Performance Improvement 1998. Health Care Financing Administration


MISSION: To promote the timely delivery of appropriate, quality health care to the Nation's aged, disabled, and poor through administration of the Medicare and Medicaid programs.

Evaluation Program

The research arm of the Health Care Financing Administration (HCFA)--the Office of Strategic Planning (OSP)--performs, coordinates, and supports research and demonstration projects (through intramural studies, contracts, grants, and waivers) to develop and implement new health care financing policies and to provide information on the impact of HCFA's programs. The scope of HCFA's research and demonstration activities embraces all areas of health care: cost, access, quality, service delivery models, and financing approaches. OSP's research responsibilities include evaluations both of the ongoing Medicare and Medicaid programs and of demonstration projects testing new health care financing and delivery approaches. These projects address four major themes.

  • Monitoring and Evaluating Health System Performance: Access, Quality, Program Efficiency and Costs--HCFA's research program produces information and descriptive statistics on the infrastructure of the health system, on populations of health care users, and on service and expenditure patterns; examines differences in costs, quality, and access to care; and assesses the effects of HCFA programs on beneficiary health status.
  • Improving Health Care Financing and Delivery Mechanisms: Current Programs and New Models--HCFA performs research and demonstrations to develop and test new payment and delivery models intended to increase the efficiency and effectiveness of Medicare. OSP's evaluations of these demonstration projects provide policymakers with information about their impact.
  • Meeting the Needs of Vulnerable Populations--HCFA's research and evaluation program includes projects that develop new approaches to improve access to cost-efficient and appropriate health services for vulnerable populations.
  • Information to Improve Consumer Choice and Health Status--Improving beneficiaries' knowledge and ability to make informed health care choices, both in the health plans they select and in the services they use, is part of HCFA's commitment to improving communication of information to beneficiaries. OSP examines variations in the use of services and treatments and the impact of new information tools and technologies in making health care decisions and improving beneficiaries' health status.

Summary of Fiscal Year 1997 Evaluations

During FY 1997, HCFA completed 21 evaluations, which are briefly described below.

In, Access to Physicians' Services for Vulnerable Beneficiaries: Impact of the Medicare Fee Schedule (6301), HCFA evaluated the effect of the physician fee schedule on a beneficiary's access to care. Six different strata of beneficiaries were selected based on the relative size of the payment change under the fee schedule compared to the earlier payment scheme. The project examined the use of services, outcomes of services, and the change in the beneficiary's financial liability.

The Impact of the Medicare Fee Schedule on Teaching Physicians (6666) was started because of four concerns: (1) teaching physicians perform more high-technology procedures and less primary care, which could result in disproportionate net loss for these practices; (2) teaching hospitals and medical schools tend to be located in large urban areas, where the Geographic Practice Cost Index portion of the payment is lower; (3) customary charges for teaching physicians may be higher than the areawide historical payments calculated for fee schedule transition; and (4) a number of academic medical practices had not signed Medicare participation agreements. For this study, 720 hospitals were selected, including all U.S. academic medical centers. The results indicated that there is no evidence that teaching physicians have been adversely affected by the Medicare Fee Schedule.

1995 Influenza Immunizations Paid for by Medicare: State and County Rates (6615) is a data book tied to the program begun in 1993 to stimulate the provision of flu vaccine to Medicare beneficiaries. It provides information about National, State, and county rates of vaccination in fee-for-service settings (managed care beneficiaries could not be counted because their encounter data are not reported).

