Private Payers Serving Individuals with Disabilities and Chronic Conditions. E. Summary and Discussion


In this chapter, we analyzed enrollment and claims data from the indemnity and managed care plans offered by two large employers to describe the demographic, case mix, and utilization characteristics of people with potentially disabling chronic diseases. We provide comparisons across employers, but focused within employers on differences between those in the indemnity versus the managed care plans. The reader should place more weight on the within-employer comparisons, because the two employers used in this study were not chosen on the basis of similarities in size, mission, location, or employee characteristics. Rather, they were chosen because they have large workforces, a variety of managed care plans, and the ability to link enrollment and medical claims data.

Our descriptive analysis yields several notable results. First, the prevalence of potentially disabling chronic conditions varied between the two employers. The reasons for the prevalence differences are unknown. One may speculate that prevalence estimates reflect the differing nature of employment and the differences in medical benefits covered. For example, compared to Employer B there may be a larger proportion of physically demanding jobs at Employer A that are more difficult to perform for those with potentially disabling chronic conditions. Employer A may therefore attract and retain fewer chronically ill or disabled employees. Alternatively, as a government employer, Employer B may offer better benefits (e.g., health benefits, sick leave, disability earnings coverage, and disability retirement benefits) than other employers in the same locale.5 As a result, Employer B may attract a larger percentage of people with chronic conditions.

Second, despite the differences in prevalence rates between the two employers, the employers' chronically ill populations had roughly the same proportions of many potentially disabling chronic conditions. Heart disease, asthma, cancer, and arthritis were frequent problems for both employers' adult health plan members, while asthma, congenital problems, and cerebral palsy affected both employers' covered children. Moreover, depending upon plan type, 29-57 percent of the sample members had one or more of the most common activity-limiting conditions identified by LaPlante(1989). Thus, in these populations a relatively small set of problems seems to account for a relatively large proportion of those with potentially disabling chronic conditions. If the same kinds of conditions are problematic for many different employers and health plans, disease management companies are likely to respond by offering programs for these frequent problems. At the same time, employers may work together to identify more efficient purchasing or care management strategies to accommodate the needs of their chronically ill health plan enrollees.

Third, analyses of service users showed that those with potentially disabling chronic conditions are more likely to enroll in the indemnity plans than in the managed care plans offered by these two employers. This finding is similar to those based upon data from the Medical Outcomes Study (Kravitz, et al., 1992). It seems in contrast, however, to work by Fama, Fox, and White (1995), who analyzed National Health Interview Survey data from 1992 to compare characteristics of people enrolled in HMOs to those with private indemnity coverage. The Fama, Fox, and White study was limited to a smaller number of chronic conditions than our study, but it was based on nationally representative survey data; neither the Medical Outcomes Study nor our study is nationally representative. Fama, Fox, and White found similar prevalence of chronic conditions across plan types but few differences by plan type in functioning, health status, and the likelihood of having chronic disease.

Other than noting obvious differences in study samples and the lists of chronic conditions studied by us and Fama, Fox, and White, the data we analyzed cannot be used to infer why our results differ from theirs. For example, it is unknown whether those with chronic conditions in our study were more likely to choose indemnity plans because of the desire to maintain existing relationships, or whether their choice was motivated by specific aspects of the managed care benefits. Moreover, the two employers we studied may offer different plan choices than faced by the typical National Health Interview Survey respondent that Fama, Fox, and White studied. These issues cannot be addressed easily without surveying large samples about their enrollment decisions.

Fourth, average age differed across plan types in this study. Indemnity plans had an older patient population. Other studies (such as Kravitz et al., 1992) also found that older people tended toward indemnity plan enrollment.

Fifth, differences in case mix were inconsistent across the managed care and indemnity plan comparisons. This suggestthat controlling for casemix differences across plans is essential before comparing utilization, expenditures or outcomes. Sixth, some inpatient and outpatient utilization measures differed substantially by employer. For example, hospitalization rates were usually higher for Employer A, and the pattern of outpatient claim days and outpatient therapy usage by plan type differed across the employers. Expenditure patterns also differed by employer. Analyses of inpatient expenditures showed no significant differences by plan type for Employer A. However, for Employer B, both inpatient and outpatient expenditures were significantly lower for adults in the HMO plans compared to the indemnity plans. These differences could be due to differences in patient samples, geographic differences in health care use, or other factors.

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