Medicare Subvention Demonstration: Greater Access Improved Enrollee Satisfaction but Raised DOD Costs
Published: 2001-10-31T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: In the Balanced Budget Act of 1997, Congress established a three-year demonstration, called Medicare subvention, to improve the access of Medicare-eligible military retirees to care at military treatment facilities (MTF). The demonstration allowed Medicare-eligible retirees to get their health care largely at MTFs by enrolling in a Department of Defense (DOD) Medicare managed care organization known as TRICARE Senior Prime. During the subvention demonstration, access to health care for many retirees who enrolled in Senior Prime improved, while access to MTF care for some of those who did not enroll declined. Many enrollees in Senior Prime said they were better able to get care when they needed it. They also reported better access to doctors in general as well as care at MTFs. Enrollees generally were more satisfied with their care than before the demonstration. However, the demonstration did not improve enrollees' self-reported health status. In addition, compared to nonenrollees, enrollees did not have better health outcomes, as measured by their mortality rates and rates of "preventable" hospitalizations. Moreover, DOD's costs were high, reflecting enrollees' heavy use of hospitals and doctors.

section_title: Letter
paragraphs: In the Balanced Budget Act (BBA) of 1997, Congress established a 3-year  demonstration, called Medicare subvention, designed to improve the  access of Medicare-eligible military retirees to care at military treatment  facilities (MTF).  Historically, military retirees age 65 and over have had  only limited access to military health care.  Until they turned 65, they could  enroll in TRICARE Prime, the Department of Defense’s (DOD) managed  care plan, which gave them priority access to MTFs.  Alternatively, they  could use one of DOD’s other plans that pays part of the cost of civilian  health care.  However, when they turned 65 and became eligible for  Medicare, retirees lost their right to military health care and could obtain  care at MTFs only if space were available after higher priority beneficiaries  were treated.
The demonstration allowed retirees to get their care largely at MTFs by  enrolling in a DOD-run Medicare managed care organization known as  TRICARE Senior Prime.  Enrollees in Senior Prime could receive the full  range of Medicare services, as well as some additional TRICARE services,  and they would incur minimal out-of-pocket costs.  For enrollees, the MTF  became the focal point of their medical care—the source of all their  primary care and much of their specialty care, as well as referrals to  civilian network providers.  Those retirees who chose not to enroll could  still use MTFs on a space-available basis.  However, given the MTFs’ new  responsibilities for treating Senior Prime enrollees, nonenrollees might no  longer be able to get care at MTFs.
In establishing the subvention demonstration, the BBA also directed us to  evaluate the demonstration over its initial 3-year period, which ended in  December 2000.  Our evaluation covers three major areas: the effect of the  demonstration on retirees’ access  to care and the quality of care received  by enrollees; the cost of the demonstration to beneficiaries, Medicare, and  DOD; and management and implementation issues encountered during the  demonstration.
This report, focusing on access to care, is one of several addressing these  issues.  Our objectives were to examine (1) the effect of the demonstration  on enrollees’ and nonenrollees’ access to health care and (2) the  consequences of changes in access to care for retirees’ satisfaction, health  outcomes, and DOD costs.  To address these issues, we surveyed about  20,000 enrollees and eligible nonenrolled retirees by mail at the beginning  of the demonstration and at the end of 2000. (See app. I.) We supplemented  the surveys with Medicare and DOD administrative data, but did not  independently verify these data.  Although the survey data covered the  period of the initial demonstration, the administrative data related  primarily to 1999, due to reporting lags.  We performed our work according  to generally accepted government auditing standards from June 1998  through September 2001.
subsections: section_title: Background
paragraphs: DOD’s health system, TRICARE, currently offers health care coverage to  approximately 6.6 million active duty and retired military personnel under  age 65 and their dependents and survivors.  An additional 1.5 million  retirees aged 65 and over can obtain care when space is available.   TRICARE offers three health plans: TRICARE Standard, a fee-for-service  plan; TRICARE Extra, a preferred provider plan; and TRICARE Prime, a  managed care plan.  In addition, TRICARE offers prescription drugs at no  cost from MTF pharmacies and, with co-payments, from retail pharmacies  and DOD’s National Mail Order Pharmacy.