The Department was legislatively required to report to the Congress on the relative quality of the care in the Medicaid program. HCFA's A Study of the Appropriateness, Process of Care, and Outcomes of Medical Care for Medicaid Patients (6302) examined the necessity, appropriateness, and effectiveness of selected medical treatments and surgical procedures for Medicaid patients. It assessed the variation that exists in the rate of performance of selected treatments and procedures on Medicaid beneficiaries for small areas within and among States. It determined that there are underutilized, medically necessary treatments and procedures for which failure to furnish could have an adverse effect on health status. The study had two phases. The first used extant data in HCFA to examine patterns of utilization for over 160 different conditions and procedures. It found that, for all conditions combined, utilization was higher in the Medicaid population and that the differences were higher for medical than for surgical conditions. Within Medicaid, medical conditions showed somewhat more small-area geographic variation than did surgical conditions. For all conditions combined, the Medicaid population tended to exhibit more small-area geographic variation than did the non-Medicaid population, but the pattern was not consistent across States. In the second phase, data were abstracted from medical records at 118 hospitals in California, Georgia, and Michigan for a selected series of index diagnoses: pediatric asthma, hysterectomy, and complicated labor and delivery. Five indicators were developed to assess the level of quality. In general, Medicaid women and children were treated in public hospitals, teaching hospitals, and hospitals with large bed capacities. The appropriateness of the decision to hospitalize was comparable between Medicaid and the privately-insured. And, once hospitalized, they received a similar level of care. Most importantly, the outcomes of care were essentially similar between the two payer groups, although the Medicaid patients were more severely ill. As a result, there were differences in outcomes that were not related to the inpatient quality of care provided. The inpatient care for the Medicaid patients was considered adequate and comparable with care received by privately-insured patients.

Evaluation of the Medicaid Uninsured Demonstrations (6298) assesses three demonstrations conducted in the States of Maine, South Carolina, and Washington. These demonstrations, implemented in response to a Congressional mandate under section 4745 of the Omnibus Budget Reconciliation Act of 1990, tested the effect of allowing States to extend Medicaid coverage to low-income families. The project examined the ability of the Medicaid programs to enroll significant numbers of eligible persons, looking particularly at the conditions under which eligible persons and their families are willing to participate in such programs, given their scarce financial resources. The evaluation also looked at the ability of the programs to induce adequate levels and the willingness of employers to participate in the programs.

The Inspector General of the Department conducted a demonstration of improved methods for the investigation and prosecution of fraud and abuse. The Evaluation of the Effectiveness of the Operation Restore Trust Demonstrations (6311) examined whether this more concentrated effort, rendered through the demonstration's partnership model, had a relatively greater impact on health industry fraudulent behavior than the same efforts conducted separately. Operation Restore Trust (ORT) involved a targeted set of initiatives that focused on a few States, a few areas of the Medicare benefit, and a few standard operating procedures (especially, failures to coordinate among the most central agencies and to exploit available data resources). The evaluation concluded that ORT turned around certain troubling trends of the early 1990's and has brought new vigor to government efforts to combat health care fraud and abuse. ORT had important effects across the full spectrum of organizations it sought to affect, and even had some important effects on organizations over the boundaries of the demonstration (e.g., Medicare contractors) that were not so directly orchestrated by the ORT initiative.

Assessing the Viability of All-Payer Systems for Inpatient Hospital Services (6594) explored the feasibility and possible structure of alternative approaches to developing such a system. It looked at the practicality of adapting or extending Medicare's Prospective Payment System to other payers. Two analyses were conducted to determine (1) whether diagnosis-related group-based payment rates for Medicare and non-Medicare patients should be adjusted based on hospital characteristics, and (2) alternative approaches in defining the Medicare standardized prospective payment rate. Current Medicare standardized prospective payment rates are based on the mean adjusted cost for a given category of hospital; high-cost hospitals are penalized under the assumption that their costs reflect presumed inefficiency. It developed hospital-specific measures of inefficiency and then excluded the costs of inefficient hospitals from the calculation of standardized payment rates. The conclusion was that a frontier cost function model approach is superior to the current system and can result in substantial program savings.

Monitoring and Evaluation of the Medicare Cataract Surgery Alternate Payment Demonstration: Final Evaluation Report (6295) assisted HCFA in tracking the 3-year demonstration that tested the concept of a single global Medicare payment for outpatient cataract procedures. The payment amount represented the cost for physician, facility, and intraocular lenses. The evaluation found that the project was reasonably successful in encouraging provider flexibility and in managing the bundle of services. There was ample anecdotal evidence that the cost-effectiveness incentives were working; e.g., cost reduction efforts by surgeons in the techniques and time required to perform the surgery and actions to standardize the intraocular lenses and other supplies and materials. Once operations began, government activities related to pricing were greatly reduced and limited to simple verification and payment of the global fee. The evaluator was not able to measure appropriateness, but in terms of quality control and utilization review, the demonstration was successful in that the outcomes were unchanged. The project offered some insights into the strengths and weaknesses of particular incentives in encouraging providers to participate. However, it provided only limited new information on the factors that influenced beneficiaries to participate.

