Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

AUGUST 1998 

OEI-06-95-00434 

BENEFICIARY PERSPECTIVES OF 

MEDICARE RISK HMOs 1996 

Beneficiaries With Functional Limitations, 

Comorbidities and Disabilities 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 

protect the integrity of the Department of Health and Human Services programs as well as the 

health and welfare of beneficiaries served by them. This statutory mission is carried out through a 

nationwide program of audits, investigations, inspections, sanctions, and fraud alerts. The 

Inspector General informs the Secretary of program and management problems and recommends 

legislative, regulatory, and operational approaches to correct them. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 

Inspector General. It conducts short-term management and program evaluations (called 

inspections) that focus on issues of concern to the Department, the Congress, and the public. The 

inspection reports provide findings and recommendations on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

OEI's Dallas Regional Office prepared this report under the direction of Chester B. Slaughter, 

Regional Inspector General. Principal OEI staff included: 

REGION HEADQUARTERS 

Kristine Kenslow Tricia Davis 

Judith V. Tyler Brian Ritchie 

Nancy Watts Barbara Tedesco 

To obtain a copy of this report, call the Dallas Regional Office at 1 (800) 848-8960. 

Reports are also available on the World Wide Web at (http://www.dhhs.gov/progorg/oei). 

http://www.dhhs.gov/progorg/oei 
EXECUTIVE SUMMARY

PURPOSE 

To describe and compare the experiences of functionally limited, comorbid and disabled Medicare 

HMO beneficiaries with those of healthier beneficiaries. 

BACKGROUND 

Medicare beneficiaries may join a risk health maintenance organization (HMO) or remain in the 

fee-for-service program. In return for a predetermined monthly capitation payment, the HMO 

must provide all medically necessary, Medicare-covered services, except hospice care. As of 

October 1997, the Health Care Financing Administration (HCFA) reported 307 risk HMO plans 

serving 5 million Medicare enrollees. 

We conducted a mail survey of 4 thousand enrollees and disenrollees from 40 Medicare HMOs. 

The OIG report entitled, "Beneficiary Perspectives of Medicare Risk HMOs 1996" presented an 

overview of findings from this survey data. One significant finding in this overview report was 

that functionally limited, chronically ill and disabled beneficiaries experienced more service access 

problems than healthier beneficiaries. 

This report provides an in-depth analysis of the survey responses of functionally limited, disabled 

and chronically ill beneficiaries having comorbidities. Recent research has shown less healthy 

beneficiaries are less likely to join HMOs and more likely to leave them. Some research has also 

found that such vulnerable beneficiaries have less favorable medical outcomes in HMOs than in 

fee-for-service delivery systems. 

We highlight and distinguish the responses of disenrollees in these groups since their 

unsatisfactory experiences may have motivated them to disenroll. Thus, their responses may 

sharpen our understanding of shortfalls in HMO services. 

FINDINGS 

Although our overall report found that Medicare beneficiaries in HMOs generally had good 

access to health care services, beneficiaries who are impaired or less healthy experienced 

substantially more problems. We found significant differences between these vulnerable 

beneficiaries and their healthier counterparts regarding their experiences with enrollment, access 

to services, care from their primary doctors and difficulty of obtaining HMO care. 

Functionally limited, comorbid and disabled beneficiaries experienced more problems in 

accessing services, particularly specialized services, than healthier beneficiaries. 

< Functionally limited enrollees (8%) and disenrollees (20%), comorbid enrollees (9%) and 

disabled disenrollees (27%) said that their physician failed to give them needed Medicarecovered services. These proportions were significantly higher than their corresponding 

reference groups. 

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< Comorbid enrollees (8%) and disenrollees (21%), and disabled disenrollees (36%) said their 

physician failed to refer them to needed specialists. 

< More comorbid disenrollees (36%) reported delays in obtaining non-routine services (i.e. 

physical therapy, diagnostic tests) in the six months prior to the survey. 

Vulnerable beneficiaries said obtaining care through their HMO was hard or very hard. 

Over 37 percent of disabled disenrollees and 24 percent of disabled enrollees said obtaining care 

through their HMO was hard or very hard. This was substantially higher than the proportion of 

elderly beneficiaries who reported this. Functionally limited and comorbid beneficiaries expressed 

similar difficulties in obtaining care. 

While able to obtain timely appointments when they were very ill, vulnerable beneficiaries were 

more critical of the care received from their primary physicians. 

< Functionally limited enrollees (16%) and disenrollees (24%), as well as disabled disenrollees 

(39%) more often reported that their primary physicians did not take their health complaints 

seriously. 

< Disabled (61%) and functionally limited (68%) disenrollees were significantly less likely than 

aged (78%) and less impaired (79%) disenrollees to believe their physician explained all 

treatment options to them. 

< Fewer functionally limited enrollees (34%) and disenrollees (29%), and disabled enrollees 

(38%) rated the care received from their primary physicians as excellent than their 

corresponding reference groups. 

While sizeable proportions of vulnerable enrollees said their health improved, about one fifth of 

vulnerable disenrollees said care provided by the HMO caused their health to worsen. 

Among vulnerable disenrollees, 23 percent of comorbid, 20 percent of functionally limited, and 18 

percent of the disabled beneficiaries reported HMO care caused their health to worsen. However, 

on the positive side, 34 percent of disabled, 44 percent of functionally limited, and 52 percent of 

comorbid enrollees said their health improved under HMO care. 

Disabled beneficiaries and functionally limited and comorbid disenrollees were more likely than 

less impaired groups to have been inappropriately asked about their health problems when 

applying to their HMO. 

Disabled disenrollees (25%) more often reported being asked questions regarding their health at 

application than aged disenrollees (17%). Likewise, more functionally limited disenrollees, and 

comorbid disenrollees (22%) reported being asked about their health status at the time of 

application than beneficiaries without functional limitations or multiple illnesses. 

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RECOMMENDATIONS 

We recommend that HCFA address the problems identified by vulnerable beneficiaries in 

Medicare risk HMOs and suggest consideration of the following options. 

< In developing the health status capitation risk adjusters required by the Balanced Budget Act 

of 1997, HCFA should take into account the following considerations: 

C Risk adjusters should be sufficiently specific to address the severity of illnesses or 

functional impairments contributing to the health service needs of beneficiaries. 

C Multi-plan studies should be conducted concurrently with implementation of the risk 

adjustment methodology to measure adequacy of adjusters and plan and beneficiary 

behavioral responses. 

C During the early implementation stage, the capitation methodology could include 

adjustments based upon actual cost experience. 

< Service access problems encountered by vulnerable populations in HMOs should continue to 

be monitored. 

< Contractual requirements could be used by HCFA to encourage or require plans to designate 

specialists as primary physicians in appropriate cases or to provide standing referrals for 

ongoing specialty care needs. 

< HCFA could also use contractual requirements to assure that referral and utilization criteria 

are available on request to providers and to beneficiaries for use in accessing care and 

appealing any denials of service. 

AGENCY COMMENTS 

We received comments from HCFA and the Assistant Secretary for Planning and Evaluation 

(ASPE). HCFA fully concurred with four of the six recommendations in the report and partially 

concurred with the remaining two recommendations regarding risk adjustment, by citing 

difficulties with implementation of parts of the recommendations. HCFA also offered several 

technical comments about sample size and questioned the connection between the report's 

analyses and our recommendations for risk adjustment. ASPE concurred with our 

recommendations, but suggested further study of the disabled population, and also noted some 

concerns on the sample size and composition. Based on HCFA and ASPE comments, we clarified 

information about our sample and cited literature demonstrating the connection between access to 

care issues and risk adjustment. 

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TABLE OF CONTENTS

PAGE

EXECUTIVE SUMMARY ................................................... i

INTRODUCTION .......................................................... 1

FINDINGS ................................................................ 5

Enrollment Process ........................................................ 5

Perceived Health Status .................................................... 6

Access to Health Services ................................................... 7

Primary HMO Physician Care ............................................... 10

Assessing HMO Overall Care ............................................... 12

RECOMMENDATIONS ................................................... 14

AGENCY COMMENTS .................................................... 17

ENDNOTES ............................................................. 19

BIBLIOGRAPHY ......................................................... 21

APPENDICES

Methodology .......................................................... A-1

Demographic Data for Survey Respondents ................................... B-1

Supplementary Tables for Beneficiary Survey Findings ........................... C-1

Statistical Tables for Key Questions ......................................... D-1

Agency Comments ...................................................... E-1
INTRODUCTION

PURPOSE 

To describe and compare the experiences of functionally limited, comorbid and disabled Medicare 

HMO beneficiaries with those of healthier beneficiaries. 

BACKGROUND 

The Medicare risk HMO program 

Medicare beneficiaries may join a risk health maintenance organization (HMO) through the 

Medicare program. When enrolling beneficiaries, HMOs may not deny or discourage enrollment 

based on a beneficiary's health status except for end-stage renal disease (ESRD) or hospice care. 

They must also adequately inform beneficiaries about lock-in to the HMO and appeal/grievance 

procedures. Once enrolled, beneficiaries are usually required to use HMO physicians and 

hospitals (lock-in) and to obtain prior approval from their primary care physicians for other than 

primary care.1 The Health Care Financing Administration (HCFA) has oversight responsibility for 

Medicare risk contracts with HMOs. Effective July 1997, HCFA's internal reorganization placed 

many managed care functions under the new Center on Health Plan and Provider Operations. 

Previously, the HCFA Office of Managed Care was the responsible agency. As of October 1997, 

HCFA reported 307 risk-based HMO plans served 5,049,296 Medicare enrollees.2,3 

Functionally limited, chronically ill and disabled beneficiaries 

Several recent studies have focused attention on the experiences and outcomes of the less healthy 

Medicare beneficiaries who join HMOs. Since the Medicare HMO program is growing 

substantially and the population of beneficiaries over age 85 is growing it is anticipated that the 

health care needs of HMO members will intensify. Because they use the health care system more 

often and cost more to care for, the less healthy members have a more experienced view of their 

health care system than healthy members and are often more vulnerable to cost saving strategies 

employed in managed health care.4,5 A recent medical outcomes study found that patients with 

chronic illnesses had worse outcomes in HMOs than in fee-for-service coverage, but such 

outcome differences were not found for a healthier population.6 Another study of enrollmentdisenrollment patterns and utilization of hospital services found that beneficiaries who disenroll 

from HMOs have higher inpatient admission rates than those who stayed in the fee-for-service 

system7 suggesting that sicker beneficiaries are selectively disenrolling from HMOs. Given these 

findings, an examination of sicker beneficiaries experiences with HMOs is warranted, and is the 

focus of this report. 

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1 
Prior Office of Inspector General studies 

The Office of Inspector General (OIG) has conducted several studies of Medicare managed care. 

In 1995 the OIG released two final reports based on 1993 survey data from 2,882 Medicare HMO 

enrollees and recent disenrollees randomly sampled from 45 Medicare risk HMOs.8 While the 

majority of enrollees and disenrollees reported access to medical care that maintained or improved 

their health, the results also indicated some serious problems with enrollment procedures and 

service access. Further, the reports suggested how HCFA could use information from 

beneficiaries to guide its performance monitoring and assessments of HMOs. 

In 1996 OEI initiated a follow-up study,"Beneficiary Perspectives of Medicare Risk HMOs 1996" 

(OIG-OEI-06-95-00430), largely replicating the methodology of the 1993 survey for comparison 

purposes. One of the more substantial findings of the overview report was that experiences and 

perspectives of HMO enrollees and disenrollees who were functionally limited, chronically ill or 

disabled differed significantly from those of healthier beneficiaries. This report provides a more 

indepth look at these sub-populations. 

METHODOLOGY* 

Definition of access 

Beyond referencing medical necessity and an actual or likely adverse effect on the beneficiary, the 

law and regulations do not clearly delineate what full access to services through an HMO means. 

To adequately cover access to services, we adapted a definition from literature that uses five 

dimensions: availability, accessibility, accommodation, affordability, and acceptability. 

