 69 markets in MPR’s M+C monitoring system.
5.
Financial Performance
We did not calculate financial indicators for New Orleans because that market was not
among the 69 markets in MPR’s M+C monitoring system.
6.
Outlook for 2001
MCO departures in 2001 affected fewer M+C enrollees than the departures of either 1999 or
2000. Pullouts for 2001 affected about 4,400 enrollees. Aetna did not renew its contract,
affecting about 4,400 enrollees. Two other MCOs exited from one county each. However, in
December 2000, one Choices demonstration contract serving the market, Tenet Choices, Inc.,
was converted to a M+C contract. As a result, the New Orleans market has six M+C contracts in
2001.
68
L. NEW YORK, NEW YORK
1.
Medicare+Choice Enrollment and Availability
More MCOs have exited than entered the New York market, which consists of eight counties
(Bronx, Kings, New York, Putnam, Richmond, Rockland, Queens, and Westchester)14, in the
past few years (see Figure III.12). Due to these developments, the number of M+C contracts fell
from 13 in December 1997 to 10 in March 2000. Two new MCOs entered the market, one in
1998 (Prudential) and one in 1999 (Americhoice). Four MCOs did not renew their contract: two
for 1999 (Prudential and NYL Care) and two for 2000 (Vytra Healthcare and Wellcare of New
York). Four MCOs reduced their service areas: two in 1999 (Oxford and United Healthcare) and
two in 2000 (Cigna and Physicians Health Service). The 1999 pullouts had a greater impact than
the 2000 pullouts, affecting nearly 23,000 enrollees (11.3 percent). Nonetheless, the 2000
pullouts affected about 8,000 enrollees (4 percent).
M+C plans have not garnered much of the Medicare market in New York. Enrollment
increased by 17 percent from December 1997 to March 2000, but the M+C penetration rate
increased from only 15.6 to 18.2 percent. In other words, fewer than two in 10 beneficiaries
belonged to an M+C contract as of March 2000.
Since December 1997, four MCOs have controlled nearly 90 percent of the market: Aetna,
Empire Blue Cross/Blue Shield, HIP of Greater New York, and Oxford. Once the MCO with the
largest market share at 52.5 percent in December 1997, Oxford saw its market share decline to
30 percent in March 2000 perhaps because of its decision to leave three counties north of New
York City (Rockland, Putnam, and Westchester). On the other hand, the other three dominant
MCOs each recorded an increase in market share during the same period. The market share for
14
Five of these counties (Bronx, Kings, New York, Richmond, and Queens) are the five
boroughs of New York City.
69
FIGURE III.12
NEW YORK MSA MARKET PROFILE
M+C Enrollment and Availability
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
One contract
Two – four
Contracts
Five or more
contracts
Market share
of largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
CAHPS Measures
Dec.
1997
13
June
1998
13
June
1999
12
March
2000
10
0%
0%
0%
0.9%
0.9%
0.9%
0.9%
15.1%
99.1%
99.1%
99.1%
84.0%
52.6%
48.2%
31.6%
31.1%
1,198.5
1,199.9
1,200.6
1,201.4
186.9
202.4
212.9
218.3
15.6%
16.9%
17.7%
18.2%
Percentage of Medicare
1998 1999
DiffMCO enrollees:
erence
With overall health
78.8
73.0
-5.8a
plan rating of 8 or
more
93.6
93.1
-0.5
Who said doctor
usually or always
listens carefully
Who had no problems
81.7
78.0
-3.7a
accessing a specialist
83.0
78.3
-4.7a
Who said customer
service was usually or
always helpful
Who received a flu
57.8
56.1
-1.7
shot from their health
plan last winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
$1,001 $1,500
18%
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees affected
by pullouts
1999
4
2000
4
2001
2
22,922
8,258
5,344
11.3
3.9
2.4
$1-$999
27%
$1,000
55%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
Benefits in Basic Package
Percent of contracts offering
1999
2000
coverage for
Prescription drugs
100.0
100.0
Vision
100.0
100.0
Dental exams
60.01
55.6
Physical exams
100.0
100.0
Percent of contracts with
90.9
90.0
zero premium
Average premium
1.82
5.00
1
Dental benefit information available for ten contracts in
1999 and nine contracts in 2000 (available for eleven
contracts for 1999 and ten contracts for 2000 for other
measures).
Unlimited
11%
$1,000
67%
70
$1-$999
22%
FIGURE III.12
NEW YORK MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
2.5%
1999
3.1%
HEDIS Measures
2000
3.1%
45%
40%
58%
55%
60%
42%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
18%
20%
5%
82%
80%
95%
1998
13
1999
12
9
8
-0.05
-0.04
1.05
0.78
1.32
0.00
0.02
1.00
0.81
1.37
64.43
83.31
1999
89.0
88.9
66.1
73.4
55.7
71.8
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
71
HIP of Greater New York increased from 25 to 31 percent while Aetna’s increased from 9 to
18 percent and Empire Blue Cross/Blue Shield’s from 4 to 12 percent.
2.