Retirees have access to all of TRICARE’s health plans and benefits until  they turn 65 and become eligible for Medicare.  Subsequently, they can only  use military health care on a space-available basis, that is, when MTFs have  unused capacity after caring for higher priority beneficiaries.  However,  MTF capacity varies from a full range of services at major medical centers  to limited outpatient care at small clinics.  Moreover, the amount of space  available in the military health system has decreased during the last decade  with the end of the Cold War and subsequent downsizing of military bases  and MTFs. Recent moves to contain costs by relying more on military care  and less on civilian providers under contract to DOD have also contributed  to the decrease in space-available care.
Although some retirees age 65 and over rely heavily on military facilities for  their health care, most do not, and over 60 percent do not use military  health care facilities at all.  In addition to using DOD resources, retirees  may receive care paid for by Medicare and other public or private  insurance for which they are eligible.  However, they cannot use their  Medicare benefits at MTFs, and Medicare is generally prohibited by law  from paying DOD for health care.
subsections: section_title: Medicare
paragraphs: Medicare is a federally financed health insurance program for persons age  65 and over, some people with disabilities, and people with end-stage  kidney disease.  Eligible beneficiaries are automatically covered by part A,  which covers inpatient hospital, skilled nursing facility, and hospice care,  as well as home health care that follows a stay in a hospital or skilled  nursing facility.  They also can pay a monthly premium to join part B, which  covers physician and outpatient services as well as those home health  services not covered under part A.  Traditional Medicare allows  beneficiaries to choose any provider that accepts Medicare payment and  requires beneficiaries to pay for part of their care.  Most beneficiaries have  supplemental coverage that reimburses them for many costs not covered  by Medicare.  Major sources of this coverage include employer-sponsored  health insurance; “Medigap” policies, sold by private insurers to  individuals; and Medicaid, a joint federal-state program that finances health  care for low-income people.
The alternative to traditional Medicare, Medicare+Choice, offers  beneficiaries the option of enrolling in managed care or other private  health plans.  All Medicare+Choice plans cover basic Medicare benefits,  and many also cover additional benefits such as prescription drugs.   Typically, these plans have limited cost sharing but restrict members’  choice of providers and may require an additional monthly premium.
section_title: The Subvention Demonstration
paragraphs: Under the Medicare subvention demonstration, DOD established and  operated Medicare+Choice managed care plans, called TRICARE Senior  Prime, at six sites.  Enrollment in Senior Prime was open to military  retirees enrolled in Medicare part A and part B who resided within the  plan’s service area.  About 125,000 dual eligibles (military retirees who  were also eligible for Medicare) lived in the 40-mile service areas of the six  sites—about one-fifth of all dual eligibles nationwide living within an MTF’s  service area.  DOD capped enrollment at about 28,000 for the  demonstration as a whole.  Over 26,000 enrolled—about 94 percent of the  cap.  In addition, retirees enrolled in TRICARE Prime could “age in” to  Senior Prime upon reaching age 65, even if the cap had been reached, and  about 6,800 did so.  Beneficiaries enrolled in the program paid the Medicare  part B premium, but no additional premium to DOD.  Under Senior Prime,  all primary care was provided at MTFs, although DOD purchased some  hospital and specialty care from its network of civilian providers.  Senior  Prime enrollees received the same priority for care at the MTFs as younger  retirees enrolled in TRICARE Prime.  Care at the MTFs was free of charge  for enrollees, but they had to pay any applicable cost-sharing amounts for  care in the civilian network (for example, $12 for an office visit).