Operationally, we divided access into five areas: appointments, including waiting time and 

administrative processes for making them; restrictions on medical services; incidence and reasons 

for out-of-plan care; behavior of primary HMO doctors and other HMO personnel towards 

beneficiaries; and beneficiary awareness of appeal and grievance rights. 

Sample selection 

From HCFA's Group Health Plan (GHP) data base, we selected a two-stage random sample, 

stratified at the second stage. At the first stage, we selected Medicare risk HMOs from those 

under contract with HCFA as of May 1996. We first excluded those that did not meet our 

parameters for length of time in the Medicare program or for number of enrollees and 

disenrollees. From the remaining HMOs, we randomly selected 40. At the second stage, we 

selected current enrollees and recent disenrollees from each sampled HMO. After excluding 

enrollees and disenrollees who had not been members for at least 3 months, we randomly selected 

51 enrollees and 51 disenrollees from each of the 40 HMOs. Finally, using HCFA's Enrollment 

Data Base, we dropped beneficiaries who had died or who appeared as current enrollees, but had 

actually disenrolled since the last update to the GHP file. This process resulted in 2,038 enrollees 

and 2,027 disenrollees for a total of 4,065 beneficiaries. 

* See Appendix A for the full text of the Methodology. 

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2 
Scope and data collection 

Since this study's primary focus is the Medicare beneficiaries' perceptions of their risk HMO 

experiences, we only collected information from them. We surveyed both enrollees and 

disenrollees to compare their responses, and thus, to gain greater insight into HMO issues. We 

did not contact HMOs or their staffs, nor did we attempt to assess the quality or propriety of 

medical care rendered by the HMOs to these beneficiaries. We initially mailed structured survey 

forms to 4,065 beneficiaries in early August 1996. In mid-September 1996, we mailed a followup letter and second survey form to non-respondents; we closed data collection in October 1996. 

With the exception of four questions on overall ratings of their HMO experiences, we did not 

specifically ask beneficiaries about their satisfaction with the HMOs. Instead we asked for more 

concrete details on beneficiaries' perceptions and experiences, such as, how long were waits for 

appointments, or how often, if ever, did a primary physician fail to take their health complaints 

seriously. Both enrollees and disenrollees provided information on sample and demographic data, 

enrollment experience, past and present health status and functional level, cost of HMO 

membership, HMO environment, and available HMO services. 

A total of 3,229 survey forms were returned. Of these, 3,003 were usable yielding an unweighted 

return rate of 74 percent overall, 82 percent for enrollees (N=1665) and 66 percent for 

disenrollees (N=1338). 

Weighting and interpretation 

We weighted the collected data to reflect a non-response bias, differences in enrollment size 

among the sampled HMOs, and distribution of enrollees and disenrollees in the universe (97% vs. 

3%) for the sample period. The results are generalizable only to the 132 HMOs that met our 

sampling parameters. 

Because of the imbalance between enrollees and disenrollees, we primarily analyzed the two 

groups separately. Comparisons between sub-populations of enrollees and disenrollees form the 

basis for all tables in this report. All tables show the weighted percentages with the weighted 

number of respondents in parentheses. Additionally, we computed 95 percent confidence 

intervals and statistical significance tests for key questions (see Appendix D ). 

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3 
Defining Medicare vulnerable sub-populations 

We conducted a literature review of recent studies of Medicare beneficiaries which addressed less 

healthy sub-populations. Several working definitions were identified in the literature. We used 

definitions of vulnerable subgroups that were fairly consistent with those used in existing studies. 

In our overview report, we used a broad category of chronically ill beneficiaries since other 

studies had used this categorization. However, our more indepth analysis of vulnerable 

feneficiaries for this report, as well as prior research efforts, led us to focus on beneficiaries 

having multiple health problems as a more discriminating category for the chronically ill. 9 

Therefore, we chose to use comorbidity as our definition of serious illness. For a more complete 

discussion of the categorization scheme used across other studies, see Appendix A. 

We analyzed three categories of vulnerable beneficiaries: the disabled, functionally limited and 

comorbid individuals having multiple serious conditions. Disabled beneficiaries were shown on 

the GHP as meeting the Medicare criteria for disability and were younger than 65. We classified 

enrollees and disenrollees as functionally limited or comorbid based on their self reports of health 

conditions and activities of daily living. Functionally limited beneficiaries reported at least one 

limitation in the following activities of daily living: problems getting in or out of bed, bathing or 

showering, using the toilet, or climbing one flight of stairs. Comorbid beneficiaries reported two 

or more health conditions from a list including heart attack or heart condition, kidney failure, 

stroke, cancer (excluding skin cancer), diabetes, and other serious conditions (See Appendix A). 

The sub-populations of disabled and functionally limited beneficiaries are not the same, although 

some overlap exists. Disabled enrollees and disenrollees comprise 12 percent and 24 percent, 

respectively, of the functionally limited respondents. 

The unweighted sample sizes for these vulnerable sub-groups resulting from these definitions are 

as follows: Disabled Enrollees - 91, Disabled Disenrollees - 98, Functionally Limited Enrollees -

258, Functionally Limited Disenrollees - 216, Comorbid Enrollees - 244, Comorbid Disenrollees -

207. 

This inspection was conducted in accordance with the Quality Standards for Inspections issued 

by the President's Council on Integrity and Efficiency. 

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4 
FINDINGS

SUMMARY OF BENEFICIARIES' ASSESSMENTS 

Overall, Medicare beneficiaries in risk HMOs gave favorable reports of their experiences and 

access to care in 1996. Problem areas identified by the overall group were beneficiaries' lack of 

awareness of their formal appeal and grievance rights, disenrollees receiving denials for 

emergency or urgent care, and awareness of the need for, and rules applying to gynecological 

care. However, we found that functionally limited and disabled beneficiaries experienced 

significantly more problems in accessing specialists, and other Medicare-covered services, and in 

receiving full explanations of their treatment options and having their health complaints taken 

seriously. 

In our further analysis of the experiences of vulnerable sub-populations in Medicare risk HMOs, 

we found additional evidence of problems they encountered and differences in their perceptions of 

HMO care as compared to the overall HMO beneficiary population. These included problems 

with access to care, particularly referrals and specialized services, the perception that their 

primary doctor did not take their complaints seriously and difficulty they experienced in obtaining 

care. For this report, we expanded the set of questions examined to include the enrollment 

process, their rating of care received by their primary doctor, and the impact of the care they 

received on their health status. 

ENROLLMENT PROCESS 

We found that vulnerable beneficiaries' most frequently mentioned reasons for joining HMOs, as 

for healthier beneficiaries, were to obtain more affordable health care, services not covered by 

Medicare fee-for-service, and better quality care (See Table C-1). 

We noted few differences among specific sub-groups concerning why they joined an HMO. We 

found that disabled enrollees (70%) and disenrollees (58%) were much more likely than aged 

enrollees(36%) and disenrollees (37%) to have joined their HMO in order obtain services not 

covered by the fee-for-service plan. Additionally, comorbid disenrollees (40%) joined for this 

reason more often than their reference group (28%). Disabled disenrollees joined seeking more 

affordable health care (48%) less often than aged disenrollees (72%), which was also true for 

comorbid disenrollees (60% compared to 72%). See Table C-1. Most beneficiaries knew at 

enrollment that their primary HMO doctor must give them referrals for specialist services. 

Disabled Beneficiaries And Functionally Limited And Comorbid Disenrollees Were More 

Likely Than Less Impaired Groups To Have Been Inappropriately Asked About Their 

Health Problems At Application. 

Due to concerns stated by other researchers over whether less healthy beneficiaries are being 

selectively excluded from HMO membership, we analyzed the experience of these vulnerable 

groups regarding being asked about their health problems at application. We found that disabled 

enrollees (22%) and disenrollees (25%) and disenrollees reporting comorbidities (22%) and 

functional limitations (23%) did more often report being asked about their health status at the 

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5 
time of HMO application. See Table C-2. 

PERCEIVED HEALTH STATUS 

Researchers have found self assessment of health status is strongly related to perceived health care 

needs and utilization of services.10 Since health status has multiple dimensions, including the 

nature of the diagnosis, the severity of the condition, and functional limitations caused by the 

condition, the individual is able to take all of these dimensions into account in self-assessing their 

health status. Because perceived health status is an important predictor of perceived health care 

needs and service utilization, we examined the self-reported health status of each vulnerable 

beneficiary group. 

Table 1: 

Enrollees Disenrollees 

Medicare Aged/Disabled Aged Disabled Aged Disabled 

Health at time of survey was: 

< good to excellent 

< fair 

< poor to very poor 

71% 

(1,319,887) 

25% 

(460,975) 

5% 

(84,221) 

34% 

(27,377) 

42% 

(34,091) 

24% 

(19,763) 

66% 

(27,750) 

25% 

(10,403) 

9% 

(3,845) 

21% 

(594) 

48% 

(1,378) 

32% 

(915) 

Functional Limits No Limits 1+ Limits No Limits 1+ Limits 

Health at time of survey was: 

< good to excellent 

< fair 

< poor to very poor 

77% 

(1,197,149) 

21% 

(321,764) 

2% 

(32,450) 

31% 

(104,547) 

48% 

(161,033) 

21% 

(70,717) 

74% 

(25,054) 

21% 

(7,194) 

5% 

(1,645) 

16% 

(1,355) 

50% 

(4,356) 

34% 

(2,972) 

Comorbidity <2 Illnesses 2+ Illnesses <2 Illnesses 2+ Illnesses 

Health at time of survey was: 

< good to excellent 

< fair 

< poor to very poor 

76% 

(1,157,508) 

22% 

(332,433) 

3% 

(41,655) 

40% 

(136,330) 

43% 

(146,675) 

17% 

(59,588) 

71% 

(25,468) 

23% 

(8,099) 

6% 

(2,073) 

19% 

(1,300) 

45% 

(3,105) 

36% 

(2,516) 

Beneficiaries' Perceived Health at Time of Survey by Sub-Population 

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6 
As Expected, Vulnerable Beneficiaries Assessed Their Health Status As Much Poorer Than 

Other Beneficiaries. 

We found significant differences in the proportion of all vulnerable beneficiaries reporting poor to 

very poor health status compared to their reference groups (See Table 1). Disabled and 

functionally limited beneficiaries reported the highest proportions of poor health status. Disabled 

enrollees (24%) and disenrollees (32%) perceived their health status as poor or very poor more 

often than aged enrollees and disenrollees (9%). Comorbid enrollees (17%) and disenrollees 

(36%) more often reported poor to very poor health compared to 3 percent and 6 percent 

respectively, of their reference groups. 

ACCESS TO HEALTH SERVICES 

Several health economists and health services researchers have expressed concern regarding the 

perverse payment incentives which exist in the current Medicare HMO capitation methodology 

which is not adjusted for health status. They note that plans which develop a reputation for 

quality care to the sickest patients will attract a disproportionate share of such enrollees without 

any additional compensation for their more expensive care. This can lead to plan failure or 

incentives to limit access and treatment for specific subgroups.11,12,13 Due to these concerns, we 

focused much of our analysis of vulnerable beneficaries in Medicare risk HMOs on their access to 

health services. 

While Able To Obtain Timely Primary Physician Appointments When They Were Very Ill, 

Vulnerable Beneficiaries Experienced More Service Access Problems Than Healthier 

Beneficiaries. 

We first examined these beneficiaries' access to timely (1-2 days) primary physician appointments 

when they were very sick. We found no differences between the vulnerable beneficiaries and 

others in receiving timely doctor appointments. Most enrollees (92% to 97%) were able to obtain 

appointments within 1 to 2 days when very sick. Similarly, most disenrollees (84% to 87%) 

obtained timely appointments when very sick. See Tables 2.1 to 2.3. 

Functionally limited beneficiaries, comorbid enrollees and disabled disenrollees said their 

physician failed to give them Medicare-covered services more often than healthier 

beneficiaries. 