HCFA completed an evaluation on the implementation of ambulatory patient groups (APGs) under the title, Toward a Prospective Payment System for Outpatient Services: Implementation for Outpatient Services-- Implementation of APGs by State Medicaid Agencies and Private Payers. (6320) The focus of this study was the Medicaid outpatient prospective payment system that groups patients for payment purposes rather than paying on a cost basis. These groups are similar in concept to diagnosis-related groups, which form the heart of Medicare's prospective payment system for inpatient care. It involved a case study of Iowa's implementation of the APG system and an analysis of the reimbursement methodology. All six payers that had operational experience tailored their APG systems to their own priorities and markets. They all implemented the system without major incident. The payers reported success in reducing outpatient costs where that was the immediate goal, and they believe the system encourages higher-cost facilities to reduce costs and rewards lower-cost facilities. The views of providers were more mixed. Though they reported generally adequate overall payment, they also viewed the system as complex, could not calculate expected payment, and often let their computer systems group related claims rather than consolidating them prior to submission, as was the intent of the system. No evidence was found of much behavioral response by providers, but that could change if the system is implemented by a large payer such as HCFA.

The Second Update of the Geographic Practice Cost Index: Final Report (6611) was produced and is scheduled to be fully phased in by January 1, 1999. One-half of the total change will be implemented in 1998. A comparison between the 1997 and 1999 Geographic Practice Cost Indexes (GPCIs) shows that (1) there is no change between the physician work GPCI or the non-physician employee wage index of the practice expense GPCI, except that they are reweighted with 1994 county relative value units; (2) the office rental index of the practice expense GPCI is updated with FY 1996 Fair Market Rents (from the Department of Housing and Urban Development); (3) county rental adjustment factors are eliminated for all metropolitan areas (except for the New York City Primary Metropolitan Statistical Area); (4) the malpractice GPCI is updated with 1992, 1993, and 1994 premium data, and specialty premiums are weighted by national relative value unit proportions rather than allowed charges; (5) there is no change in the GPCI cost shares, which measure the share of the various inputs in total practice revenues; and (6) the county relative value units used to weight averages to county input prices for each Fee Schedule Area are updated from 1992 to 1994. The project determined that the changes in the Medicare Fee Schedule resulting from implementation of this GPCI update will be less than 2.5 percent for each Fee Schedule Area.

The Payment of Pharmacists for Cognitive Services: Results of the Washington State C.A.R.E. Demonstration Project (6528) is a report on a demonstration project called Cognitive Activities and Reimbursement Effectiveness (C.A.R.E.). It is operated under the premise that (1) direct reimbursement for cognitive services would remove financial barriers associated with the pharmacists' provision of these services; and (2) that this change would result in more consultations, with a subsequent impact on costs and outcomes from drug therapy. Data were drawn from three groups of approximately 100 pharmacies in the State of Washington. The project found that (1) pharmacists who received a financial incentive consistently reported higher cognitive service intervention rates than did those who did not receive financial incentives; (2) about half of all documented service problems were for patient-related matters (about one-third were for drug-related problems, about 17 percent were for prescription-related problems, and the residual 1.4 percent were for non-drug problems); (3) a drug therapy change occurred as a result of 28 percent of all pharmacist cognitive services; (4) for each cognitive service that was associated with any type of drug therapy change, the average downstream drug cost savings was about $13.05 (but these savings varied by type of drug therapy); and (5) the demonstration generated savings of about $78,000 in Medicaid prescription drug expenditure over the 18-month period.