Benefit Trends (Basic Package only)
Benefits offered by MCOs in the New York market were fairly generous in both 1999 and
2000. Of the 11 MCOs in New York for which 1999 Medicare Compare data are available, 10
offered zero premium basic packages, and one required a $20 monthly premium for its basic
package. In 1999 and 2000, all MCOs offered a basic package that included coverage for
prescription drugs, vision care, and physical examinations. In 2000, nine offered a zero premium
basic package, and one charged a $50 premium.
Prescription drug caps were fairly similar in 1999 and 2000. In 1999, all MCOs in the New
York market limited the cap to $1,500 or less: two had a cap of between $1 and $999, five had a
cap of $1,000, and one had a cap between $1,000 and $1,500. In 2000, two had a cap of between
$1 and $999, seven had a cap of $1,000, and one (Cigna) did not cap its drug benefit.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the New York market scored lower on all five CAHPS measures in 1999
than in 1998. Declines in three measures—overall health plan rating, customer service rating,
and specialist access—were statistically significant (p<0.05). The largest decrease occurred in
the overall health plan rating (5.8 percentage points). In 1998, 78.8 percent of enrollees rated
their health plan at 8 or higher. By 1999, this figure had fallen to 73 percent.
72
b. HEDIS Measures
In 1998 and 1999, 89 percent of enrollees in the New York market had at least one
ambulatory visit.
Sixty-six percent of female enrollees age 65 to 69 had a breast cancer
screening in 1997 or 1998. That figure rose to 73 percent over the 1998-99 period. Fifty-six
percent of diabetic enrollees had an eye exam in 1998. That figure rose to 72 percent in 1999.
4.
Disenrollment Rates
In the New York market, the quarterly M+C disenrollment rate increased from 2.5 percent in
1998 to 3.1 percent in 1999. This rate remained at 3.1 percent in 2000. The percentage of
disenrollees who joined another MCO was 55 percent in 1998, 60 percent in 1999, and 42
percent in 2000. The rapid disenrollment rate increased slightly from 18 percent in 1998 to 20
percent in 1999, before declining to 5 percent in 2000.
5.
Financial Performance
The financial performance of MCOs serving the New York market appeared to improve
from 1998 to 1999 (see Figure III.12). In 1998, the average operating profit margin was -0.05,
while the average overall profit margin was -0.04. By 1999, these margins had increased to 0.00
and 0.02, respectively. From 1998 to 1999, the average current ratio increased slightly from 0.78
to 0.81. The average days in unpaid claims increased from 64 days in 1998 to 83 days in 1999.
In both years, MCOs in New York had the highest average days in unpaid claims of the case
study markets.
6.
Outlook for 2001
MCO pullouts for 2001 affected a smaller number of enrollees than in 1999 or 2000. Cigna
withdrew from the market, affecting about 4,000 enrollees. Given that the MCO had a market
share of only 2 percent as of March 2000, its departure could be because it did not attract
73
enrollees. Aetna withdrew from Putnam County, affecting about 1,700 enrollees. The New York
market has nine M+C contracts in 2001.
M. PHOENIX, ARIZONA
1.
Medicare+Choice Enrollment and Availability
In the Phoenix market, made up of two counties (Maricopa and Pinal), the number of M+C
contracts decreased from 10 in December 1997 to seven in March 2000 (see Figure III.13). In
1999, United Healthcare did not renew one of its two contracts; as of June 1998, it had no
enrollees in that contract. As for United Healthcare’s other contract, the company withdrew from
the market in 2000, affecting about 5,000 enrollees. Also in 2000, Blue Cross/Blue Shield did
not renew its contract, affecting another 11,000 enrollees. Humana withdrew from specific ZIP
codes in the smaller of the two counties it served. Another contract, Sun Health Medisun,
entered the market in late 1999. However, HCFA cancelled the contract held by Premier
Healthcare as of November 30, 1999, cancelling out the enrollment increase from Sun Health’s
entry.
As in Los Angeles and Miami, M+C contracts play a significant role in the Phoenix market.
From December 1997 to March 2000, enrollment increased by 12.5 percent (155,318 to
174,788). The number of Medicare beneficiaries grew at a slower rate (4 percent). Therefore, the
M+C penetration rate increased from 40.9 to 44.2 percent during the same period. Almost one of
every two beneficiaries living in the Phoenix market belonged to an M+C contract as of March
2000.
The largest MCO in the market, Pacificare, has commanded a market share over the past few
years ranging from 41 to 35 percent. Three other MCOs, Cigna, Intergroup, and Humana, also
have commanded significant market shares. As of March 2000, Cigna had a 20 percent share,
Intergroup a 17 percent share, and Humana a 12 percent share. Aetna has made large strides in
74
the market. Its enrollment grew considerably from December 1997 to March 2000, from about
100 to 10,000 enrollees.
2.
Benefit Trends (Basic Package Only)
MCOs offered similar benefits in 1999 and 2000 to beneficiaries in the Phoenix market. In
1999, all MCOs for which benefit data were available offered a zero premium package with
coverage for prescription drugs, vision care, and physical examinations. In 2000, only one MCO
charged a premium, and the other MCOs continued to offer a zero premium package that covered
prescription drugs, vision care, and physical examinations.