The demonstration authorized Medicare to pay DOD for Medicare-covered  health care services provided to retirees at an MTF or through private  providers under contract to DOD.  As established in the BBA, capitation  rates—fixed monthly payments for each enrollee—for the demonstration  were discounted from what Medicare would pay private managed care  plans in the same areas.  However, to receive payment, DOD had to spend  at least as much of its own funds in serving this dual-eligible population as  it had in the recent past.
The six demonstration sites are each in a different TRICARE region and  include 10 MTFs that vary in size and types of services offered. (See table  1.)  The five MTFs that are medical centers offer a wide range of inpatient  services and specialty care as well as primary care. They accounted for  over 75 percent of all enrollees in the demonstration, and the two San  Antonio medical centers had 38 percent of all enrollees.  MTFs that are  community hospitals are smaller, have more limited capabilities, and could  accommodate fewer Senior Prime enrollees.  At these smaller facilities, the  civilian network provides much of the specialty care.  At Dover, the MTF is  a clinic that offers only outpatient services, thus requiring all inpatient and  specialty care to be obtained at another MTF or purchased from the civilian  network.
section_title: Senior Prime Enrollees Got More Care While Some Nonenrollees Were Crowded Out of MTFs
paragraphs: Compared with their access to care before the demonstration, many  enrollees reported that their access to care overall—their ability to get care  when they needed it—had improved.  They reported better access to MTFs  as well as to doctors. Although at the start of the demonstration enrollees  had reported poorer access to care than nonenrollees, by the end of the  demonstration about 90 percent of both groups said that they could get  care when they needed it.  Enrollees’ own views are supported by  administrative data: they got more care than they had received from  Medicare and DOD combined before the demonstration.  However, most  nonenrollees who had relied on MTFs before the demonstration were no  longer able to rely on military health care.
subsections: section_title: Enrollees Obtained More Health Care Than Before the Demonstration
paragraphs: Most enrollees reported that their ability to get care when they needed it  was not changed by the demonstration, but those who did report a change  were more likely to say that their access to care—whether at MTFs or from  the civilian network—had improved.   (See table 2.)
When asked specifically about their access to MTF care, those who had not  used MTFs in the past reported the greatest improvement.  (See figure 1.)
About one-third of all enrollees said that their access to physicians had  improved, and a significantly smaller fraction said that it had declined.  For  example, 32 percent of enrollees said that, under the demonstration, their  primary care doctor’s office hours were more convenient, while 20 percent  said they were less so.  Similarly, enrollees said that they did not have to  wait too long to get an appointment with a doctor and, once they reached  the office, their doctor saw them more promptly.  (See table 3.)
For two aspects of access, however, Senior Prime enrollees’ experience  was mixed.  TRICARE has established standards for the maximum amount  of time that should elapse in different situations between making an  appointment and seeing a doctor: 1 month for a well-patient visit, 1 day for  an urgent care visit, and 1 week for routine visits.  According to TRICARE  policy, MTFs should meet these standards 90 percent of the time.  While  Senior Prime met the standards for the time it took to get an appointment  and see a doctor for well-patient visits (like a physical), it fell slightly short  of the standard for urgent care visits (such as for an acute injury or illness  like a broken arm or shortness of breath) and, more markedly, for routine  visits  (such as for minor injuries or illnesses like a cold or sore throat).   (See table 4.)
When asked about their ability to choose their own primary care doctors,  enrollees were somewhat more likely to say that it was more difficult than  before the demonstration.  This is not surprising, in view of the fact that  Senior Prime assigned a primary care doctor (or nurse) to each enrollee.   However, regarding specialists, enrollees said that their choice of doctors  had improved.
Enrollees reported fewer financial barriers to access under Senior Prime.   They said that their out-of-pocket spending decreased and was more  reasonable than before.  By the demonstration’s end, nearly two-thirds said  that they had no out-of-pocket costs.  Even at the smaller demonstration  sites, where care from the civilian network, which required co-payments,  was more common, about half of enrollees said they had no out-of-pocket  costs.