Of disabled disenrollees, 27 percent stated that their physicians failed to give them Medicarecovered services, whereas only 11 percent of aged disenrollees made this assertion. Among 

functionally limited beneficiaries, 8 percent of enrollees and 20 percent of disenrollees reported 

this failure to obtain services compared to 2 percent of enrollees and 11 percent of disenrollees in 

the less impaired group. Comorbid enrollees were also more likely than their healthier 

counterparts to report their physician failed to give them Medicare-covered services (9% 

compared to 2%). 

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7 
Comorbid beneficiaries and disabled disenrollees experienced more problems in obtaining 

referrals to specialists than healthier beneficiaries. 

Thirty-six percent of disabled disenrollees experienced failure of their physicians' to refer them to 

a specialist when the beneficiaries felt this was needed, which is significantly higher than the 13 

percent of aged disenrollees making this claim (See Table 2.1). 

Table 2.1: 

Enrollees Disenrollees 

Service Access Aged Disabled Aged Disabled 

Received appointment with physician w/in 

1-2 days when very sick. 

Physician failed to give needed Medicarecovered services. 

Experienced delays in receiving nonroutine services in past 6 months. 

Physician failed to admit beneficiary to 

hospital when needed. 

Physician failed to refer beneficiary to a 

specialist when needed. 

Had sought out-of-plan care. 

96% 

(982,645) 

3% 

(62,609) 

12% 

(159,867) 

1% 

(12,747) 

4% 

(64,581) 

5% 

(100,662) 

95% 

(63,365) 

4% 

(3,233) 

23% 

(15,463) 

4% 

(2,061) 

16% 

(12,935) 

15% 

(12,505) 

85% 

(23,952) 

11% 

(5,265) 

23% 

(8,222) 

4% 

(829) 

13% 

(4,586) 

10% 

(4,612) 

87% 

(2,330) 

27% 

(970) 

34% 

(1,101) 

19% 

(377) 

36% 

(918) 

14% 

(531) 

Service Access by Medicare Aged/Disabled Sub-Population 

Table 2.3 indicates that beneficiaries with comorbidity experienced this problem with specialty 

referrals as well. Eight percent of enrollees and 21 percent of disenrollees reported a problem 

with specialist referrals, contrasted with healthier enrollees (4%) and disenrollees (13%). 

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8 
Table 2.2: 

Enrollees Disenrollees 

Service Access No Limits 1+ Limits No Limits 1+ Limits 

Received appointment with physician w/in 

1-2 days when very sick. 

Physician failed to give needed Medicarecovered services. 

Experienced delays in receiving nonroutine services in past 6 months. 

Physician failed to admit beneficiary to 

hospital when needed. 

Physician failed to refer beneficiary to a 

specialist when needed. 

Had sought out-of-plan care. 

97% 

(768,985) 

2% 

(35,857) 

11% 

(123,089) 

1% 

(8,241) 

5% 

(58,280) 

4% 

(63,105) 

92% 

(233,233) 

8% 

(26,111) 

16% 

(41,497) 

3% 

(6,110) 

6% 

(11,235) 

13% 

(46,648) 

84% 

(17,717) 

11% 

(4,136) 

22% 

(6,495) 

4% 

(660) 

12% 

(3,313) 

10% 

(3,751) 

87% 

(7,320) 

20% 

(2,047) 

30% 

(2,589) 

8% 

(522) 

25% 

(2,072) 

13% 

(1,327) 

Service Access by Functionally Limited Sub-Population 

Comorbid disenrollees encountered more delays in obtaining non-routine services (e.g. 

physical therapy, diagnostic tests) than healthier disenrollees. 

We asked beneficiaries about any delays in receiving HMO approvals for non-routine services, 

such as physical therapy or diagnostic tests in the 6 months prior to the survey. Of disenrollees 

with comorbidities, 36 percent had experienced such delays, although only 21 percent of healthier 

disenrollees reported this (See Table 2.3). 

Table 2.3: 

Enrollees Disenrollees 

Service Access <2 Illnesses 2+ Illnesses <2 Illnesses 2+ Illnesses 

Received appointment with physician w/in 

1-2 days when very sick. 

Physician failed to give needed Medicarecovered services. 

Experienced delays in receiving nonroutine services in past 6 months. 

Physician failed to admit beneficiary to 

hospital when needed. 

Physician failed to refer beneficiary to a 

specialist when needed. 

Had sought out-of-plan care. 

97% 

(742,513) 

2% 

(35,127) 

13% 

(134,787) 

1% 

(5,665) 

4% 

(51,794) 

6% 

(84,684) 

94% 

(265,966) 

9% 

(29,629) 

12% 

(33,394) 

4% 

(8,346) 

8% 

(25,434) 

7% 

(23,663) 

85% 

(18,893) 

12% 

(4,954) 

21% 

(6,450) 

4% 

(455) 

13% 

(3,769) 

9% 

(3,628) 

87% 

(6,482) 

12% 

(1,086) 

36% 

(2,465) 

13% 

(712) 

21% 

(1,510) 

14% 

(1,170) 

Service Access by Comorbid Sub-Population 

Beneficiaries with comorbidities and disabled disenrollees more often reported their primary 

)))))))))))

9 
physician failed to admit them to the hospital when they felt this was needed. 

As shown in Table 2.,3 comorbid diserollees (13%) and enrollees (4%) stated that their physician 

failed to admit them to the hospital when they felt this was needed more often than healthier 

beneficiaries. This problem was also experienced by disabled disenrollees (19%), whereas 

significantly smaller proportions of their reference groups noted this problem (See Table 2.1). 

PRIMARY HMO PHYSICIAN CARE 

We also analyzed a set of questions asking about beneficiaries' perceptions of the care received 

from their primary physicians. Given the "gatekeeper" role of the primary physician in an HMO, 

their relationship with beneficiaries is important to how HMO members perceive the quality of 

care they receive. 

The perceptions of comorbid beneficiaries were very similar to those of healthier beneficiaries. 

See Table 3. 

Functionally Limited Beneficiaries And Disabled Disenrollees Were More Critical Of The 

Care Received From Their Primary Physicians. 

Disabled and functionally limited disenrollees and enrollees more often said their primary 

care physician did not take their health complaints seriously. 

As seen in Table 3, a substantial proportion of disabled disenrollees (39%) reported their primary 

physician did not take their complaints seriously, as contrasted with only 17 percent of aged 

disenrollees. Our overview report discussed examples of provider behavior which generated these 

concerns, such as not listening to the beneficiary, impatience, and not letting beneficiaries fully 

explain their concerns.14 Among disenrollees, 39 percent of disabled and 24 percent of the 

functionally limited felt their primary care physician did not take their complaints seriously. To a 

lesser extent, disabled and functionally limited enrollees also shared this view. 

Disabled and functionally limited disenrollees were also less likely to believe their physician 

explained all their treatment options than less impaired disenrollees. 

Explaining treatment options is another important aspect of the physician patient relationship. 

Only 61 percent of disabled disenrollees believed their primary physician explained all their 

treatment options, whereas 78 percent of aged disenrollees felt this was true. Likewise, only 68 

percent of the functionally limited disenrollees were comfortable that all treatment options were 

explained by their physician compared to 79 percent of the less impaired disenrollees. We found 

no significant differences in comparing enrollees from these sub-populations with their reference 

groups, nor between comorbid beneficiaries and their healthier counterparts. 

)))))))))))

10 
Table 3: 

Populations 

Enrollees Disenrollees 

Primary Physician Care Aged Disabled Aged Disabled 

Primary physician did not take health 

complaints seriously. 

Primary physician explained treatment 

options 

Cost most important to primary physician. 

Believed care given by PCP was: 

< excellent 

< good 

< fair 

7% 

(127,608) 

89% 

(1,399,300) 

9% 

(138,033) 

48% 

(919,845 

43% 

(821,073) 

7% 

(131,841) 

13% 

(11,106) 

92% 

(73,799) 

5% 

(4,030) 

38% 

(34,275) 

45% 

(40,620) 

14% 

(12,959) 

17% 

(7,943) 

78% 

(31,090) 

20% 

(7,135) 

36% 

(17,545) 

37% 

(17,733) 

17% 

(8,085) 

39% 

(1,441) 

61% 

(2,176) 

24% 

(516) 

33% 

(1,221) 

24% 

(882) 

29% 

(1,072) 

Primary Physician Care No Limits 1+ Limits No Limits 1+ Limits 

Primary physician did not take health 

complaints seriously. 

Primary physician explained treatment 

options 

Cost most important to primary physician. 

Believed care given by PCP was: 

< excellent 

< good 

< fair 

5% 

(72,319) 

91% 

(1,143,058) 

8% 

(114,317) 

51% 

(804,503) 

41% 

(654,904) 

6% 

(101,383) 

16% 

(58,381) 

85% 

(280,598) 

9% 

(25,475) 

34% 

(117,306) 

50% 

(172,946) 

12% 

(41,298) 

17% 

(6,444) 

79% 

(25,390) 

18% 

(5,631) 

38% 

(14,759) 

37% 

(14,368) 

15% 

(5,664) 

24% 

(2,418) 

68% 

(6,742) 

27% 

(1,795) 

29% 

(3,201) 

29% 

(3,191) 

30% 

(3,264) 

Primary Physician Care by Medicare Aged/Disabled and Functionally Limited SubWe also analyzed the proportion of vulnerable beneficiaries who believed that cost was the most 

important consideration of their primary physician and generally found no difference between the 

vulnerable beneficiaries and healthier groups, except that 27 percent of functionally limited 

disenrollees believed this to be true versus 18 percent of less impaired disenrollees. 

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11 
Fewer functionally limited beneficiaries and disabled enrollees rated the care they received 

from their primary physician as excellent than their reference groups. 

We asked beneficiaries to give a summary rating of the care received from their primary 

physicians. Fewer disabled (38%) than aged (48%) enrollees rated this care as excellent. 

Likewise, fewer functionally limited enrollees (34%) and disenrollees (29%) rated the care 

provided by their primary physician as excellent than less impaired enrollees (51%) and 

disenrollees (38%). We found no differences between comorbid enrollees and healthier enrollees. 

However, comorbid (41%) disenrollees rated their care as excellent more often than those not so 

impaired. See Table 3. 

ASSESSING HMO OVERALL CARE 

While Sizeable Proportions Of Vulnerable Enrollees Said Their Health Improved, About 

One Fifth Of Vulnerable Disenrollees Said Care Provided By The HMO Caused Their 

Health To Worsen. 

Among vulnerable disenrollees, 23 percent of the comorbid, 20% of the functionally limited, and 

18 percent of the disabled reported HMO care caused their health to worsen. However, on the 

positive side, 34 percent of disabled, 44 percent of functionally limited, and 52 percent of 

comorbid enrollees said their health improved under HMO care. 

More Vulnerable Beneficiaries Said Obtaining Care Through Their HMO Was Hard Or 

Very Hard. 

Table 4 presents beneficiary assessments of the ease with which they obtained care through their 

HMO. Significantly more disabled enrollees (24%) and disenrollees (37%) and functionally 

limited enrollees (11%) and disenrollees (31%) said that obtaining care was hard or very hard 

compared to aged and less impaired beneficiaries. This greater difficulty in obtaining care was 

also a concern of comorbid disenrollees. 