Most MCOs in the area maintained similar limits on prescription drugs in 2000. In 1999 and
2000, more than half of the MCOs imposed a cap of between $1,000 and $1,500. In 1999, three
MCOs had caps over $2,000 and, in 2000, two had caps over $2,000.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the Phoenix area scored higher on four of the five CAHPS measures in 1999
than in 1998 (see Figure III.13). The largest increase was in the measure of access to a specialist
(2.9 percentage points). In 1998, 76 percent of enrollees did not have a problem seeing a
specialist. By 1999, this figure increased to 78.9. The only measure that registered a decrease
was the number of enrollees who received a flu shot. It fell from 65.3 percent in 1998 to 62.4
percent in 1999. The change in this measure was also the only statistically significant change in
the five CAHPS measures calculated (p<0.05).
75
FIGURE III.13
PHOENIX MSA MARKET PROFILE
M+C Enrollment and Availability
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
Two – four
Contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
CAHPS Measures
Dec.
1997
10
June
1998
10
June
1999
9
March
2000
7
0%
0%
0%
6.5%
100%
100%
100%
93.5%
40.2%
38.1%
35.2%
40.8%
379.7
381.9
389.7
395.8
155.3
161.8
171.7
174.8
40.9%
42.4%
44.1%
44.2%
Percentage of Medicare
1998 1999
DiffMCO enrollees:
erence
With overall health
77.3
78.1
0.8
plan rating of 8 or
more
91.8
91.9
0.1
Who said doctor
usually or always
listens carefully
Who had no problems
76.0
78.9
2.9
accessing a specialist
82.5
83.9
1.4
Who said customer
service was usually or
always helpful
Who received a flu
65.3
62.4
-2.9a
shot from their health
plan last winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription
Drug Caps in Basic Package, 1999
Greater
than $2,000
33%
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees
affected by pullouts
1999
1
2000
2
2001
0
0
16,052
0
0
9.4
0
$1,001 $1,500
56%
$1,501 $2,000
11%
Distribution of Annual Prescription
Drug Caps in Basic Package, 2000
Benefits in Basic Package
Percent of contracts
1999
2000
offering coverage for:
Prescription drugs
100.0
100.0
Vision
100.0
100.0
Dental exams
62.51
50.0
Physical exams
100.0
100.0
Percent of contracts with
100.0
85.7
zero premium
Average premium
0
7.86
1
Dental benefit information available for eight
contracts in 1999 and six contracts in 2000 (available
for nine contracts for 1999 and seven contracts for
2000 for other measures).
Greater than
$2,000
25%
$1,000
13%
$1,001 $1,500
62%
76
FIGURE III.13
PHOENIX MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
2.2%
1999
3.0%
HEDIS Measures
2000
4.5%
22%
17%
15%
78%
83%
85%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
9%
9%
7%
91%
91%
93%
1998
10
1999
9
7
6
0.04
0.03
0.96
1.07
1.30
0.02
0.03
0.98
1.13
1.36
36.36
48.34
1999
84.6
85.0
74.9
72.8
53.1
60.9
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
77
b. HEDIS Measures
In 1998 and 1999, 85 percent of enrollees had at least one ambulatory visit. More than 70
percent of female enrollees had a breast cancer screening over both the 1997-98 and 1998-1999
periods. And fifty-three percent of diabetic enrollees had an eye exam in 1998. That figure rose
to 61 percent in 1999.
4.
Disenrollment Rates
In the Phoenix market, the quarterly M+C disenrollment rate doubled from 1998 to 2000. In
1998, this figure was 2.2 percent. By 1999, it had increased to 3.0 percent, and by 2000, it was
4.5 percent. The rate at which disenrollees joined another MCO was consistently higher than the
corresponding rates in the other case study markets (except Tampa in 1998). The percentage
of disenrollees who joined another MCO was 78 percent in 1998, 83 percent in 1999, and 85
percent in 2000. The rapid disenrollment rate was relatively low in all three years. This rate was
9 percent in 1998 and 1999 and 7 percent in 2000.
5.
Financial Performance
In 1998 and 1999, MCOs in the Phoenix market had positive profit margins (see Figure
III.13). The average operating profit margin was 0.04 in 1998 and 0.02 in 1999, while the
average overall profit margin was 0.03 in both years. The average current ratio increased from
1.07 in 1998 to 1.13 in 1999. The average days in unpaid claims increased from 36 days in 1998
to 48 days in 1999.
6.
Outlook for 2001
Unlike the situation in 1999 or 2000, no MCOs withdrew from the Phoenix market in 2001.
The area currently has seven M+C contracts.
78
N. PORTLAND, OREGON
1.
Medicare+Choice Enrollment and Availability
Over the past few years, M+C plan availability has varied geographically in the Portland
market, which is made up of five counties in Oregon (Clackamas, Columbia, Multnomah,
Washington, and Yamhill), and one county in Washington (Clark). For example, in December
1997, the market claimed seven M+C contracts (see Figure III.14), but only one county, Clark,
had five M+C contracts. The rest had four or fewer M+C contracts. As of March 2000, Yamhill
County had two contracts, Columbia County had three contracts, and the remaining four counties
had four contracts; a total of six contracts served the area. No MCOs withdrew from any part of
the market in 1999, although Pacificare withdrew from Yamhill County in 2000, affecting 1,015
enrollees. Pacificare continued to serve four other counties in the market.