The Consequences of Paying Medicare HMOs and Health Care Prepayment Plans (HCPPs) (6314) compared the cost effectiveness of such plans to fee-for-service (FFS) and health maintenance organizations (HMOs), which operate on a risk basis. The main question examined in this study was whether HCFA payments would have increased or decreased had these organizations remained risk contractors. The evaluator found that costs to HCFA increased substantially under the cost programs, HMO, and Health Care Prepayment Plan (HCPP). Furthermore, most of the cost-based plans were found to have favorable selection. Total dollar losses to HCFA for 1993 due to the cost, HMO, and HCPP programs were estimated to be $185 million relative to fee-for-service, and $4 million relative to risk-based payments. Dropping the seven plans that converted to risk or dropped out of Medicare since 1993 would have resulted in estimated losses of $210 million compared to FFS, and $90 million compared to risk contracting.

The Costs and Consequences of Case Management for Medicare Beneficiaries: Final Report (6291) studied the appropriateness of providing case management services to beneficiaries with catastrophic illnesses and high medical costs. It tested case management as a way of controlling costs in the fee-for-service sector. The target conditions and case management protocols differed in each site, though all three generally focused on increased education regarding proper patient monitoring and management of the target chronic condition. All three sites anticipated reduced hospitalizations and medical costs compared to the beneficiary control groups. The evaluation found that (1) the projects successfully identified and enrolled populations of Medicare beneficiaries likely to have much higher than average Medicare reimbursements during the demonstration period; (2) each project met with unexpectedly low levels of enthusiasm for the demonstration from beneficiaries and their physicians; and (3) despite high levels of satisfaction among the high-cost, chronically ill beneficiaries who eventually participated, the projects failed to improve client self-care or health, or reduce Medicare spending. Comparisons of health status, functional status, and expenditures between the control and intervention groups showed no improvements resulting from the case management intervention.

The Validation of Nursing Home Quality Indicators Study (6612) developed a system by which a series of indicators could be used, in conjunction with claims data, to monitor quality of care in nursing facilities. Fifty such indicators were developed and validated. The indicators focused on three broad problem areas: adverse outcomes, lack of therapy, and inappropriate pharmaceutical treatments. The indicators were designed to be used in an automated system to continuously monitor the quality of care provided. The study found that (1) it is possible to base such indicators on Medicaid and Medicare claims data; (2) as a whole, the indicators were better at predicting the absence of a quality issue (suggesting that the negative finding represented the lack of a quality concern in a specific nursing home); and (3) using covariant diagnoses was useful to adjust for the risk of a resident receiving an indicator tag.

The Evaluation of the Community Nursing Organization Demonstration Interim Evaluation Report (6306) examined a set of demonstration projects that tested a capitated, nurse-managed system of care. It was designed to promote timely and appropriate use of community health services and to reduce the use of costly acute care services. More than 5,400 beneficiaries were enrolled in the four Community Nursing Organization (CNO) demonstration sites. The evaluation report covers the first 15 months of operations. The applicants have been healthier and more independent, on average, than the general Medicare population in their respective market areas. Analyses of measures of death, physical functioning, and satisfaction with care detected no statistically significant differences. Analysis of a subsample of persons who were impaired in Activities of Daily Living indicated that members of the CNO treatment group were more likely to improve (or less likely to deteriorate further) than members of the control group. An even stronger result, in the same direction, was found for individuals who were limited in Instrumental Activities of Daily Living.

The Evaluation of the Utah Prepaid Mental Health Plan (6293) focuses on a demonstration project in which three mental health centers provided services to all Medicaid beneficiaries in their catchment areas (these areas included over 50 percent of all Utah Medicaid beneficiaries). It was expected that this program would control the cost inflation and improve patient outcomes in mental health services. The study examined (1) the organizational and financial characteristics and their evolution over time, (2) the impact on the organization of service delivery and use of services, and (3) the financial impact on providers and the Medicaid program in Utah. The development of the demonstration proceeded fairly smoothly, albeit somewhat more slowly than planned. Three centers chose to enter the demonstration and eight chose to not join. Several changes in the program's environment affected the development during the initial 3 years. There were general expansions in children's programs, day treatment programs, and case management. The community mental health centers began to focus staff attention on ways to increase the efficiency with which discharges from the hospital were managed and on the way outpatient services were delivered--all while maintaining quality of care. The results suggest that the demonstration reduced expenditures on acute inpatient care by reducing admissions, without significant effects on outpatient expenditures and visits. Financial impact was possible in that the demonstration altered the way in which Medicaid funds flowed to the participating community mental health centers and it redefined their responsibilities with respect to the provision of services. In addition, there were relatively few financial differences between contracting and non-contracting community mental health centers. Thus, the decision to participate appears to have had a null effect on the site's financial performance. The payments to the participating sites were less than estimated. In the second method of looking at payments to the sites, there were savings on inpatient care, which were partially offset by increases in outpatient care for a net overall savings. The overall estimates of total program savings showed this same pattern of inpatient savings, diminished by outpatient increases. However, these estimates are very sensitive to the methods used to project trends.