These enrollee reports of better access under Senior Prime are largely  supported by DOD and Medicare administrative data.  Enrollees received  more services from Senior Prime than they had obtained before the  demonstration from MTFs and Medicare combined.  Specifically, their use  of physicians increased from an average 12 physician visits per year before  enrolling in Senior Prime to 16 visits per year after enrollment, and the  number of hospital stays per person also increased by 19 percent.
Enrollees’ use of services not only increased under Senior Prime—as did  other measures of access to care—but exceeded the average level in the  broader community.  Enrollees used significantly more care than their  Medicare fee-for-service counterparts.  These differences cannot be  explained by either age or health—enrollees were generally younger and  healthier.  Adjusted for demographics and health conditions, physician  visits were 58 percent more frequent for Senior Prime enrollees than for  their Medicare counterparts, and hospital stays were 41 percent more  frequent.  Nonetheless, enrollees’ hospital stays—adjusted for  demographics and health conditions—were about 4 percent shorter.
We found three probable explanations for enrollees’ greater use of hospital  and outpatient care:   Lower cost-sharing. Research confirms the commonsense view that  patients use more care if it is free.  Whereas in traditional Medicare the  beneficiary must pay part of the cost of care—for example, 20 percent of  the cost of an outpatient visit—in Senior Prime all primary care and  most specialty care is free.
Lack of strong incentives to limit utilization.  Although MTFs  generally tried to restrain inappropriate utilization, they did not have  strong financial incentives to do so.  MTFs cannot spend more than their  budget, but space-available care acts as a safety valve: that is, when  costs appear likely to exceed funding, space-available care can be  reduced while care to Senior Prime enrollees remains unaffected.  MTFs  also had no direct incentive to limit the use of purchased care, which is  funded centrally, and the managed care contractors also lacked an  incentive, since they were not at financial risk for Senior Prime.
Practice styles.  Military physicians’ training and experience, as well as  the practice styles of their colleagues, also affect their readiness to  hospitalize patients as well as their recommendations to patients about  follow-up visits and referrals to specialists.  Studies have shown that  the military health system has higher utilization than the private sector.   Given that military physicians tend to spend their careers in the military  with relatively little exposure to civilian health care’s incentives and  practices, it is not surprising that these patterns of high use would  persist.
section_title: Some Nonenrollees Could No Longer Use MTFs
paragraphs: Although nonenrollees generally were not affected by the demonstration,   the minority who had been using space-available MTF care were affected  because space-available care declined. This decline is shown in our survey  results, and is confirmed by DOD’s estimate of the cost of space-available  care, which decreased from $183 million in 1996 to $72 million in 1999, the  first full year of the demonstration.  However, for most nonenrollees, this  decline was not an issue, because they did not use MTFs either before or  during the demonstration.  Furthermore, of those who depended on MTFs  for all or most of their care before the demonstration, most enrolled in  Senior Prime, thereby assuring their continued access to care.  (See figure  2.)
Since there was less space-available care than in the past, many of those  who had previously used MTFs and did not enroll in Senior Prime were  “crowded-out.”  Crowd-out varied considerably, depending both on the  types of services that nonenrollees needed and the types of physicians and  space available at MTFs.  Nonenrollees who required certain services were  crowded out while others at the same MTF continued to receive care.  We  focus on nonenrollees who experienced a sharp decline in MTF care: those  who said they had received most or all of their care at MTFs before the  demonstration but got no care or only some care at MTFs during the  demonstration.
Of those nonenrollees who had previously depended on MTFs for their  care, over 60 percent (about 4,600 people) were crowded out. (See figure  3.)
The small number of nonenrollees—10 percent of the total—that had  depended on MTFs for their care before the demonstration limited crowd- out. (See figure 4.)  Consequently, only a small proportion of all  nonenrollees—about 6 percent—was crowded out. Somewhat  surprisingly, a small number of nonenrollees who had not previously used  MTFs began obtaining all or most of their care at MTFs.