)))))))))))

12 
Table 4: 

by Medicare Status, Functionally Limited and Comorbid Sub-Populations 

Enrollees Disenrollees 

Medicare Aged/Disabled Aged Disabled Aged Disabled 

Ease of obtaining care was: 

< easy or very easy 

< neither easy nor hard 

< hard or very hard 

68% 

27% 

5% 

45% 

31% 

24% 

52% 

29% 

18% 

45% 

18% 

37% 

HMO care caused health to: 

< improve 

< stay the same 

< worsen 

44% 

54% 

3% 

34% 

62% 

4% 

30% 

59% 

11% 

17% 

66% 

18% 

Functional Limits No Limits 1+ Limits No Limits 1+ Limits 

Ease of obtaining care was: 

< easy or very easy 

< neither easy not hard 

< hard or very hard 

70% 

26% 

5% 

55% 

35% 

11% 

55% 

28% 

16% 

40% 

29% 

31% 

HMO care caused health to: 

< improve 

< stay the same 

< worsen 

43% 

56% 

1% 

44% 

48% 

9% 

34% 

58% 

9% 

17% 

63% 

20% 

Comorbid <2 Illnesses 2+ Illnesses <2 Illnesses 2+ Illnesses 

Ease of obtaining care was: 

< easy or very easy 

< neither easy nor hard 

< hard or very hard 

67% 

28% 

5% 

66% 

27% 

7% 

53% 

28% 

18% 

47% 

28% 

25% 

HMO care caused health to: 

< improve 

< stay the same 

< worsen 

41% 

58% 

1% 

52% 

41% 

7% 

28% 

63% 

9% 

37% 

40% 

23% 

Beneficiaries' Perceptions of HMO Care 

)))))))))))

13
C

C

C

RECOMMENDATIONS

As the agency responsible for the growing Medicare risk HMO program, HCFA must exercise

leadership in monitoring the performance of HMOs and in assuring full access

to services for all Medicare HMO beneficiaries. Using 1996 data, we identified areas of the

Medicare risk HMO program that were working well for vulnerable beneficiaries or that

apparently needed improvement. Based on this work we also suggest techniques HCFA could

use to strengthen the consumer protections in its contractual requirements with HMOs to address

several problems identified by these vulnerable sub-populations. We further suggest factors for

HCFA to consider in developing the capitation rate risk adjusters required by the Balanced

Budget Act of 1997.

We recommend that HCFA take appropriate actions to address the problems of vulnerable

beneficiaries. We suggest HCFA consider the following options.

In developing and refining the health status capitation rate risk adjusters required by the 

Balanced Budget Act of 1997, HCFA should consider the following: 

C Risk adjusters should be sufficiently specific to address the severity of illness or 

functional impairments which contribute to the health service needs of beneficiaries. 

C Large scale, multi-plan studies should be conducted concurrently with implementation 

of the risk adjustment methodology to test the adequacy of adjusters and measure plan 

and beneficiary behavioral responses. 

C During the early implementation stage, the capitation methodology could include 

adjustments based upon actual cost experience. 

Health economists have, over the past several years, raised concerns about the financial incentives 

inherent in a capitation payment methodology which does not adequately adjust for the health 

risks of a diverse Medicare population. Specifically, they predict that managed care plans have 

incentives not to enroll sicker or disabled beneficiaries and that access problems will emerge for 

sicker patients in these plans.15 Our analysis of beneficiary survey responses adds to a growing 

number of studies which have shown evidence of enrollment and health access problems of these 

vulnerable groups.16 These health economists have described risk adjustment methodologies as 

the appropriate payment approach for addressing such problematic incentives. 

The findings of this report and a review of recent research suggest that multiple dimensions of 

health status need to be incorporated in a health status capitation rate methodology. Broad 

categories of health status or diagnoses are not likely to capture the range of variation in costs and 

health care needs of sicker and disabled populations. The Balanced Budget Act of 1997 requires 

HCFA to submit a report by March, 1999 on a method of risk adjustment for captation rates paid 

to Medicare HMOs, and to implement a risk adjustment methodology by January 1, 2000. 

However, the Act does not specify the methodology to be used. Health economists, over the past 

several years, have developed and conducted analyses of methodologies to serve this purpose. 17 18 

These studies have noted the importance of functional limitations and comorbidity in developing 

)))))))))))

14 
appropriate risk adjusters. 

However, both plan and beneficiary behavioral responses to the new incentives created by a risk 

adjustment methodology could vary from theoretical predictions. Thus, it is important for HCFA 

to conduct studies of the actual behavior of these actors concurrent with implementation of the 

risk adjustment methodology. A blend of prospective risk adjusters, coupled with actual cost 

experience, as proposed by Newhouse et. al.,19 might help to correct for initial variance from the 

expected effects of the new incentive structure of capitation risk adjustment as the methodology is 

being refined. 

Service access problems encountered by functionally limited, comorbid and disabled 

beneficiaries should be identified and carefully monitored to assure optimal access to 

needed health care services by these vulnerable groups. 

Both the 1993 and 1996 HMO beneficiary surveys identified service access problems for these 

vulnerable populations. HMOs and HCFA will be conducting disenrollee surveys and the 

Consumer Assessment of Health Plans Survey (CAHPS) to assess beneficiary experience and 

satisfaction with their HMOs. We believe these surveys should identify the health conditions and 

functional limitations of beneficiaries, and analyze the responses of these vulnerable populations, 

due to our findings on the problems they have experienced. These analyses could provide an 

important beneficiary protection as the altered incentives of a risk adjusted capitated methodology 

come into play. 

HMOs may be encouraged, or required by contract, to improve access to needed specialty 

care, by designating medical specialists as primary care providers for individuals with 

severe, disabling or degenerative conditions. Alternatively, HMOs could be encouraged or 

required to provide standing referrals to specialists for beneficiaries determined by the 

HMO to have conditions that require on-going specialty care. 

Problems with access and acceptability of care in HMOs for privately insured persons are 

currently being addressed by several state governments through legislation and regulation of the 

managed care industry. New York and New Jersey have proposed regulations requiring HMOs 

to designate medical specialists as primary care providers for these vulnerable beneficiaries. New 

York has also proposed regulations which would allow enrollees to receive a standing referral to a 

specialist for conditions requiring on-going specialty care.20 

At the Federal level, a "Patients Bill of Rights" is being considered. For Medicare beneficiaries 

HMO contractual requirements afford a mechanism for protecting vulnerable plan members. The 

problems in obtaining specialist referrals reported by vulnerable beneficiaries indicate such 

protection is warranted. 

)))))))))))

15 
To address problems experienced by vulnerable beneficiaries in obtaining needed 

Medicare-covered services and specialty care, HCFA could, through contractual 

requirements, require that referral and utilization criteria be available on request to 

providers and to beneficiaries for use in accessing care and appealing any denials of service. 

In our overview report we found that beneficiaries are experiencing problems in understanding 

their appeal rights. In this report we found that vulnerable beneficiaries are experiencing more 

problems than healthier beneficiaries in accessing needed health services, particularly specialty 

services. We suggest that HCFA strengthen its requirements of HMOs to assure beneficiaries 

have appropriate information regarding the basis upon which decisions regarding their access to 

care are made. 

Denial of service letters, written in clear language, must be provided by HMOs to plan enrollees 

when services are denied. These letters provide an appropriate mechanism to provide the 

enrollees and their providers with the criteria which were used to deny services. The HCFA 

HMO/CMP Manual requires specificity in reasons for denials to be stated in denial determination 

letters. However, criteria used by the plan in their determinations are not explicitly required.21 

This could also aid these enrollees and their providers in pursuing expedited appeals, which are 

required in urgent situations. New York has proposed regulations requiring such disclosures.22 

Monitoring state experiences with such regulations could assist HCFA in deciding whether to 

include such requirements in its Medicare HMO contracts. 

)))))))))))

16 
AGENCY COMMENTS

We received comments on the report from the Health Care Financing Administration (HCFA) and 

the Assistant Secretary for Planning and Evaluation (ASPE). The full text of their comments is in 

Appendix E. 

Health Care Financing Administration 

Of the report's six recommendations, HCFA fully concurred with four: 1) identifying and 

monitoring service access problems encountered by vulnerable beneficiaries; 2) improving these 

beneficiaries' access to needed specialty care; 3) improving the processes for informing providers 

and beneficiaries' of referral and utilization criteria; and 4) testing the adequacy of risk adjusters, 

and measuring plan and beneficiary behavioral responses. 

We also suggested that HCFA consider using health status adjusters to address severity of illness 

and functional impairments, as well as a blend of prospective adjusters and retrospective 

adjustments based upon actual cost in developing capitation rates. HCFA seriously considered 

these options and partially concurred by accepting their intent while raising substantive concerns 

about their feasibility. 

HCFA also noted that it is developing data and methods for risk adjustment based on severity of 

illness. By the year 2000, it will most likely implement a risk adjustment system that uses 

inpatient diagnoses to assign relative predicted risk scores to managed care enrollees. HCFA 

anticipates moving to a more comprehensive risk adjustment model in later years. HCFA does 

not foresee, however, implementing risk adjustment based on functional limitations as it would 

require an additional expense of another data collection, is difficult to do accurately, and is of 

questionable value to them. 

We also suggested that HCFA consider a partial capitation approach that blends prospective and 

retrospective adjustments. HCFA agrees that such an approach "may help mitigate against the 

possible incentives under full capitation to restrict the use of services." However, HCFA believes 

that this approach is not generally consistent with the prospective payment rate required by the 

Balanced Budget Act of 1997, would be difficult to operationalize based on their experience with 

demonstration projects, and again, would require data they do not have. 

HCFA also offered several technical comments on the report's title, the sufficiency of information 

about the sample sizes of the vulnerable subgroups, the connection between the report's analyses 

and our recommendations for risk adjustment, and the ability of some of these beneficiaries to be 

referred to appropriate specialty centers or clinics at least for diagnosis or case management. We 

modified the report title, added clarifications that specify the unweighted sample sizes, the 

smallest of which was 91 beneficiaries, and cited the literature that demonstrates the connection 

between access to care issues and risk adjustment. Acquiring sufficiently specific health data to 

identify beneficiaries with rare conditions or to analyze their referrals to specialty centers or clinics 

was beyond the intended scope of our study. 

Assistant Secretary for Planning and Evaluation 

)))))))))))

17 
ASPE concurred with the recommendations and offered comments on sample composition and 

size, the statistical significance of our findings, and the need for further study of the disabled 

population. ASPE noted incorrectly that our sample included only elderly Medicare beneficiaries 

and not disabled Medicare beneficiaries. In fact, as the methodology mentions, we did sample 

beneficiaries who met the Medicare criteria for disability and were younger than age 65. Of the 

3,003 respondents to our survey, 189 were Medicare disabled beneficiaries. Appendix D shows 

the tests of statistical significance between the disabled and aged Medicare respondents, as well as 

those for the other vulnerable group comparisons. We acknowledge ASPE's interest in further 

study of the disabled population. 

)))))))))))

18 
ENDNOTES

1. This excludes the effect of the point-of-service option which was relatively new for the 

Medicare program at the time we completed the data collection phase of our study. 

2. "Medicare Managed Care Plans," October 1997, a monthly report prepared by Office of 

Managed Care, HCFA. 

3. In recent years, HCFA has begun to broaden the range of service delivery options within 

the Medicare managed care program. In October 1995, HCFA issued guidelines to 

HMOs on offering a point-of-service (POS) option to Medicare enrollees. The POS 

benefit increases flexibility for Medicare HMO enrollees by allowing them to seek care 

outside the HMO's provider network, typically with higher cost-sharing, i.e. the HMO will 

provide partial reimbursement for out-of-network services. In January 1997, HCFA 

launched the Medicare Choices demonstration project designed to provide beneficiaries a 

wider variety of managed care plans and to extend managed care options to rural areas. 

The demonstration plans include four provider sponsored networks, a preferred provider 

organization and a "triple option" hybrid that lets members see gatekeeper physicians, 

other plan providers without a gatekeeper referral, or providers outside the plan. 

4. Paul Fishman et al., "Chronic Care Costs in Managed Care," Health Affairs, May/June 

1997, pp. 239-247. 

5. John E. Ware Jr., et al., "Differences in 4-Year Health Outcomes for Elderly and Poor, 

Chronically Ill Patients Treated in HMO and Fee-For-Service Systems," Journal of the 

American Medical Association, 1996:276:13:1039-1047. 