The Limited-Service Hospital Pioneers: Challenges and Successes of the Essential Access Community Hospital/Rural Primary Care Hospital (EACH-RPCH) Program and Medical Assistance Facility (MAF) Demonstration (5200.1) concerned a legislatively mandated attempt to assist States in maintaining access to health care services in rural areas. The program awarded grants to several States to develop rural health plans, establish rural health networks, and create a limited service alternative for communities that could no longer support a full-service hospital. These limited service providers and other health care providers were organized into rural health networks. This evaluation examined the development, implementation, and early operating experience of the program. In addition, it looked at a forerunner program, the Montana Medical Assistance Facility Demonstration. It found that these limited service hospital models occupy a niche in rural health care system by permitting an alternative for outright closure. However, there were considerable limitations to participation. The financial benefits varied by facility, depending on such things as cost structure, provider supply, and patterns of use in the specific community. It found that program flexibility and the linkage of primary care services to developing networks was essential.

The Comparative Study of the Use of EPSDT and Other Preventive and Curative Health Care Services by Children Enrolled in Medicaid: Final Project Synthesis Report (6236.7) included (1) a description of the Medicaid program in the four study States (Michigan, Georgia, Tennessee, and California) and these States' responses to the 1989 legislative changes relating to children's and Medicaid coverage and also to the Early Periodic Screening, Diagnosis, and Treatment (EPSDT) program; (2) an analysis of the impacts of the State's responses on participating providers and enrolled children; and (3) an assessment of the national context. The States' efforts to increase provider participation in Medicaid and EPSDT were successful in increasing provider participation and average caseloads among all types of providers (except for dentists in Michigan). However, the increased supply may not have been adequate to meet the increased demand because the ratios of Medicaid children to participating providers and percentages of counties with provider shortages rose from 1989 to 1992 in all four States. Only 42 to 54 percent of Medicaid children were recommended to have preventive care visits and, of these, only 36 to 59 percent made such visits. Compared with other low-income children, Medicaid coverage did increase service use and improved access to illness-related care. However, Medicaid children had very low completion rates for age-appropriate immunizations.

The Evaluation of the Demonstration to Improve Access to Care for Pregnant Substance Abusers (6297) sought to evaluate project effectiveness in (1) outreach and assessment; (2) expansion, integration, and coordination of program services; and (3) improvement of client case management. The evaluator examined the effects of access to prenatal care and substance abuse treatment services on the health of drug-addicted pregnant women and birth outcomes of their infants. The evaluation showed that the number of abusers enrolled in the demonstrations was low relative to all pregnant substance abusers in the area, since women were reluctant to be identified. The project found higher enrollment rates in States that implemented broad-based outreach efforts, and that higher levels of participation and greater retention in substance abuse treatment resulted in higher-birthweight infants.

An Evaluation of Implementation of the Medicaid Community Supported Living Arrangements (CLSA) Program in Eight States (6304) was designed to test the effectiveness of developing a continuum of care concept as an alternative to the Medicaid-funded residential services provided to individuals with mental retardation and related conditions. The program served individuals who are either living in the community independently, with their families, on in homes with three or fewer other individuals receiving the same services. These services were provided in eight States between fiscal years 1991 and 1995. By the end of the program, only 73 percent of the expected number of individuals were receiving services in the Community Supported Living Arrangement (CSLA), and the expenditures were only 58 percent ($38.4 million) of the amount authorized.