Almost half of the beneficiaries living in the area belonged to an M+C contract from 1997 to
2000. The M+C penetration rate increased from 44.8 percent in December 1997 to 47.1 percent
in March 2000, while M+C enrollment increased by 6.6 percent, from 99,793 to 106,386. Over
the same period, the total number of Medicare beneficiaries living in the market increased by just
1.3 percent.
The market is not heavily concentrated. Over the past few years, four MCOs have split the
market more or less evenly. In December 1997, the market shares of the four MCOs were 28
percent (Pacificare15), 25 percent (Providence Health Plan), 23 percent (Kaiser), and 17 percent
(Regence HMO Oregon). By March 2000, Providence’s market share totaled 28 percent,
Kaiser’s 25 percent, Pacificare’s 24 percent, and Regence’s 17 percent.
15
Pacificare actually had two contracts in the market, H3805 and H5005. That figure
includes only the enrollment in the largest contract, H3805.
79
FIGURE III.14
PORTLAND MSA MARKET PROFILE
M+C Enrollment and Availability
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
Two – four
Contracts
Five or more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
Dec.
1997
7
June
1998
7
CAHPS Measures
June
1999
7
Percentage of Medicare
MCO enrollees:
with overall health
plan rating of 8 or
more
who said doctor
usually or always
listens carefully
who had no problems
accessing a specialist
who said customer
service was usually or
always helpful
who received a flu
shot from their health
plan last winter
March
2000
6
97.3%
97.3%
97.3%
100%
2.7%
2.7%
2.7%
0%
28.3%
28.4%
27.3%
27.9%
222.9
223.3
225.1
225.8
99.8
100.4
106.6
106.4
44.8%
45.0%
47.4%
47.1%
1998
1999
82.9
83.2
Difference
0.3
95.3
94.7
-0.6
83.9
83.8
-0.1
91.1
92.3
1.2
73.3
72.8
-0.5
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999*
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees affected
by pullouts
1999
0
2000
1
2001
0
0
1,015
0
0
1.0
0
Unlimited
100%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000*
Benefits in Basic Package1
Percent of contracts offering
1999
2000
coverage for
Prescription drugs
16.7
16.7
Vision
100.0
100.0
Dental exams
0.0
0.0
Physical exams
100.0
100.0
Percent of contracts with
0.0
0.0
zero premium
Average premium
35.08
49.17
1
Benefits available for six contracts in both years.
Unlimited
100%
*Although the one MCO with drug coverage, Kaiser,
did not have a limit on this coverage, it had a
coinsurance rate of 70 percent on prescription drugs.
80
FIGURE III.14
PORTLAND MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
2.6%
1999
1.2%
HEDIS Measures
2000
1.6%
33%
50%
57%
67%
50%
43%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
3%
12%
3%
97%
88%
97%
1998
7
1999
7
6
6
-0.03
0.00
1.01
0.55
2.36
-0.02
0.00
1.01
0.74
1.88
39.75
42.24
1999
92.5
89.7
78.3
74.2
64.5
71.8
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who
were continuously enrolled in a Medicare MCO
during 1997 and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001.
81
2.
Benefit Trends (Basic Package Only)
In 1999 and 2000, the benefits offered by MCOs in the Portland market were less generous
than those for most of the other case study markets we studied, probably because of the market’s
low payment rate (7 percent lower than the USPCC in 2000). In neither year did an MCO offer a
zero premium package. Among the six MCOs reporting benefit data in 1999, five charged
premiums ranging from $15 to $39, and Kaiser imposed a premium of $75. In 2000, the same
five MCOs increased their premiums by $35 to $58; Kaiser raised its premium to $81 and was
the only MCO that covered prescription drugs in either year. Although Kaiser did not impose a
limit on this coverage, it had a coinsurance rate of 70 percent on prescription drugs. All six
MCOs, however, covered vision care and physical examinations in 1999 and 2000, but none
covered preventive dental care.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the Portland market scored about the same on three of the five CAHPS
measures from 1998 to 1999. None of the changes were statistically significant (p<0.05).
b. HEDIS Measures
In 1998, 93 percent of enrollees had at least one ambulatory visit. That figure fell to 90
percent in 1999. More than 74 percent of female enrollees had a breast cancer screening during
both the 1997-98 and 1998-1999 periods. And 65 percent of diabetic enrollees had an eye exam
in 1998. That figure rose to 72 percent in 1999.
4.
Disenrollment Rates
In the Portland market, the quarterly M+C disenrollment rate declined from 2.6 percent in
1998 to 1.2 percent in 1998, before increasing slightly to 1.6 percent in 2000 (see Figure III.14).
82
These rates were consistently among the lowest disenrollment rates of the case study markets.
The percentage of disenrollees who joined another MCO was 67 percent in 1998, declined to 50
percent in 1999, and dropped further to 43 percent in 2000. The rapid disenrollment rate was
relatively low in 1998 and 2000, at 3 percent, but was 12 percent in 1999.
5.
Financial Performance
The average operating profit margin for MCOs serving the Portland market was -0.03 in
1998 and -0.02 in 1999, while the average overall profit margin was 0.00 in both years. The
average current ratio was quite low in 1998, at 0.55, but did increase to 0.74 in 1999. However,
the average ratio of cash and long-term bonds to current liabilities was relatively higher than the
corresponding figure for the other case study markets in both years. This percentage declined
from 2.36 in 1998 to 1.88 in 1999.