6. Ware et al., October 1996. 

7. Robert O. Morgan et al., "The Medicare-HMO Revolving Door - The Healthy Go In and 

The Sick Go Out", The New England Journal of Medicine (July 17, 1997), 

172-175. 

8. "Beneficiary Perspectives of Medicare Risk HMOs" (OEI-06-91-00730), 

"Medicare Risk HMO Performance Indicators" (OEI-06-91-00734) 

9. Physician Payment Review Commission 1997 Annual Report to Congress, p. 108. 

10. Hornbrook and Goodman present a study of the linkage of health status, functional 

limitations and health service utilization in the context of developing appropriate capitation 

risk adjusters. They reported that functional limitations, self-reported diseases and 

perceived health status to be strongly associated with service utilization and perceived 

health care needs. Consequently, they stress the importance of capturing multiple 

dimensions of health status, perception of health status, functional limitations as well as 

specific conditions in developing appropriate predictors of health service utilization. 

)))))))))))

19 
(Mark C. Hornbrook and Michael J. Goodman, "Chronic Disease, Functional Health 

Status and Demographics: A Multi-Dimensional Approach to Risk Adjustment," Health 

Services Research, 31:3, August 1996, pp. 283-305. 

11. Robert H. Miller and Harold S. Luft, "Does Managed Care Lead to Better or Worse 

Quality of Care," Health Affairs, September/October 1997, pp. 7-25. 

12. Hornbrook and Goodman, 1996. 

13. Morgan et. al., 1997. 

14. "Beneficiary Perspectives of Medicare Risk HMOs 1996," OEI-06-95-00430, p.18. 

15. Joseph Newhouse et. al. succinctly presents the logical connection between lack of 

risk adjustment and plan attempts to enroll healthier patients and increased access 

problems for the chronically ill. His basic argument is that, without risk 

adjustment, plans that enroll sicker patients and provide them good access to 

services weaken their financial position to compete with other plans in a market 

area. "Risk Adjustment and Medicare: Taking a Closer Look," Health Affairs, 

September/October 1997, pp. 26-43. 

For additional descriptions of this logic see Physician Payment Review 

Commission 1997 Annual Report to Congress, Chapter 5 and Mark C. Hornbrook 

and Michael J. Goodman, "Chronic Disease, Functional Health Status and 

Demographics: A Multi-Dimensional Approach to Risk Adjustment," Health 

Services Research, 31:3, August 1996, pp. 284-285. 

16. John E. Ware, et al., "Differences in 4-Year Health Outcomes for Elderly and 

Poor, Chronically Ill Patient Treated in HMO and Fee-For-Service Systems", 

Journal of the American Medical Association, 1996:276:13:1039-1047. 

Robert O. Morgan et al., "The Medicare-HMO Revolving Door - The Healthy Go 

In and The Sick Go Out", The New England Journal of Medicine (July 17, 1997), 

172-175. 

Marsha Gold et al., "Disabled Medicare Beneficiaries In HMOs," Health Affairs, 

September/October 1997, 155-158. 

17. Joseph Newhouse et. al. have analyzed the risk adjustment methodologies which have 

been developed and conclude that the work on diagnostic cost groups and that on 

hierarchial coexisting conditions offer the most promise. (Newhouse et. al., 1997, pp. 26-

43). 

Hornbrook and Goodman have also addressed the multi-dimensional nature of health 

status adjustment and suggest that functional limitations compound specific diagnostic 

categories in determining the amount and type of health service needs and, consequently, 

need to be accounted for in risk adjustment methodologies. (Hornbrook and Goodman, 

)))))))))))

20 
1996). 

18. Physician Payment Review Commission 1997 Annual Report to Congress. 

19. Newhouse et. al., September/October 1997. 

20. "HMO Consumers at Risk: States to the Rescue," Washington: Families USA, July 1996 

(http://epn.org/families/farisk.html). 

21. HCFA HMO/CMP Manual, Revision 6, section 2403.4. 

22. "HMO Consumers at Risk: States to the Rescue," 1996. 

)))))))))))

21 
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--"Legislation Would Encourage Medicare Managed Care Plan Enrollment," Number 796, April 

7, 1994, p. 9. 

Miller, Robert H. and Harold S. Luft, "Does Managed Care Lead to Better or Worse Quality of 

Care," Health Affairs, September/October 1997, pp. 7-25. 

Morgan, Robert O., Beth A. Virnig, Carolee A. DeVito, and Nancy A. Persily, "The MedicareHMO Revolving Door -- The Healthy Go In And The Sick Go Out," The New England Journal 

of Medicine, July 17, 1997, 337:3:169-175. 

Nelson, Lyle, Randall Brown, Marsha Gold, Anne Ciemnecki, and Elizabeth Docteur, "Access to 

Care in Medicare HMOs, 1996," Health Affairs, March/April 1997, 16:2:148-156. 

)))))))))))

24 
Newhouse, Joseph et al., "Risk Adjustment and Medicare: Taking a Closer Look," Health 

Affairs, September/October 1997, pp. 26-43. 

Office of Inspector General, Department of Health and Human Services 

--"Marketing Practices of South Florida HMOs Serving Medicare Beneficiaries," OEI-04-91-

00630, November 1991. 

--"Miami Area HMOs: Medicare Enrollment Patterns," OEI- 04-91-00640, November 1991. 

--"HMO Customer Satisfaction Surveys," OEI-02-94-00360, March 1996. 

--"Medicare HMO Appeal and Grievance Processes Overview," OEI-07-94-00280, December 

1996. 

--"Medicare HMO Appeal and Grievance Processes: Beneficiaries Understanding," 

OEI-07-94-00281, December 1996. 

--"Medicare HMO Appeal and Grievance Processes: Survey of HMOs," 

OEI-07-94-00282, December 1996. 

--"Medicare HMO Appeal and Grievance Processes: Review of Cases," 

OEI-07-94-00283, December 1996. 

Pear, Robert, "Medicare To Stop Pushing Patients to Enter H.M.O.s," The New York Times, 

December 27, 1993, p. A-1. 

Pear, Robert, "Once in Forefront, H.M.O.'s Lose Their Luster in Health Debate," The New York 

Times," August 23, 1994, p. A-10. 

Penchansky, Roy, and J. William Thomas, "The Concept of Access: Definition and Relationship 

to Consumer Satisfaction," Medical Care, February 1981, 12:2:127-140. 

Physician Payment Review Commission, 1997 PPRC Annual Report to Congress, Washington, 

D.C. 

Podolsky, Doug and Joanne Silberner, "How Medicine Mistreats the Elderly," U.S. News and 

World Report, January 18, 1993, pp. 72-79. 

Porell, Frank W., Carolyn Cocotas, Peter J. Perales, Christopher P. Tompkins, and Mitchell 

Glavin, "Factors Associated with Disenrollment from Medicare HMOs: Findings from a Survey of 

Disenrollees," July 1992, Health Care Financing Administration and the Health Policy Research 

Consortium of Brandeis University under Cooperative Agreement # 99-C99256/11-06. 

Prasad, V. Kanti and Rajshekhar G. Javalgi, "Understanding Needs and Concerns of the Elderly 

Regarding Medicare Health Maintenance Organizations," The Journal of Consumer Affairs, 

)))))))))))

25 
Summer, 1992, 26:1:47-67. 

Richardson, David A., James Phillips, Dean Conley, Jr., "A Study of Coverage Denial Disputes 

Between Medicare Beneficiaries and HMOs," Network Design Group, Inc., under HCFA 

Cooperative Agreement No. 17-C-90070/2-01, September 1993. 

Riley, Gerald, James Lubitz and Evelyne Rabey, "Enrollee Health Status under Medicare Risk 

Contracts: An Analysis of Mortality Rates," Health Services Research, June 1991, 26:2:137-163. 

Rossiter, Louis F., Kathryn Langwell, Thomas T.H. Wan, and Margaret Rivnyak, "Patient 

Satisfaction Among Elderly Enrollees and Disenrollees in Medicare Health Maintenance 

Organizations: Results from the National Medicare Competition Evaluation," Journal of the 

American Medical Association, July 7, 1989, 262:1:57-63. 

Rossiter, Louis, Thomas Wan, Kathryn Langwell, James Hadley, Anthony Tucker, Margaret 

Rivnyak, Kenneth Sullivan, John Narcross, final analysis report, "National Medicare Competition 

Evaluation: An Analysis of Patient Satisfaction for Enrollees and Disenrollees in Medicare RiskBased Plans," April 1988, Williamson Institute for Health Studies, Medical College of Virginia 

and Mathematica Policy Research, under contract # 500-83-0047. 

Sherrid, Pamela, "Cutting the cost of staying healthy," U.S. News and World Report, January 18, 

1993, pp. 80-81. 

Sullivan, Louis W., Secretary, Department of Health and Human Resources, final report 

"Disenrollment Experience in the Medicare HMO and CMP Risk Program: 1985 to 1988," 1990, 

based on Mathematica Policy Research study under contract # 500-88-0006. 

Thomas, J. William, and Roy Penchansky, "Relating Satisfaction With Access to Utilization of 

Services," Medical Care, June 1984, 22:6:553-568. 

Tumlinson, Anne, et. al, "Choosing A Health Plan: What Information Will Consumers Use?" 

Health Affairs, May/June 1997, 16:3:229-238. 

United States General Accounting Office, 

--"Managed Care: Explicit Gag Clauses Not Found in HMO Contracts, But Physician Concern 

Remains," GAO/HEHS-97-175, August 1997. 

--"Medicare: Issues Raised by Florida Health Maintenance Organization Demonstrations," 

Chapter 5, GAO/HRD-86-97, July 1986. 

--"Medicare: Experience Shows Ways to Improve Oversight of Health Maintenance 

Organizations," HRD-88-73, August 17, 1988, GAO report summary. 

--"Medicare: Physician Incentive Payments by Prepaid Health Plans Could Lower Quality of 

Care," GAO/HRD-89-29, December 1988. 

)))))))))))

26 
--"Medicare: PRO Review Does Not Assure Quality of Care Provided by Risk HMOs," 

GAO/HRD-91-48, March 1991. 

--"Medicare: HCFA Needs to Take Stronger Actions Against HMOs Violating Federal 

Standards," GAO/HRD-92-11, November 1991. 

--"Medicare: Increased HMO Oversight Could Improve Quality and Access to Care," 

GAO/HEHS-95-155, August 1995. 

--"Medicare: Federal Efforts to Enhance Patient Quality of Care," GAO/HEHS-96-20, April 

1996. 

--"Medicare: HCFA Should Release Data to Aid Consumers, Prompt Better HMO Performance," 

GAO/HEHS-97-23, October 1996. 

--"Medicare: Fewer and Lower Cost Beneficiaries With Chronic Conditions Enroll in HMOs," 

GAO/HEHS-97-160, August 1997. 

--"Medicare HMOs: Rapid Enrollment Growth Concentrated in Selected States," GAO/HEHS96-63, January 1996. 

--"Medicare HMOs: Potential Effects of a Limited Enrollment Period Policy," GAO/HEHS-97-

50, February 1997. 

United States Senate, Special Committee on Aging, Minority Staff Report, "Medicare and 

HMOs: A First Look, with Disturbing Findings," April 7, 1987. 

Ware, John E., Jr. and Ann H. Karmos, "Volume II - Perceived Health and Patient Role 

Propensity," Development and Validation of Scales to Measure Patient Satisfaction with Health 

Care Services, prepared for National Center for Health Services Research, Public Health Service, 

1976. National Technical Information Service, Publication No. PB-288-331. 

Ware, John E., Jr., W. Russell Wright, and Mary K. Snyder, "Volume IV - Key Health Concepts; 

Methodological Appendix," Development and Validation of Scales to Measure Patient 

Satisfaction with Health Care Services, prepared for National Center for Health Services 

Research, Public Health Service, 1976. National Technical Information Service, Publication No. 

PB-288-333. 