The Impact of Report Cards on Employees: A Natural Experiment (6312) sought to determine whether the dissemination of information about health plans to consumers (who choose health plans within a managed care competition framework) would influence their knowledge of plan characteristics, attitudes toward the plans, or choice of plan. Investigators found that report cards had no effect on employees' knowledge of health plans, their attitude about quality of health plans, or their choices in selecting a managed care health plan. The study did find that health plan characteristics (such as price) were strongly related to health plan choice. The investigators suggest that consumers do not seem to be influenced by the information in any of the ways measured in this study.

Evaluations in Progress

HCFA currently supports 19 evaluation projects in progress, 13 of which are scheduled to be completed in FY 1998. These projects provide information for continued monitoring of the Medicare and Medicaid programs and assess the impacts of HCFA's Medicare and Medicaid demonstration projects.

The Evaluation of Medicare SELECT (5966.3) examines a pilot Medicare supplemental insurance product under which full Medigap benefits are paid only when services are provided by the plan's provider network. Case studies, primary surveys, and administrative data (claims) analyses are conducted. The analytical portion of the project compares cost and use of Medicare and supplemental services, selection effects, beneficiary satisfaction, and physician practice patterns to other Medigap options. To date, the evaluation has found no health status differences or quality of care received by SELECT and non-SELECT beneficiaries. In addition, there were no differences in overall satisfaction levels between these populations. Premiums for SELECT policies were almost always cheaper than the same company's own standard Medigap policy for any age group. In two out of three years examined, SELECT policies were generally more expensive for older beneficiaries when compared to community rated policies. Medicare costs generally increased as a result of Medicare SELECT. The costs increased in five States, decreased in three States; and were not affected in three other States. Since the States studied were not chosen to be representative of the Nation, their experience is not necessarily indicative of a national program. Consequently, the effect of SELECT on Medicare program expenditures appears to be mixed at best.

The Medicare Participating Heart Bypass Center Demonstration Extended Evaluation (5985.5) continues to study the feasibility of a negotiated, all-inclusive pricing arrangement for coronary artery bypass graft surgery while maintaining high-quality care. The project looks for any net cost savings to the Medicare program, any volume increases at the demonstration sites, the aspects of the demonstration that were attractive to beneficiaries and referring physicians, and whether the quality of care at the sites was equivalent to that provided prior to the demonstration.

The Medicare HMO Evaluation (6294) updates the findings of an earlier study of Medicare risk health maintenance organizations. That study found that Medicare paid 5.7 percent more for plan enrollees than would have been spent under fee-for-service. The current study looks at disenrollment, beneficiary satisfaction, quality of care, and selection and savings.

The Evaluation of Medicaid-Managed Care Programs with 1915(b) Waivers (6290) will provide information on the extent to which various features of the managed care waiver projects contribute to the ability of the Medicaid program to deliver cost-effective care to eligible populations.

Maximizing the Effective Use of Telemedicine: A Study of the Effects, Cost Effectiveness, and Utilization Patterns of Consultation via Telemedicine (6303) is a comprehensive evaluation of HCFA's telemedicine demonstration projects. The project assesses alternative payment options for the providers of telemedicine services, such as fee-for-service, facility payments, or capitation. Objective measures of the cost of telemedicine services in different clinical settings are used, both from the payer's and the physician's perspective. Provider and patient satisfaction, utilization measures (e.g., physician visits, hospitalizations or rehospitilizations, and frequencies of complications or comorbidities), and the effect of telemedicine on practice patterns are included.

The Drug Utilization Review Evaluation Contract (6296) is examining the impacts of retrospective and prospective review, which included the payment of pharmacists for cognitive services. Demonstrations of on-line prospective drug utilization review (DUR) in Iowa and of cognitive service by Washington State pharmacists provided the primary data for evaluation. This evaluation looks at the two types of DUR program effects in preventing adverse drug-related events by incorporating and analyzing the program participants' pharmaceutical and medical information.

The Evaluation and Technical Assistance of the Medicare Alzheimer's Disease Demonstration (6305) is being conducted to determine the effectiveness, cost, and impact on health status and functioning of providing comprehensive in-home and community-based services to beneficiaries with dementia. Two models of care will be studied. Both include case management and an extensive package of services not presently covered under Medicare, such as adult day care, homemaker/personal care services, companion services, and caregiver education and training. The models are differentiated by the intensity of the case management provided to beneficiaries and their families and by the monthly amount of Medicare payments for project services. The purpose of the evaluation is to measure the cost and effect on the beneficiaries' functional level and institutionalization rate, as well as its impact on caregiver burden and stress.