6.
Outlook for 2001
As is the case in Phoenix, no MCO withdrew from the Portland market in 2001. Six M+C
contracts currently serve the market.
O. SEATTLE, WASHINGTON
1.
Medicare+Choice Enrollment and Availability
In the Seattle market, made up of Island, King, and Snohomish counties, the number of M+C
contracts was seven in December 1997, eight in June 1998, and seven in June 1999 and March
2000 (see Figure III.15). About 12,000 beneficiaries (14 percent) were affected by nonrenewals
in 1999. Qual-Med and Providence Health Plan did not renew their contracts for 1999. One
MCO entered the market in 1998, and one entered the market in 1999.
M+C enrollment increased by 13 percent between December 1997 and June 2000 and then
declined by 1 percent from June 1999 to March 2000. The M+C penetration rate followed a
83
FIGURE III.15
SEATTLE MSA MARKET PROFILE
M+C Enrollment and Availability
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
Two—Four
contracts
Five or
more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
Dec.
1997
7
June
1998
8
CAHPS Measures
June
1999
7
Percentage of Medicare
enrollees:
with overall health plan
rating of 8 or more
who said doctor usually
or always listens
carefully
who had no problems
accessing a specialist
who said customer
service was usually or
always helpful
who received a flu shot
from their health plan
last winter
March
2000
7
3.1%
3.1%
3.2%
3.2%
96.9%
96.9%
96.8%
96.8%
41.0%
38.5%
36.8%
36.7%
271.5
272.2
273.6
273.6
82.3
87.2
93.4
92.5
30.3%
32.0%
34.1%
33.8%
1999
2
2000
0
2001
4
12,369
0
23,309
14.2
0
25.2
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees
affected by pullouts
Benefits in Basic Package1
Percent of contracts
1999
2000
offering coverage for:
Prescription drugs
0.0
0.0
Vision
100.0
100.0
Dental exams
0.0
0.0
Physical exams
100.0
100.0
Percent of contracts with
71.4
28.6
zero premium
Average premium
8.29
23
1
Benefit information available for seven contracts in
both years.
84
1998
1999
79.4
80.3
Difference
0.9
96.1
95.6
-0.5
82.8
82.2
-0.6
85.6
87.1
1.5
65.1
67.5
2.4
FIGURE III.15
SEATTLE MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
1.3%
1999
1.2%
HEDIS Measures, 1998
2000
2.8%
40%
36%
31%
60%
64%
69%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening
in the past two yearsb
Eye exam in the past
year for diabeticsc
a
10%
19%
6%
90%
81%
94%
1998
8
1999
7
6
3
0.01
0.01
1.00
0.86
1.51
-0.09
0.00
1.09
1.50
1.55
50.35
35.65
1999
86.4
87.8
78.2
74.2
69.5
81.1
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who were
continuously enrolled in a Medicare MCO during 1997
and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001
85
similar pattern. From December 1997 to June 1999, it increased from 30.3 to 34.1 percent and
then dropped to 33.8 percent in March 2000. Interestingly, the M+C market is not as much of a
factor in Seattle as it is in nearby Portland, where the M+C penetration rate is closer to 50
percent.
Group Health Cooperative of Puget Sound and Pacificare have dominated the market over
the past three years. Between the two MCOs, their combined market share has been over 70
percent. In December 1997, Group Health Cooperative had a market share of 41 percent and
Pacificare a market share of 35 percent. In March 2000, Group Health’s market share totaled 37
percent and Pacificare’s 35 percent. In spite of Providence’s 1999 departure, which forced 14
percent of beneficiaries to choose another MCO or return to fee-for-service (FFS) Medicare,
neither Group Health nor Pacificare experienced much of an increase in enrollment. The MCO
that appears to have benefited from Providence’s decision to exit the market was Aetna, whose
market share increased from 4 percent in June 1998 to 10 percent in March 2000.
2.
Benefit Trends (Basic Package Only)
Benefits offered by the MCOs were not that generous in 1999 or 2000. No MCO covered
prescription drugs or dental examinations, and the average premium increased from $8.29 to $23.
In 1999, most MCOs had a zero premium, and, in 2000, few did.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs serving the Seattle market scored slightly higher on three of the five CAHPS
measures in 1999 than in 1998. None of the changes were statistically significant, however
(p<0.05). The largest increase was in the percentage of enrollees who received a flu shot (2.4
percentage point increase—from 65.1 percent in 1998 to 67.5 percent in 1999). The second-
86
largest increase was in the measure of customer service. The percentage of enrollees with a
positive view of customer service increased by 1.5 percentage points (85.6 to 87.1 percent).
b. HEDIS Measures
In 1998 and 1999, 86 to 88 percent of enrollees had at least one ambulatory visit (see Figure
III.15). Over seventy-four percent enrollees had a breast cancer screening during both the 199798 and 1998-99 periods. And almost 70 percent of diabetic enrollees had an eye exam in 1998.
That figure rose to 81 percent in 1999. Across the case study markets, Seattle had the highest
proportion of diabetic enrollees receiving an eye exam in both 1998 and 1999.
4.