Ware, John E. Jr., Martha S. Bayliss, William H. Rogers, Mark Kosinski, and Alvin R. Tarlov, 

"Differences in 4-Year Health Outcomes for Elderly and Poor, Chronically Ill Patients Treated in 

HMO and Fee-for-Service Systems," The Journal of the American Medical Association, 

November 12, 1996, 276:13:1039-1047. 

)))))))))))

27 
APPENDIX A

METHODOLOGY 

Definition of access 

Beyond referencing medical necessity and an actual or likely adverse effect on the beneficiary, the 

law and regulations do not clearly delineate what full access to services through an HMO means. 

In order to construct a survey instrument that adequately covered access to services, we adapted 

a definition from literature.1,2 Basically, it uses five dimensions (availability, accessibility, 

accommodation, affordability, and acceptability) that represent the degree of "fit" between the 

patient and the health care system, e.g. existing services and the patient's medical needs, or price 

of services and the patient's ability to pay. To tailor the survey for Medicare risk HMOs, we 

expanded the idea of service availability to include the role of gatekeepers, primary physicians or 

others associated with the HMO, in preventing or facilitating beneficiaries' receipt of covered 

services. Operationally, we divided access into five areas: appointments, including waiting time 

and administrative processes for making them; restrictions on medical services; incidence and 

reasons for out-of-plan care; behavior of primary HMO doctors and other HMO personnel 

towards beneficiaries; and beneficiary awareness of appeal and grievance rights. 

Sample selection 

From HCFA's Group Health Plan (GHP) data base, we selected a two-stage random sample, 

stratified at the second stage. 

At the first stage, we selected Medicare risk HMOs3 from those under contract with HCFA as of 

May 1996. From a total of 208 risk HMOs, we excluded 76 because they: 1) had not been 

enrolling Medicare beneficiaries for at least 6 months as of May 1996, 2) did not have at least 100 

enrollees who had been members for 3 months or longer as of June 1996, or 3) did not have at 

least 60 disenrollees from March 1996 through June 1996 who had been members for 3 months or 

longer. We set these restrictions to avoid collecting data on HMOs and beneficiaries with little 

Medicare HMO experience and to assure an adequate sampling universe per HMO. From the 

remaining 132 HMOs, we randomly selected 40. 

At the second stage, we selected Medicare beneficiaries from each sampled HMO. The universe 

of beneficiaries for each sampled HMO contained two strata -- Medicare beneficiaries (enrollees) 

who were enrolled as of June 1996 and Medicare beneficiaries (disenrollees) who had disenrolled 

from March 1996 through June 1996 for reasons other than death. From each sampled HMO, 

after excluding enrollees and disenrollees who had not been members for at least 3 months, we 

randomly selected 51 enrollees and 51 disenrollees. While we could have selected a proportional 

sample of beneficiaries, we chose not to because of a planned but separate analysis of the same 

data at the HMO level. Instead, for this report, we weighted the beneficiary data as described 

below. Finally, using HCFA's Enrollment Data Base, we dropped beneficiaries who had died or 

who appeared as current enrollees, but had actually disenrolled since the last update to the GHP 

file. This process resulted in 2,038 enrollees and 2,027 disenrollees for a total of 4,065 

beneficiaries. 

)))))))))))

A - 1 
Scope and data collection 

Since this study's primary focus is the Medicare beneficiaries' perceptions of their risk HMO 

experiences, we only collected information from them. We surveyed both enrollees and 

disenrollees to compare their responses, and thus, to gain greater insight into HMO issues. We 

did not contact HMOs or their staffs, nor did we attempt to assess the quality or propriety of 

medical care rendered by the HMOs to these beneficiaries. We initially mailed structured survey 

forms to 4,065 beneficiaries in early August 1996. In mid-September 1996, we mailed a followup letter and second survey form to non-respondents; we closed data collection in October 1996. 

With the exception of four questions on overall ratings of their HMO experiences, we did not 

directly and specifically ask beneficiaries about their satisfaction with the HMOs. Instead we 

asked for more concrete details on beneficiaries' perceptions and experiences, such as, how long 

were waits for appointments, or how often, if ever, did a primary physician fail to take health 

complaints seriously. Both enrollees and disenrollees provided information on sample and 

demographic data, enrollment experience, past health status and functional level, cost of HMO 

membership, HMO environment, and available HMO services. Additionally, enrollees were asked 

about current health status and future plans for HMO membership while disenrollees were asked 

about health status at disenrollment and reasons for disenrollment. 

A total of 3,229 survey forms were returned. Of these, 3,003 were usable4 yielding an 

unweighted return rate of 74 percent overall, 82 percent for enrollees (N=1665) and 66 percent 

for disenrollees (N=1338). 

Weighting and interpretation 

We weighted the collected data to reflect a non-response bias, differences in enrollment size 

among the sampled HMOs, and distribution of enrollees and disenrollees in the universe. To 

determine non-response bias, we tested unweighted data for differences of means and proportions 

to discern significant differences between respondents and non-respondents by four demographic 

characteristics -- age, race, sex and number of months enrolled in the sampled HMO. Since 

significant differences did exist, we conservatively weighted the sample to approximate the 

response rate per stratum per sampled HMO.5 The weighted data also approximates the relative 

Medicare enrollment sizes of the sampled HMOs and the disproportionate distribution of enrollees 

and disenrollees in the universe (97% vs. 3%) for the sampling period.6 The results are 

generalizable to the 132 HMOs described in the sampling section, but not to those that didn't meet 

our sampling parameters. However, the beneficiary universe from which we sampled our 

enrollees and disenrollees was 96 percent and 99 percent, respectively, of enrollees and 

disenrollees who were members of all 208 HMOs for 3 months or longer.7 Further, our universe 

of enrollees and disenrollees was 87 percent and 85 percent of all Medicare risk enrollees and 

disenrollees. 

Because of the imbalance between enrollees and disenrollees, we primarily analyzed the two 

groups separately.8 Comparisons between sub-populations form the basis for all tables in this 

report, particularly when these groups differed markedly in reporting their HMO experiences. All 

tables show the weighted percentages with the weighted number of respondents in parentheses.9 

)))))))))))

A - 2 
Additionally, we computed 95 percent confidence intervals and statistical significance for key 

questions (see Appendix D). A few of the confidence intervals are quite broad, particularly for 

disenrollees, due to the small number of responses for some questions. Standard errors for the 

weighted percentages and number of beneficiaries were corrected using the SUDAAN software. 

Defining disabled, functionally limited, and comorbid sub-populations 

A literature review was conducted of several recent studies of Medicare beneficiaries which 

addressed less healthy sub-populations. Three categories of sub-populations were selected based 

on definitions used in these studies and information available from our survey; functionally limited, 

chronically ill and disabled. The definition of the disabled population was consistent across all of 

the studies examined 10,11 which was Medicare beneficiaries who met the Medicare disability 

criteria and were younger than age 65. 

Functionally limited (or impaired) sub-populations were examined in two studies.12,13

However, the definitions given were quite general referencing only "Activities of Daily Living"

limitations and "functional impairment. We decided to examine a similar group because of the

expectation that this category would include beneficiaries who have more severe health conditions

or were quite frail. We defined the functionally limited as including respondents who identified

one or more of the following limitations to their activities of daily living: problems with getting in

and out of bed, problems with bathing or showering, using the toilet, or climbing one flight of

stairs.

The most variance we found in the literature defining these sub-populations was in categorizing 

the "chronically ill" or "chronic conditions." A medical outcomes study of chronically ill HMOs 

and fee-for-service systems used the following list of chronic illnesses: hypertension, heart attacks, 

congestive heart failure and clinical depression.14 A recently issued GAO Report on chronically ill 

Medicare beneficiaries in HMOs defined this sub-population as those with diabetes, ischemic heart 

disease, congestive heart failure or chronic obstructive pulmonary disease.15 A literature survey of 

multiple studies regarding quality of care and HMOs referenced research which also included 

arthritis, cancer and stroke in their definitions of "chronically ill."16 

Recent research has also identified comorbidity as a complication of health status which has 

significant implications for health services utilization and the complexity of health care for such 

individuals.17 Our indepth analysis showed this to be a more focused way to identify beneficiaries 

with significant health conditions. We defined comorbid beneficiaries as respondents who 

reported two or more health conditions from the following list of survey options: survey form; 

heart attack or heart condition, cancer (not skin cancer), kidney failure, stroke, broken bones, 

internal bleeding, pneumonia, diabetes, lung problems. 

The unweighted sample sizes for these vulnerable sub-groups resulting from these definitions are 

as follows: Disabled Enrollees - 91, Disabled Disenrollees - 98, Functionally Limited Enrollees -

258, Functionally Limited Disenrollees - 216, Comorbid Enrollees - 244, Comorbid Disenrollees -

207. 

)))))))))))

A - 3 
APPENDIX A - ENDNOTES

1. Penchansky, Roy, DBA, and J. William Thomas, PhD, "The Concept of Access: Definition 

and Relationship to Consumer Satisfaction," Medical Care, February 1981, 12:2:127-140. 

Thomas, J. William, PhD, and Roy Penchansky, DBA, "Relating Satisfaction With Access 

to Utilization of Services," Medical Care, June 1984, 22:6:553-568. 

2. The Penchansky and Thomas five dimensions of access to services are: 

a. Availability - the relationship of the volume and type of existing services (and 

resources) to the client's volume and types of need. It refers to the adequacy of 

supply of medical providers, facilities and specialized programs and services, such 

as mental health and emergency care. 

b. Accessibility - the relationship between the location of supply and the location of 

clients, taking account of client transportation resources and travel time, distance 

and cost. 

c. Accommodation - the relationship between the manner in which the supply 

resources are organized to accept clients (including appointment systems, hours of 

operation, walk-in facilities, telephone services) and the client's ability to 

accommodate to these factors and the client's perception of their appropriateness. 

d. Affordability - The relationship of prices of services and the providers' insurance 

(or deposit requirements) to client's income, ability to pay and existing health 

insurance. Client perception of worth relative to total cost is a concern, as is client 

knowledge of prices, total cost and possible credit arrangements. 

e. Acceptability - the relationship of clients' attitudes about personal and practice 

characteristics of providers to the actual characteristics of existing providers, as 

well as to provider attitudes about acceptable personal characteristics of clients. In 

turn, providers have attitudes about the preferred attributes of clients or their 

financing mechanisms. Providers may be unwilling to serve certain types of clients 

or, through accommodation, make themselves more or less available. 

3. Actually, the sample is a mix of HMOs and competitive medical plans (CMP). Since the 

rules governing their particpation in the Medicare risk program are the same, we use 

HMO to refer to both. 

4. Of the 3,229 returned survey forms, 226 were not usable: 58 were returned for bad 

addresses, with no known forwarding address; 129 were not usable because the 

beneficiary was deceased or was unwilling/unable to complete the survey form; 39 were 

not usable because the beneficiary's responses indicated (s)he may not be referring to the 

sampled HMO, or few to none of the key questions were answered. 

5. The range of response rates for unweighted data per HMO was 59 percent to 92 percent 

for enrollees and 43 percent to 84 percent for disenrollees. 

6. Formulas used to weight data: 

)))))))))))

A - 4 
Enrollee universe per 

sampled HMO 

Enrollees 

HMO universe (N = 132) 

X 

HMO sample (N = 40) Sampled enrollees per HMO 

Disenrollees 

Disenrollee universe per 

HMO universe (N = 132) sampled HMO

X 

HMO sample (N = 40) Sampled disenrollees per HMO 

7. 

Comparison of Beneficiary Universe Sizes 

Stratum 3 months 

(132 HMOs) 

 3 months 

(208 HMOs) 

All members 

(208 HMOs) 

Enrollees 3,218,351 3,335,189 3,719,713 

Disenrollees 110,539 112,015 130,436 

8. For those tables that do not show the proportion of all beneficiaries answering a question, 

that proportion is usually the same as or one point (+/-) that of the proportions shown for 

enrollees. 