Although Medicare fee-for-service care increased for those who were  crowded out of MTF care, the increase in Medicare outpatient care was not  nearly large enough to compensate for the loss of MTF care. (See figure 5.)   Retirees who were crowded out had somewhat lower incomes than other  nonenrollees and were also less likely to have supplemental insurance,  suggesting that some of them may have found it difficult to cover Medicare  out-of-pocket costs. By the end of the initial demonstration period, less  than half of all nonenrollees said they were able to get care at MTFs when  they needed it, a modest decline from before the demonstration.
section_title: Improved Enrollee Access Resulted In Higher Patient Satisfaction but Costs for DOD Were High
paragraphs: Enrollees’ improved access to care had both positive and negative  consequences.  Many enrollees in Senior Prime reported that they were  more satisfied with nearly all aspects of their care.  Some results were  neutral: enrollees’ self-reported health status did not change and health  outcomes, such as mortality and preventable hospitalizations, were no  better than those achieved by nonenrolled military retirees.  However,  enrollees’ heavy use of health services resulted in high per-person costs for  DOD compared to costs of other Medicare beneficiaries.
subsections: section_title: Enrollee Satisfaction Improved
paragraphs: Satisfaction with almost all aspects of care increased for enrollees.   Moreover, by the end of the demonstration, their satisfaction was generally  as high as that of nonenrollees.
Patients’ sense of satisfaction or dissatisfaction with their physicians  reflects in part their perceptions of their physicians’ clinical and  communication skills.  Under Senior Prime, many enrollees reported  greater satisfaction with both their primary care physicians and specialists.  Specifically, enrollees reported greater satisfaction with their physicians’  competence and ability to communicate—to listen, explain, and answer  questions, and to coordinate with other physicians about patients’ care.  (See table 5.)
section_title: Demonstration Did Not Affect Health Outcomes
paragraphs: Senior Prime did not appear to influence three key measures of health  outcomes—the mortality rate, self-reported health status, and preventable  hospitalizations.
Mortality rate.  Although there were slightly more deaths among  nonenrollees, the difference between enrollees and nonenrollees  disappears when we adjust for retirees’ age and their health conditions  at the start of the demonstration.
Health status.  We also found that Senior Prime did not produce any  improvement in enrollees’ self-reported health status. We base this on  enrollees’ answers to our questions about different aspects of their  health, including their ratings of their health in general and of specific  areas, such as their ability to climb several flights of stairs.  This finding  is not surprising, given the relatively short time interval—an average of  19 months—between our two surveys. We also found that, like  enrollees, nonenrollees did not experience a significant change in health  status.
Preventable hospitalizations.  The demonstration did not have a  clear effect on preventable hospitalizations—those hospitalizations that  experts say can often be avoided by appropriate outpatient care.  Among  patients who had been hospitalized for any reason, the rate of  preventable hospitalizations was slightly higher for Senior Prime  enrollees than for their Medicare fee-for-service counterparts.  However,  when all those with chronic diseases—whether hospitalized or not— were examined, the rate among Senior Prime enrollees was lower.
section_title: Access and High Utilization Resulted in High Costs for DOD
paragraphs: A less desirable consequence of enrollees’ access to care was its high cost  for DOD.  Under Senior Prime, DOD’s costs were significantly higher than  Medicare fee-for-service costs for comparable patients and comparable  benefits. These higher costs did not result from Senior Prime enrollees  being sicker or older than Medicare beneficiaries.  Instead, they resulted  from heavier use of hospitals and, especially, greater use of doctors and  other outpatient services.  In other words, the increased ability of Senior  Prime enrollees to see physicians and receive care translated directly into  high DOD costs for the demonstration.