Disenrollment Rates
In the Seattle market, the quarterly M+C disenrollment rate was 1.3 percent in 1998 and 1.2
percent in 1999, before increasing to 2.8 percent in 2000 (see Figure III.15). These rates were
consistently among the lowest disenrollment rates of the case study markets. The percentage of
disenrollees who joined another MCO steadily increased from 60 percent in 1998, to 64 percent
in 1999, and to 69 percent in 2000. The rapid disenrollment rate was 10 percent in 1998, 19
percent in 1999, and 6 percent in 2000.
5.
Financial Performance
The average operating profit margin for MCOs serving the market declined from 0.01 in
1998 to -0.09 in 1999. However, the average overall profit margin was fairly constant at 0.01 in
1998 and 0.00 in 1999. The average current ratio nearly doubled, going from 0.86 in 1998 to 1.5
in 1999. However, the average ratio of cash and long-term bonds to current liabilities increased
slightly, from 1.51 to 1.55 from 1998 to 1999.
87
6. Outlook for 2001
Owing to MCO withdrawals, one in four M+C enrollees needed to find another MCO or
return to FFS Medicare in 2001. Four MCOs did not renew their contracts for 2001. As a result,
three M+C contracts currently serve the Seattle market. All three of these contracts have
imposed capacity limits, however. Two are closed to new enrollees in Snohomish County, and
the other, held by Pacificare, is closed to new enrollees for beneficiaries living in any of the three
counties in the Seattle market (HCFA 2001).
P. TAMPA, FL
1.
Medicare+Choice Enrollment and Availability
The Tampa M+C market, made up of four counties (Hernando, Hillsborough, Pasco, and
Pinellas), has been stable over the past few years (see Figure III.16). In December 1997, nine
MCOs served the market. In 1999, Humana purchased PCA Health Plans, causing the number of
MCOs to drop to eight. In 2000, HIP Health Plan did not renew its contract, affecting about
2,500 enrollees. However, Well Care HMO entered the market in 2000 and serves two of the
four counties in the market vacated by HIP. Service area reductions also affected Hernando
County when United Healthcare and Cigna withdrew from the county in 1999 and 2000,
respectively. Well Care HMO did not enter Hernando County in 2000.
As has been the case in some other case study markets, M+C enrollment increased from 1997
to 1999 and then declined from 1999 to 2000. Specifically, enrollment increased by 13.5 percent
during the first period (from 146,872 to 166,751) and then fell by 3 percent to 161,197 in March
2000. Likewise, the M+C penetration rate increased from 30.8 to 35.1 percent and then declined
to 33.9 percent in March 2000.
For the past few years, Humana has been the dominant MCO in the market, commanding a
market share of 36.4 percent in December 1997, 32.1 percent in June 1999, and 48.9 percent in
88
FIGURE III.16
TAMPA MSA MARKET PROFILE
M+C Enrollment and Availability
Number of
M+C contracts
Percent of
beneficiaries
with choice of:
Two – four
contracts
Five or
more
contracts
Market share of
largest M+C
contract
Number of
Medicare
beneficiaries
(thousands)
Number of
M+C enrollees
(thousands)
M+C pen. rate
CAHPS Measures
Dec.
1997
9
June
1998
9
June
1999
8
March
2000
8
8.6%
0%
8.8%
8.8%
91.4%
100%
91.8%
91.2%
36.4%
33.0%
32.1%
48.9%
476.8
475.7
475.2
475.2
146.9
155.6
166.8
161.2
30.8%
32.7%
35.1%
33.9%
1999
1
2000
2
2001
4
1,085
2,674
24,031
0.7
1.6
15.1
Percentage of Medicare
1998 1999
Diffenrollees:
erence
With overall health plan
82.2
78.7
-3.5a
rating of 8 or more
Who said doctor usually
94.0
93.4
-0.6
or always listens
carefully
Who had no problems
85.4
84.4
-1.0
accessing a specialist
82.9
81.2
-1.7
Who said customer
service was usually or
always helpful
Who received a flu shot
61.9
62.5
0.6
from their health plan
last winter
a
1998–1999 change is statistically significant (p<0.05).
Distribution of Annual Prescription Drug
Caps in Basic Package, 1999
$1,501 $2,000
13%
Market Stability
Number of contracts with a
pullout (withdrawal or
service area reduction)
Number of enrollees in
previous June in contracts
that pulled out
Percent of enrollees
affected by pullouts
$1,001 $1,500
25%
Benefits in Basic Package1
$1-$999
25%
$1,000
37%
Distribution of Annual Prescription Drug
Caps in Basic Package, 2000
Percent of contracts offering 1999
2000
coverage for:
Prescription drugs
100.0
85.7
Vision
100.0
85.7
Dental exams
14.3
0.0
Physical exams
100.0
100.0
Percent of contracts with
100.0
42.9
zero premium
Average premium
0
26.86
1
Benefit information available for seven contracts in
both years.