Evaluation of Phase Two of the Home Health Agency Prospective Payment Demonstration (6308) examines the second phase of a program designed to test the effectiveness of using prospective payment methods to reimburse Medicare-certified home health agencies (HHAs). In this demonstration a per-encounter payment method is being tested. The study looks at the effects of this payment method on HHAs operations, service quality, and expenditures. It also analyzes the relationship between patient characteristics and the cost and utilization of home health services.

The Examination of the Medicaid Expansions for Children (6300) uses enrollment and expenditure trends to ascertain the impact of the 1989 program changes. It will look at target population penetration, and the impact of State policies (and the eligibility group) on enrollment, expenditures, and utilization of services.

The Project Demonstrating and Evaluating Alternative Methods to Assure and Enhance the Quality of Long-Term Care Services for Persons with Developmental Disabilities through Performance-Based Contracts with Service Providers (6310) tries to determine whether and how well the implementation of new approaches to quality assurance--with outcome-based definitions and measures of quality--will replace input and process measures of quality in this population group.

In future years, several other evaluations are expected to be completed.

The Evaluation of the Medicare Choice Demonstration (6292) assesses the feasibility and desirability of new types of managed care plans for Medicare. These plans can be integrated delivery systems and preferred provider organizations.

HCFA is conducting demonstrations testing the payment of skilled nursing facilities on a prospective basis for Medicare and Medicaid services. Medicare currently reimburses such facilities on a retrospective cost basis. This demonstration uses a case-mix classification system (called Resource Utilization Groups) to classify patients and establish payment rates. The Evaluation of the Nursing Home Case-Mix and Quality Demonstration (6307) seeks to estimate specific behavioral responses to the prospective payment and to test hypotheses about aspects of such responses. The main goal of the project is to estimate the effects on the health and functioning of the nursing home residents, their length of stay, and use of health care services; on the behavior of the facilities; and on the level and composition of Medicare expenditures.

The State of Delaware is experimenting with its Medicaid program. The State believes that by enrolling Medicaid children in a managed care system, it will benefit from a higher level of coordinated care and reduced costs. The Evaluation of the Demonstration Entitled Delaware Health Care Partnership for Children (6288) is examining this project.

HCFA is sponsoring a wide variety of waiver-based demonstrations that give States the opportunity to experiment with their Medicaid programs. As these demonstrations begin, HCFA will undertake examinations of their impact. The Evaluation of the Oregon Medicaid Reform Demonstration (6166), the Evaluation of the State Medicaid Reform Demonstrations (in Hawaii, Rhode Island, and Tennessee) (6289), and the Evaluation of the State Medicaid Reform Demonstrations (in Kentucky; Los Angeles County, California; Minnesota; New York; and Vermont) (6289.1) are three such projects. More evaluations will be initiated as more State demonstrations are begun.

In 1977, the Congress authorized a new type of provider, the Rural Health Clinic, which must be located in a rural health professional shortage area, medically underserved area, or Governor-designated shortage area and must make use of mid-level practitioners. Rural Health Clinics are reimbursed on a cost basis by the Medicare and Medicaid programs. Their numbers have been growing at a relatively rapid rate. The Evaluation of Rural Health Clinics (6299) examines the reasons for this growth, the impact on access to care for these rural populations, and the costs to the Federal government and States.

The Evaluation of the Program of All-Inclusive Care for the Elderly Demonstration (6309), known as PACE, examines replications of a unique model of managed care service delivery for very frail community-dwelling elderly, most of whom are dually eligible for Medicare and Medicaid and all of whom are assessed as being eligible for nursing home placement. The core services include adult day health care and multidisciplinary team care management through which all health and long-term care services are arranged. The evaluator is looking at the demonstration sites before and after assumption of financial risk to see if the replicates are cost effective relative the current Medicare and Medicaid services. They are also looking at the decision to enroll in order to understand how PACE enrollees differ from the eligible beneficiaries who choose not to enroll.