section_title: Concluding Observations
paragraphs: From the perspective of enrollees, Senior Prime was highly successful.  Their satisfaction with nearly all aspects of their care increased, and by the  end of the demonstration enrollees were in general as satisfied as  nonenrollees, who largely used civilian care.  However, enrollees’  utilization and the cost of their care to DOD were both higher.  Although  subvention is not expected to continue, the demonstration raises a larger  issue for DOD: can it achieve the same high levels of patient satisfaction  that it reached in Senior Prime while bringing its utilization and costs  closer to the private sector’s?
section_title: Agency Comments
paragraphs: We provided DOD and CMS an opportunity to comment on a draft of this  report, and both agencies provided written comments.  DOD said that the  report was accurate.  It noted that the report did not compare Senior Prime  enrollees’ utilization rates with those of Medicare+Choice plans and  suggested that our comparison with fee-for-service might be misleading,  because it did not take account of the richer benefit package offered by  Senior Prime.  DOD further stated that the utilization data should cover the  full 3 years of the demonstration experience and that utilization might be  higher during the initial phase of a new plan.  Finally, DOD stated that  access and satisfaction for TRICARE Prime enrollees were adversely  affected by the demonstration.  CMS agreed with the report’s findings and  suggested that higher quality of care might be an explanation for Senior  Prime enrollees’ higher use of services.  (DOD and CMS comments appear  in appendixes VI and VII.)
In comparing utilization rates with Medicare fee-for-service in the same  areas, we chose a comparison group that would be expected to have higher  utilization than Senior Prime or any other managed care plan. Fee-for- service beneficiaries can obtain care from any provider without restriction,  whereas Medicare+Choice plans typically have some limitations on access.   Consequently, the fact that Senior Prime utilization was substantially  higher than fee-for-service utilization is striking.  As mandated by law, our  evaluation covers the initial demonstration period (through December  2000).  We therefore did not attempt to obtain information on utilization  during 2001 and, in any case, the lag in data reporting would have  prevented our doing so.  However, during the first 2 full years of the  demonstration utilization declined slightly: outpatient visits in 2000 were 2  percent lower than in 1999.  As we have reported elsewhere, site officials  found little evidence that the demonstration affected TRICARE Prime  enrollees’ satisfaction or access to care.  Regarding the possible impact of  quality of care on use of services, we examined several health outcome  indicators and found no evidence of such an effect.
We are sending copies of this report to the Secretary of Defense and the  Administrator of the Centers for Medicare and Medicaid Services.  We will  make copies available to others upon request.
If you or your staffs have questions about this report, please contact me at  (202) 512-7114.  Other GAO contacts and staff acknowledgments are listed  in appendix VIII.
section_title: Health Care Survey of Subvention Demonstration Beneficiaries
paragraphs: To address the questions Congress asked about Medicare subvention, we  fielded a mail survey of military retirees and their family members who  were eligible for the subvention demonstration.  The survey had two  interlocking components: a panel of enrollees and nonenrollees, who were  surveyed both at the beginning and the end of the demonstration, and two  cross sections or snapshots of enrollees and nonenrollees—one taken at  the beginning of the demonstration and the other at the end.
subsections: section_title: Panel Study
paragraphs: To assess those questions that involved change over time, we sampled and  surveyed by mail enrollees and nonenrollees, stratified by site, at the  beginning of the demonstration. These same respondents were resurveyed  from September through December 2000, shortly before the  demonstration’s initial period ended. Because a prior report describes our  initial survey, this appendix focuses on our second survey.
subsections: section_title: Sample Design
paragraphs: To conduct the second round of data collection, we began with 15,223  respondents from the first round of surveys. To be included in the panel,  three criteria had to be met: (1) the person must still be alive, (2) the person  must still reside in an official demonstration area, and (3) the person must  have maintained the same enrollment status, that is, enrolled or not  enrolled.  Based on these criteria we mailed 13,332 surveys to our panel  sample of enrollees and nonenrollees.