Unlimited
33%
$1,000
17%
89
$1-$999
50%
FIGURE III.16
TAMPA MSA MARKET PROFILE, CONTINUED
M+C Voluntary Disenrollment Rates
Quarterly disenrollment
rate (percent)
Percentage of disenrollees
who:
Returned to original
Medicare
Joined another M+C
Organization
Percentage of disenrollees
who:
Had been enrolled for
three months or less
Had been enrolled for
four months or more
1998
4.3%
1999
4.9%
HEDIS Measures
2000
9.1%
21%
20%
25%
79%
80%
75%
Percentage of Medicare
MCO enrollees with:
At least one ambulatory
visit in the past yeara
Breast cancer screening in
the past two yearsb
Eye exam in the past year
for diabeticsc
a
11%
20%
9%
89%
80%
91%
1998
9
1999
8
7
3
-0.02
0.00
1.01
0.76
1.53
-0.01
0.00
1.01
0.66
1.37
45.65
53.43
1999
88.0
86.2
75.8
69.1
51.6
43.6
Includes only enrollees age 65 or older who were
continuously enrolled in a Medicare MCO in 1998
(1999).
b
Includes only female enrollees age 65 to 69 who were
continuously enrolled in a Medicare MCO during 1997
and 1998 (1998 and 1999).
c
Includes only enrollees with diabetes who were
continuously enrolled in a Medicare MCO in 1998
(1999).
Financial Indicators
Number of M+C contracts in
market (June)
Number of M+C contracts with
financial data in market
Mean operating profit margin
Mean overall profit margin
Mean overall expense ratio
Mean current ratio
Mean cash + long term bonds
divided by current liabilities
Average days in unpaid claims
1998
Definitions:
Operating profit margin: Ratio of operating profit to
operating revenue. Higher values indicate higher
performance.
Overall profit margin: Ratio of total profit to total
revenue. Higher values indicate higher performance.
Overall exepense ratio: ratio of direct medical cost plus
administrative cost to operating revenue. Higher values
indicate lower performance.
Current ratio: Ratio of current assets to current
liabilities. Higher values indicate higher liquidity.
Current assets and long-term bonds divided by current
liabilities: Ratio of the sum of current assets and longterm bonds to current liabilities. Higher values indicate
higher liquidity.
Days in unpaid claims. Ratio of claims payable to
hospital and medical expenses divided by 365. Higher
values indicate lower efficiency.
Source: Health Care Financing Administration,
Instructions for Completing the Adjusted Community
Rate Proposal for Contract Year 2001
90
March 2000. The second-largest MCO in the area is Health Options, which has consistently
retained a market share of about 20 percent during the past few years. Prudential’s market share
fell dramatically from 17.5 percent in June 1999 to 5.5 percent in March 2000.
2.
Benefit Trends (Basic Package Only)
In the Tampa market, some MCOs modestly scaled back their benefits in 2000 while others
enhanced their benefits. In 1999, all eight MCOs offered a zero premium package covering
prescription drugs, vision care, and physical examinations. In 2000, among the seven MCOs for
which benefit data were available, Humana, United Healthcare, and Cigna offered a zero
premium package that included prescription drug coverage. The other four MCOs charged
premiums ranging from $25 to $65. Aetna did not cover prescription drugs in its basic package
in 2000.
Drug caps vary widely in the Tampa area. In 1999, one MCO imposed a cap of $500, one a
cap of $600, three a cap of $1,000, two a cap of $1,500, and one a cap of $2,000. Humana had a
$1,000 cap in 1999. In 2000, two of the three MCOs that did not charge a premium also did not
cap their drug benefit. As for the remaining four MCOs offering drug coverage, three had caps of
$500 to $800 and the other a cap of $1,000.
3.
Trends in Access and Quality
a.
CAHPS Measures
MCOs scored lower on four of the five CAHPS measures in 1999 than in 1998 (see Figure
III.16). The largest decrease—3.5 percentage points—was in the percentage of enrollees giving
the health plan a rating of 8 or higher (from 82.2 to 78.7 percent). This decrease was statistically
significant (p<0.05). The second largest decrease was in enrollees’ rating of customer service. In
91
1998, 82.9 percent of enrollees said that customer service was usually or always helpful; by
1999, this figure had fallen to 81.2 percent.
b. HEDIS Measures
In 1998 and 1999, 86 to 88 percent of enrollees had at least one ambulatory visit (see Figure
III.16). Seventy-six percent of female enrollees had a breast cancer screening in 1997 or 1998.
That figure fell to 69 percent during the 1998-99 period. Fifty-two percent of diabetic enrollees
had an eye exam in 1998. That figure fell to 44 percent in 1999.
4.
Disenrollment Rates
The quarterly M+C disenrollment rates in Tampa were consistently higher than the
corresponding rates for the other case study markets (except Miami in 1999). This rate was 4.3
percent in 1998 and 4.9 percent in 1999. The quarterly M+C disenrollment rate nearly doubled
in 2000, to 9.1 percent. The percentage of disenrollees who joined another MCO was 79 percent
in 1998, 80 percent in 1999, and 75 percent in 2000. The rapid disenrollment rate was 11
percent in 1998, 20 percent in 1999, and 9 percent in 2000.
5.
Financial Performance
The average operating profit margin for MCOs serving the market was -0.02 in 1998 and
-0.01 in 1999. However, the average overall profit margin was constant at 0.00 in both years.
The average current ratio declined from 0.76 in 1998 to 0.66 in 1999. The average ratio of cash
and long-term bonds to current liabilities also declined slightly, from 1.53 to 1.37.