9. Respondents did not answer every survey question. Many respondents were not eligible 

to answer every item because the survey form used screening questions. Thus, the 

weighted value of the beneficiaries eligible to answer varied by question. Some 

beneficiaries simply did not answer questions for which they were eligible. To 

accommodate these two factors, we calculated a response rate for each question based on 

the weighted value of eligible respondents. Questions with response rates of less than 

50% are not reported. The majority of questions had response rates of 80% to 99%. In 

addition, percentages throughout the report are based only on the weighted responses to 

each question, not on the weighted value of all survey respondents. 

10. Robert H. Miller and Harold S. Luft, "Does Managed Care Lead to Better or Worse 

Quality of Care," Health Affairs, September/October 1997. 

11. Marsha Gold et al., "Disabled Medicare Beneficiaries In HMOs," Health Affairs, 

September/October 1997, pp. 151-152. 

12. Miller and Luft, 1997. 

13. Gold et al., 1997. 

)))))))))))

A - 5 
14. John E. Ware et al., "Differences in 4-Year Outcomes for Elderly and Poor, Chronically Ill 

Patients Treated in HMO and Fee-For-Service Systems," The Journal of the American 

Medical Association, October 2, 1996. 

15. U.S. General Accounting Office, "Medicare: Fewer and Lower Cost Beneficiaries With 

Chronic Conditions Enroll in HMOs," GAO/HEHS-97-160, 18 August 1997, p. 3. 

16. Miller and Luft, 1997. 

17. Ware Jr., et. al., (1996) and Newhouse et. al.(1997). 

)))))))))))

A - 6 
APPENDIX B

SAMPLE DEMOGRAPHIC DATA - 1996 

BY BENEFICIARY 

Weighted Data 

Demographics Enrollees Disenrollees 

SEX 

Female 

Male 

56% (1,226,765) 

44% (968,928) 

55% (34,004) 

45% (27,910) 

RACE/ETHNICITY 

White 

Non-White 

Unknown 

83% (1,812,704) 

11% (242,742) 

6% (140,247) 

82% (50,565) 

8% (5,243) 

10% (6,106) 

AVERAGE AGE 73 Years 72 Years 

EDUCATION 

< Than High School 

High School Diploma 

> Than High School 

No Response 

20% (432,333) 

30% (648,906) 

44% (978,774) 

6% (135,679) 

19% (11,564) 

24% (15,226) 

45% (27,790) 

12% (7,335) 

MEDICARE CATEGORY 

Aged 

Disabled/ESRD** 

96% (2,098,465) 

4% (97,229) 

93% (57,687) 

7% (4,227) 

HMO EXPERIENCE 

Prior Experience 

No Experience 

No Response 

26% (560,948) 

66% (1,451,278) 

8% (183,466) 

21% (12,996) 

71% (39,212) 

8% (4,853) 

AVERAGE LENGTH OF TIME 

IN HMO 34 Months 21 Months 

BY HMO

HMOs MODEL TYPES TAX STATUS STATES 

IPA Group Staff Profit Nonprofit Number 

1996 (N=40) 29 (73%) 8 (20%) 3 (8%) 28 (70%) 12 (30%) 19 

** No ESRD beneficiaries were selected in the disenrollee sample. 

)))))))))))

B - 1 
APPENDIX C

SUPPLEMENTARY TABLES FOR BENEFICIARY SURVEY FINDINGS 

Table C-1: 

Enrollees Disenrollees 

Medicare Aged/Disabled Aged Disabled Aged Disabled 

Joined HMO for: 

< more affordable care 

< better quality care 

< services not covered by Medicare 

68% 

(1,424,521) 

20% 

(422,557) 

36% 

(749,314) 

67% 

(64,155) 

37% 

(35,115) 

70% 

(67,019) 

72% 

(40,512) 

23% 

(12,908) 

37% 

(20,794) 

48% 

(2,016) 

31% 

(1,304) 

58% 

(2,453) 

Functional Limits No Limits 1+ Limits No Limits 1+ Limits 

Joined HMO for: 

< more affordable care 

< better quality care 

< services not covered by Medicare 

68% 

(1,164,095) 

21% 

(354,503) 

37% 

(632,466) 

71% 

(104,547) 

21% 

(161,033) 

43% 

(70,717) 

71% 

(32,185) 

25% 

(11,173) 

37% 

(16,660) 

65% 

(7,756) 

17% 

(2,058) 

40% 

(4,736) 

Comorbidity <2 Illnesses 2+ Illnesses <2 Illnesses 2+ Illnesses 

Joined HMO for: 

< more affordable care 

< better quality care 

< services not covered by Medicare 

69% 

(1,175,581) 

19% 

(328,569) 

38% 

(640,867) 

64% 

(241,400) 

25% 

(95,456) 

36% 

(137,167) 

72% 

(34,802) 

23% 

(10,957) 

40% 

(19,396) 

60% 

(5,833) 

26% 

(2,537) 

28% 

(2,729) 

Reasons Beneficiaries Joined HMOs by Sub-Populations 

)))))))))))

C - 1
Table C-2: 

Enrollees Disenrollees 

Medicare Aged/Disabled Aged Disabled Aged Disabled 

Were asked at application about health 

problems, excluding kidney failure and 

hospice care. 

15% 

(221,010) 

22% 

(16,325) 

17% 

(7,252) 

25% 

(933) 

Did know from beginning PCP must 

give referrals to specialists. 

86% 

(1,707,238) 

84% 

(77,347) 

86% 

(46,228) 

85% 

(3,544) 

Functional Limits No Limits 1+ Limits No Limits 1+ Limits 

Were asked at application about health 

problems, excluding kidney failure and 

hospice care. 

16% 

(188,259) 

15% 

(43,020) 

16% 

(5,499) 

23% 

(2,171) 

Did know from beginning PCP must 

give referrals to specialists. 

87% 

(1,433,664) 

83% 

(294,197) 

88% 

(38,458) 

80% 

(8,631) 

Comorbidity <2 Illnesses 2+ Illnesses <2 Illnesses 2+ Illnesses 

Were asked at application about health 

problems, excluding kidney failure and 

hospice care. 

15% 

(181,149) 

15% 

(37,218) 

16% 

(6,239) 

22% 

(1,573) 

Did know from beginning PCP must 

give referrals to specialists. 

87% 

(1,426,326) 

82% 

(286,096) 

87% 

(40,466) 

82% 

(7,289) 

Table C-3: 

Enrollees Disenrollees 

Primary Physician Care <2 Illnesses 2+ Illnesses <2 Illnesses 2+ Illnesses 

Primary physician did not take health 

complaints seriously. 

Primary physician explained treatment 

options 

Cost most important to primary physician. 

Believed care given by PCP was: 

< excellent 

< good 

< fair 

6% 

(90,197) 

91% 

(1,127,161) 

8% 

(114,020 

48% 

(751,985) 

44% 

(694,642) 

6% 

(96,683) 

14% 

(48,293) 

86% 

(289,295) 

6% 

(18,076) 

45% 

(160,539) 

38% 

(136,548) 

12% 

(42,423) 

19% 

(7,544) 

78% 

(26,239) 

19% 

(5,847) 

35% 

(14,565) 

38% 

(15,822) 

17% 

(7,023) 

17% 

(1,492) 

72% 

(5,979) 

21% 

(1,375) 

41% 

(3,500) 

25% 

(2,154) 

21% 

(1,763) 

Beneficiaries' Enrollment Experience by Sub-Populations 

Primary Physician Care by Comorbid Sub-Population 

)))))))))))

C - 2
Table C-4: 

by Medicare Status and Functionally Limited Sub-Populations 

Enrollees Disenrollees 

Medicare Aged/Disabled Aged Disabled Aged Disabled 

Ease of obtaining care was: 

< easy or very easy 

< neither easy nor hard 

< hard or very hard 

68% 

(1,283,272) 

27% 

(517,876) 

5% 

(85,526) 

45% 

(40,033) 

31% 

(26,971) 

24% 

(21,226) 

52% 

(24,640) 

29% 

(13,834) 

18% 

(8,616) 

45% 

(1,640) 

18% 

(659) 

37% 

(1,364) 

HMO care caused health to: 

< improve 

< stay the same 

< worsen 

44% 

(813,276) 

54% 

(1,007,339) 

3% 

(46,894) 

34% 

(29,458) 

62% 

(53,440) 

4% 

(3,449) 

30% 

(13,691) 

59% 

(26,360) 

11% 

(4,888) 

17% 

(537) 

66% 

(2,140) 

18% 

(563) 

Functional Limits No Limits 1+ Limits No Limits 1+ Limits 

Ease of obtaining care was: 

< easy or very easy 

< neither easy not hard 

< hard or very hard 

70% 

(1,092,719) 

26% 

(408,357) 

5% 

(70,889) 

55% 

(184,029) 

35% 

(116,287) 

11% 

(35,229) 

55% 

(21,128) 

28% 

(10,837) 

16% 

(6,225) 

40% 

(4,388) 

29% 

(3,198) 

31% 

(3,468) 

HMO care caused health to: 

< improve 

< stay the same 

< worsen 

43% 

(661,669) 

56% 

(867,462) 

1% 

(20,861) 

44% 

(148,583) 

48% 

(162,160) 

9% 

(29,482) 

34% 

(12,162) 

58% 

(20,778) 

9% 

(3,228) 

17% 

(1,738) 

63% 

(6,295) 

20% 

(1,947) 

Beneficiaries' Perceptions of HMO Care 

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C - 3
Table C-5: 

Enrollees Disenrollees 

HMO Care <2 Illnesses 2+ Illnesses <2 Illnesses 2+ Illnesses 

Ease of obtaining care was: 

< easy or very easy 

< neither easy nor hard 

< hard or very hard 

67% 

(1,034,404) 

28% 

(429,819) 

5% 

(76,607) 

66% 

(229,315) 

27% 

(94,391) 

7% 

(24,416) 

53% 

(21,490) 

28% 

(11,418) 

18% 

(7,431) 

47% 

(4,003) 

28% 

(2,359) 

25% 

(2,176) 

HMO care caused health to: 

< improve 

< stay the same 

< worsen 

41% 

(622,048) 

58% 

(871,125) 

1% 

(21,894) 

52% 

(187,868) 

41% 

(147,742) 

7% 

(26,665) 

28% 

(10,754) 

63% 

(24,060) 

9% 

(3,257) 

37% 

(2,982) 

40% 

(3,186) 

23% 

(1,880) 

Beneficiaries' Perceptions of HMO Care by Comorbid Sub-Population 

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C - 4
APPENDIX D

STATISTICAL DATA FOR KEY QUESTIONS

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D - 1
Table D-1: Point Estimates, Confidence Intervals, and Statistical Significance by Functional Status 

KEY: T = statistical significance tested ** = difference is significant at .05 level 

1+ Functional Limits No Functional Limits 

Proportion of beneficiaries: 

Point Estimate Standard Error 95% Confidence 

Interval 

Point Estimate Standard Error 95% Confidence 

Interval 

Health at time of survey was poor to very poor. 

T < enrollees 

T < disenrollees 21.03 

34.23 

3.00 

3.59 

15.2 - 26.9 

27.2 - 41.3 

** 

** 

2.09 

4.85 

0.64 

1.06 

0.8 -

2.8 -

HMO care caused health to improve. 

< enrollees 

T < disenrollees 

43.67 

17.41 

4.59 

4.06 

34.7 - 52.7 

9.5 - 25.4 ** 

42.69 

33.63 

1.94 

2.99 

38.9 - 46.5 

27.8 - 39.5 

HMO care caused health to worsen. 

T < enrollees 

T < disenrollees 

8.67 

19.51 

2.32 

4.25 

4.1 - 13.2 

11.2 - 27.8 

** 

** 

1.35 

8.92 

0.40 

1.50 

0.6 -

6.0 - 11.9 

Primary physician explained treatment options. 