section_title: Response Rates
paragraphs: Starting with a sample of 13,332 retirees and their family members, we  obtained usable questionnaires from 11,986 people, an overall response  rate of 91 percent. (See table 6, which also shows the adjustments to the  initial sample and to the estimated population size.  See table 7 for the  reasons for nonresponse.)
section_title: Cross Section Study
paragraphs: To enable comparisons between enrollees and nonenrollees at the end of  the demonstration, the second survey was augmented to include persons  who had enrolled since the first survey as well as additional nonenrollees.   The overall composition of the Senior Prime enrollee population had  changed from the time of our first survey. When we drew our second  sample in July 2000, 36 percent of all enrollees were new—that is, they had  enrolled since our first survey—and over two-fifths of them were age-ins  who had turned 65 since the demonstration started.  From the time of our  first survey to the time of our second survey, only 861 people had  disenrolled from Senior Prime.  Therefore, we surveyed all voluntary  disenrollees. Data from all respondents—those we surveyed for the first  time as well as those in the panel—were weighted, to yield a representative  sample of the demonstration population at the end of the program.
subsections: section_title: Sample Design
paragraphs: The sample for the cross section study included the panel sample as well as  the augmented populations.  We defined our population as all Medicare- eligible military retirees living in the demonstration sites and eligible for  Senior Prime.  The sample of new enrollees was drawn from all those  enrolled in the demonstration according to the Iowa Foundation’s  enrollment files.  The supplemental sample of nonenrollees was drawn  from all retirees age 65 and over in the Defense Enrollment Eligibility  Reporting System who (1) had both Medicare part A and part B coverage,  (2) lived within the official demonstration zip codes, (3) were not enrolled  in Senior Prime, and (4) were not part of our first sample.  We stratified our  sample of new enrollees and new nonenrollees  by site and by whether they  aged in.  We oversampled each stratum to have a large enough number to  conduct analyses of subpopulations.  The total sample for all sites was  23,967, drawn from a population of 117,618.
section_title: Response Rates
paragraphs: Starting with a sample of 23,967 retirees and their family members, we  obtained complete and usable questionnaires from 20,870 people, an  overall response rate of 88 percent. (See table 8, which also shows the  adjustments to the initial sample and to the estimated population size. See  table 9, which shows the reasons for nonresponse.)  Response rates varied  across sites and subpopulations.  Rates ranged from 95.3 percent among  aged-in new enrollees to 66.7 percent among disenrollees.
section_title: Questionnaire Design
paragraphs: The original questionnaire that was sent to our panel sample was created  based on a review of the literature and five existing survey instruments. In  addition, we pretested the instrument with several retiree groups.  For the  second round of data collection, we created four different versions of the  questionnaire, based on the original questionnaire.  The four versions were  nearly the same, with some differences in the sections on Senior Prime and  health insurance coverage.  (See table 10 for a complete list of all the  survey questions used in our analyses.)
For the panel sample, our objective was to collect the same data at two  points in time. Therefore, in constructing the questionnaires for the panel  enrollees and panel nonenrollees we essentially used the same instrument  as the original survey to answer questions about the effect of the  demonstration on access to care, quality of care, health care use, and out- of-pocket costs.  However, we modified our questions about plan  satisfaction and health insurance coverage.
In constructing the questionnaires for the new enrollees, we generally  adopted the same questions in the panel enrollee instrument to measure  access to care, quality of care, health care use, and out-of-pocket costs.   However, we also asked the new enrollees about their health care  experiences in the 12 months before they joined Senior Prime.  For new  nonenrollees, we were able to use the same instrument as we had used for  the panel nonenrollees, because their health care experiences were not  related to tenure in Senior Prime.   Finally, the disenrollee questionnaire,  like the other versions, did not change from the original instrument in the  measures on access to care, quality of care, health care use, and out-of- pocket costs.  However, we added questions on the reasons for  disenrollment.