6.
Outlook for 2001
Three MCOs serving the Tampa area did not renew their contracts for 2001, affecting 14,749
enrollees. These three are Aetna, Cigna, and Prudential. In addition, Humana withdrew from
92
Hernando County, affecting about 9,282 enrollees. Humana serves the other three counties in the
market in 2001. In total, the pullouts mean that about 15 percent of enrollees needed to join
another MCO or return to FFS Medicare. Five M+C contracts serve some parts of the Tampa
area in 2001. One MCO, Health Options, Inc./Blue Cross Blue Shield of Florida, has closed
enrollment to beneficiaries (HCFA 2001).
93
IV. CONCLUSION AND SUMMARY OF FINDINGS
As compared with other reports that we have written on M+C market trends, such as
Kornfield, Cook, and Nelson (2000), that focused on trends across 69 markets, this report
discusses trends within 16 particular markets. These profiles provide a resource for those
interested in understanding particular M+C markets, as well as those who are more generally
interested in understanding how M+C has evolved in these markets. Although these markets
were not selected randomly from all markets with M+C enrollment in the United States, they do
represent a significant share of M+C enrollment (31 percent of U.S. M+C enrollment as of
March 2000).
We find that, from December 1997 to March 2000, the number of M+C contracts decreased
in nine case study markets, stayed the same in four markets, and increased in three markets. All
of the case study markets, except for one, had increased M+C enrollment during this period.
Only Minneapolis had a decrease in M+C enrollment. In nearly half of the markets (7 of 16), the
enrollment increases were between 10 and 20 percent. In four markets, the increase was 10
percent or less. In the other markets, M+C enrollment increased by more than 20 percent.
M+C contract pullouts, in the form of nonrenewals and service area reductions, impacted
beneficiaries in the case study markets quite differently. In five markets in 1999, five in 2000,
and two in 2001, M+C pullouts did not affect any enrollees. In most of the case study markets in
1999 and 2000 (7 in 1999 and 10 in 2000), M+C pullouts affected 10 percent or fewer of the
enrollees.
In 2001, however, the pullouts had a profound impact on almost half of the markets. In six
markets, pullouts affected 25 percent or more of M+C enrollees. In two, Baltimore and Houston,
over 80 percent of enrollees lost access to their M+C plan in 2001. In these two markets, the
94
remaining M+C contracts are closed to new enrollees. In four others, Cincinnati, Cleveland,
Minneapolis, and Seattle, one-quarter or more of enrollees lost access to their plan due to a
pullout. Some markets were not much affected by pullouts from 1999 to 2001, including
Albuquerque, which had no pullouts in 1999 or 2000, and one in 2001, affecting six percent of
M+C enrollees, and Kansas City, which had no pullouts in 1999, three in 2000, affecting six
percent of M+C enrollees, and one in 2000, affecting three percent of M+C enrollees.
Interestingly, markets can vary considerably in spite of their proximity to one another. From
1999 to 2001, Portland had only one M+C pullout, in 2000, affecting only one percent of
enrollees. However, Seattle had two pullouts in 1999, affecting 14 percent of enrollees, one in
2000, affecting less than one percent of enrollees, and four in 2001, affecting 25 percent of
enrollees.
The number of case study markets where all M+C contracts did not charge a premium on
their basic package decreased from 1999 to 2000. In 1999, there were 11 such markets, while by
2000, this number had fallen to four. Beneficiaries in most of the markets, however, did have
access to prescription drug coverage. In 12 markets in 1999 and nine markets in 2000, all MCOs
covered prescription drugs.
In two markets —Minneapolis and Seattle—no MCO covered
prescription drugs in its basic package. The generosity of drug benefits varies considerably
across markets, as measured by the annual drug cap. In some markets, including Los Angeles
and Miami, at least one quarter of MCOs had an unlimited drug cap in 1999 and 2000. In other
markets, including Albuquerque, Baltimore, and Kansas City, the cap was $1,000 or less in 1999
and 2000 for all MCOs offering drug coverage.
Disenrollment rates vary across the case study markets, but did increase in most markets
from 1998 to 2000. In 1998, the quarterly M+C disenrollment rate was less than two percent in
four markets, two to three percent in six markets, and at least three percent in the other five
95
markets.16 In 2000, however, this rate was less than two percent in two markets, two to three
percent in four markets, and at least three percent in nine markets. In all markets except for
Minneapolis, more than half of the disenrollees joined another M+C contract in 1998 and 1999.
In most of the case study markets, the scores on CAHPS measures declined slightly from
1998 to 1999. With respect to the HEDIS indicators, there was variability across the case study
markets with respect to the proportion of female enrollees receiving a breast cancer screening
and the proportion of diabetics receiving an eye exam. For example, in 1999 the proportion of
diabetic enrollees receiving an eye exam ranged from a low of 41 percent in Houston to a high of
74 percent in Seattle. The proportion of enrollees with at least one ambulatory care visit varied
less, from a low of 74 percent in Houston to a high of almost 95 percent in Boston. Finally,
MCO’s financial indicators stayed fairly constant within most of the markets from 1998 to 1999.
16
We did not calculate disenrollment rates for New Orleans because this market was not
among the 69 markets in MPR’s M+C monitoring system.
96
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