T < enrollees 

T < disenrollees 84.99 

68.47 

2.64 

5.21 

79.8 - 90.2 

58.3 - 78.7 

** 

** 

91.23 

79.10 

0.90 

2.87 

89.5 - 93.0 

73.5 - 84.7 

Physician failed to give needed Medicarecovered services. 

T < enrollees 

T < disenrollees 

7.88 

19.84 

2.93 

4.13 

2.1 - 13.6 

11.7 - 28.0 

** 

** 

2.30 

10.65 

0.46 

1.70 

1.4 -

7.3 - 14.0 

Physician failed to admit beneficiary to hospital 

when needed. 

T < enrollees 

T < disenrollees 

2.89 

8.18 

1.55 

3.08 

0.0 -

2.1 - 14.2 

1.19 

3.99 

0.44 

1.69 

0.3 -

0.8 -

3.3 

7.0 

2.1 

3.2 

6.0 2.1 

7.3 

D - 2
Table D-1: Point Estimates, Confidence Intervals, and Statistical Significance by Functional Status 

KEY: T = statistical significance tested ** = difference is significant at .05 level 

1+ Functional Limits No Functional Limits 

Proportion of beneficiaries: 

Point Estimate Standard Error 95% Confidence 

Interval 

Point Estimate Standard Error 95% Confidence 

Interval 

Physician failed to refer beneficiary to a 

specialist when needed. 

< enrollees 

T < disenrollees 

6.38 

25.16 

2.28 

5.31 

1.9 - 10.8 

14.8 - 35.6 ** 

4.91 

11.56 

0.95 

1.82 

3.0 -

8.0 - 15.1 

Physician did not take health complaints 

seriously. 

T < enrollees 

T < disenrollees 

16.39 

23.90 

3.29 

3.69 

9.9 - 22.8 

16.7 - 31.1 

** 

** 

4.64 

16.62 

0.68 

2.19 

3.3 -

12.3 - 20.9 

Believed care given by PCP was excellent. 

T < enrollees 

T < disenrollees 

33.68 

29.06 

4.09 

4.49 

25.7 - 41.7 

20.3 - 37.9 

** 

** 

50.78 

38.12 

2.91 

4.03 

45.1 - 56.5 

30.2 - 46.0 

Believed care given by PCP was good. 

T < enrollees 

T < disenrollees 

49.66 

28.97 

3.36 

4.19 

43.1 - 56.2 

20.8 - 37.2 

** 

** 

41.34 

37.11 

2.52 

2.32 

36.4 - 46.3 

32.6 - 41.7 

Believed care given by PCP was fair. 

T < enrollees 

T < disenrollees 

11.86 

29.64 

3.38 

6.11 

5.2 - 18.5 

17.7 - 41.6 

** 

** 

6.40 

14.63 

1.14 

2.80 

4.2 -

9.1 - 20.1 

Ease of obtaining care was hard or very hard 

T < enrollees 

T < disenrollees 

10.50 

31.38 

2.63 

2.42 

5.3 - 15.7 

20.2 - 42.6 

** 

** 

4.51 

16.30 

0.78 

2.42 

3.0 -

11.6 - 21.0 

6.8 

6.0 

8.6 

6.0 

D - 3
Table D-2: Point Estimates, Confidence Intervals, and Statistical Significance by Medicare Aged/Disabled 

KEY: T = statistical significance tested ** = difference is significant at .05 level 

Disabled Age 65 or Older 

Proportion of beneficiaries: 

Point 

Estimate 

Standard 

Error 

95% Confidence 

Interval 

Point Estimate Standard Error 95% Confidence 

Interval 

Health at time of survey was poor to very poor. 

T < enrollees 

T < disenrollees 24.33 

31.70 

6.61 

6.01 

11.4 - 37.3 

19.9 - 43.5 

** 

** 

4.52 

9.15 

0.61 

1.55 

3.3 -

6.1 - 12.2 

HMO care caused health to improve. 

< enrollees 

T < disenrollees 

34.12 

16.56 

6.16 

5.37 

22.0 - 46.2 

6.0 - 27.1 ** 

43.55 

30.47 

1.74 

2.18 

40.1 - 47.0 

26.2 - 34.7 

HMO care caused health to worsen. 

< enrollees 

T < disenrollees 

3.99 

17.68 

2.48 

6.38 

0.0 -

5.2 - 30.2 ** 

2.51 

10.88 

0.60 

1.69 

1.3 -

7.6 - 14.2 

Primary physician explained treatment options. 

< enrollees 

T < disenrollees 92.03 

61.03 

3.09 

8.83 

86 0 - 98.1 

43.7 - 78.3 ** 

89.47 

78.48 

0.91 

2.55 

87.7 - 91.3 

73.5 - 83.5 

Physician failed to give needed Medicarecovered services. 

< enrollees 

T < disenrollees 

3.67 

27.54 

2.02 

8.91 

0.0 -

10.1 - 45.0 ** 

3.36 

11.00 

0.68 

1.61 

2.0 -

7.8 - 14.2 

Physician failed to admit beneficiary to hospital 

when needed. 

< enrollees 

T < disenrollees 

4.01 

19.23 

2.69 

8.87 

0.0 -

1.8 - 36.6 ** 

1.44 

3.82 

0.48 

1.40 

0.5 -

1.1 -

5.7 

8.9 3.7 

7.6 4.7 

9.3 2.4 

6.6 

D - 4
Table D-2: Point Estimates, Confidence Intervals, and Statistical Significance by Medicare Aged/Disabled 

KEY: T = statistical significance tested ** = difference is significant at .05 level 

Disabled Age 65 or Older 

Proportion of beneficiaries: 

Point 

Estimate 

Standard 

Error 

95% Confidence 

Interval 

Point Estimate Standard Error 95% Confidence 

Interval 

Physician failed to refer beneficiary to a 

specialist when needed. 

T < enrollees 

T < disenrollees 

16.26 

36.15 

6.10 

8.27 

4.3 - 28.2 

19.9 - 52.4 

** 

** 

4.40 

12.65 

0.68 

2.04 

3.1 -

8.7 - 16.6 

Physician did not take health complaints 

seriously. 

< enrollees 

T < disenrollees 

12.83 

39.27 

5.38 

8.24 

2.3 - 23.4 

23.1 - 55.4 ** 

6.75 

17.05 

0.93 

1.86 

4.9 -

13.4 - 20.7 

Believed care given by PCP was excellent. 

< enrollees 

T < disenrollees 

37.73 

33.18 

7.69 

8.00 

22.7 - 52.8 

17.5 - 48.9 ** 

48.16 

36.35 

3.05 

2.54 

42.2 - 54.1 

31.4 - 41.3 

Believed care given by PCP was good. 

< enrollees 

< disenrollees 

44.71 

23.97 

9.67 

7.32 

25.8 - 63.7 

9.6 - 38.3 

42.99 

36.74 

2.36 

2.32 

38.4 - 47.6 

32.2 - 41.3 

Believed care given by PCP was fair. 

< enrollees 

< disenrollees 

14.26 

29.14 

5.21 

8.65 

4.0 - 24.5 

12.2 - 46.1 

6.90 

16.75 

1.49 

2.03 

4.0 -

12.8 - 20.7 

Ease of obtaining care was hard or very hard 

T < enrollees 

T < disenrollees 

24.06 

37.24 

6.15 

8.91 

12.0 - 36.1 

19.8 - 54.7 

** 

** 

4.53 

18.30 

0.74 

3.00 

3.1 -

12.4 - 24.2 

5.7 

8.6 

9.8 

6.0 

D - 5
Table D-3: Point Estimates, Confidence Intervals, and Statistical Significance by Comorbidity 

KEY: T = statistical significance tested ** = difference is significant at .05 level 

2+ Illnesses <2 Illnesses 

Proportion of beneficiaries: 

Point Estimate Standard Error 95% Confidence 

Interval 

Point Estimate Standard Error 95% Confidence 

Interval 

Health at time of survey was poor to very poor. 

T < enrollees 

T < disenrollees 17.39 

36.36 

3.70 

4.88 

10.1 - 24.6 

26.8 - 45.9 

** 

** 

2.72 

5.82 

0.64 

1.16 

1.5 -

3.5 -

HMO care caused health to improve. 

T < enrollees 

T < disenrollees 

51.86 

37.05 

3.24 

6.19 

45.5 - 58.2 

24.9 - 49.2 

** 

** 

41.06 

28.25 

1.86 

2.20 

37.4 - 44.7 

23.9 - 32.6 

HMO care caused health to worsen. 

T < enrollees 

T < disenrollees 

7.36 

23.36 

2.91 

4.78 

1.7 - 13.1 

14.0 - 32.7 

** 

** 

1.45 

8.55 

0.40 

1.44 

0.7 -

5.7 - 11.4 

Primary physician explained treatment options. 

< enrollees 

< disenrollees 85.91 

72.25 

2.56 

4.45 

80.9 - 90.9 

63.5 - 81.0 

90.93 

78.08 

1.13 

2.41 

88.7 - 93.1 

73.4 - 82.8 

Physician failed to give needed Medicarecovered services. 

T < enrollees 

< disenrollees 

8.52 

11.78 

2.99 

3.63 

2.7 - 14.4 

4.7 - 18.9 ** 2.30 

12.36 

0.53 

2.22 

1.3 -

8.0 - 16.7 

Physician failed to admit beneficiary to hospital 

when needed. 

T < enrollees 

T < disenrollees 

3.56 

13.10 

1.45 

3.46 

0.7 -

6.3 - 19.9 

** 

** 

0.85 

2.59 

0.36 

2.59 

0.1 -

0.0 -

4.0 

8.1 

2.2 

3.3 

6.4 1.6 

5.5 

D - 6
Table D-3: Point Estimates, Confidence Intervals, and Statistical Significance by Comorbidity 

KEY: T = statistical significance tested ** = difference is significant at .05 level 

2+ Illnesses <2 Illnesses 

Proportion of beneficiaries: 

Point Estimate Standard Error 95% Confidence 

Interval 

Point Estimate Standard Error 95% Confidence 

Interval 

Physician failed to refer beneficiary to a 

specialist when needed. 

< enrollees 

T < disenrollees 

7.98 

20.67 

2.47 

4.60 

3.1 - 12.8 

11.7 - 29.7 ** 

4.44 

12.66 

0.85 

2.73 

2.8 -

7.3 - 18.0 

Physician did not take health complaints 

seriously. 

T < enrollees 

< disenrollees 

13.85 

16.94 

3.58 

4.39 

6.8 - 20.9 

8.3 - 25.5 ** 5.81 

18.78 

0.82 

2.23 

4.2 -

14.4 - 23.2 

Believed care given by PCP was excellent. 

< enrollees 

< disenrollees 

44.97 

41.32 

5.45 

7.90 

34.3 - 55.7 

25.8 - 56.8 

48.08 

35.00 

2.91 

2.46 

42.4 - 53.8 

30.2 - 39.8 

Believed care given by PCP was good. 

< enrollees 

T < disenrollees 

38.25 

25.43 

3.26 

6.48 

31.9 - 44.6 

12.7 - 38.1 ** 

44.41 

38.02 

2.62 

2.72 

39.3 - 49.5 

32.7 - 43.4 

Believed care given by PCP was fair. 

< enrollees 

< disenrollees 

11.88 

20.81 

4.58 

3.93 

2.9 - 20.9 

13.1 - 28.5 

6.18 

16.88 

0.98 

2.25 

4.3 -

12.5 - 21.3 

Ease of obtaining care was hard or very hard 

< enrollees 

< disenrollees 

7.28 

25.29 

2.20 

6.00 

3.0 - 11.6 

13.5 - 37.1 

4.97 

18.42 

0.76 

2.80 

3.5 -

12.9 - 23.9 

6.1 

7.4 

8.1 

6.5 

D - 7
APPENDIX E

AGENCY COMMENTS

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E - 1
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E - 2
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E - 3
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E - 4
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E - 5
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E - 6
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E - 7