section_title: Measures of Access to Care And Satisfaction With Care
subsections: section_title: Measures of Change in Access and Satisfaction
paragraphs: To detect the effects the demonstration had on both enrollees’ and  nonenrollees’ access to care and satisfaction with care, we compared the  differences between survey responses at both points in time and among  each demonstration site.  For most questions, retirees were asked both  before the demonstration and at the end of the demonstration how much  they agreed or disagreed with each statement. They were given five  possible answers: strongly agree, agree, neither agree nor disagree,  disagree, and strongly disagree.  To calculate change, responses were  assigned a numeric value on a five-point scale, with five being the highest  and one being the lowest.  To properly quantify the response, some scales  had to be reversed.  Where necessary, questions were rescaled so that  “agree” represents a positive answer and “disagree” a negative answer.  To  obtain a measure of change, the value of the response from the first survey  was subtracted from the value of the response from the second survey.  A  positive value indicates improvement, a negative value indicates decline.  The net improvement is calculated as the difference between the  proportion of respondents within each sample population who improved  and the proportion of those who declined.
Four separate significance tests were performed. (See table 11.)  The first  test was for net improvement (the difference between improved and  declined) among enrollees.  The second test was for net improvement  among nonenrollees. The third test was for the difference of net  improvement between enrollees and nonenrollees. Finally, we tested  whether the net improvement for each site is significantly different from  the net improvement of the other sites. (See tables 11 and 12.)
section_title: Measures of Access and Satisfaction at the End of the Demonstration
paragraphs: In addition to the change of access and quality among enrollees and  nonenrollees, we also examined the level of access and quality at the time  of the second survey among the cross section sample. (See table 12.)
Three separate significance tests were performed.  The first test of  significance was between enrollees and nonenrollees who said they  strongly agreed with each statement.  The second test of significance was  between enrollees and nonenrollees who said they either strongly agreed  or agreed with each statement. The final test was whether the site  percentage differs significantly from the overall percentage.
section_title: Models of Utilization
paragraphs: In this appendix, we describe the DOD and Medicare data that we used to  analyze utilization.  We also summarize the models that we developed to  risk adjust acute inpatient care and outpatient care and give results both  demonstration wide and by site.
subsections: section_title: Data
paragraphs: For these analyses, we defined the Senior Prime enrollee population as  those who had enrolled as of December 31, 1999.  We used DOD data for  1999 as the source of our counts of hospital stays and outpatient visits to  both MTF and civilian network providers.  We limited our analysis to  hospital stays of 1 day or more to eliminate inconsistencies between  Medicare and TRICARE in the use of same-day discharges. Our counts of  outpatient utilization include (1) visits and ambulatory surgeries in MTF  outpatient clinics and (2) visits to network providers— doctors’ offices,  ambulatory surgeries, hospital emergency rooms, and hospital outpatient  clinics.
To identify our comparison group of fee-for-service beneficiaries in the  demonstration areas, we used CMS’ 20-percent Medicare sample, and  extracted those beneficiaries residing in the subvention areas.  We  excluded anyone who had been in a Medicare+Choice plan for any part of  the year.  To make the comparison fair, we also excluded certain groups not  represented or only minimally represented in Senior Prime: persons with  end-stage renal disease (ESRD), Medicaid beneficiaries, persons with  disabilities (under age 65), and people who lost Medicare part A or part B  entitlement for reasons other than death.  We derived our counts of  Medicare fee-for-service utilization for the sample from Medicare claims  files.  For those who were in either Senior Prime or fee-for-service for less  than a full year, we estimated full-year utilization counts.
We identified a separate comparison group of persons eligible for the  demonstration who did not enroll.  We collected both Medicare fee-for- service claims and DOD encounter data for the sample of enrollees and  nonenrollees who answered both our first and second surveys.
section_title: Models of Risk- Adjusted Utilization
paragraphs: In order to compare the utilization of Senior Prime enrollees to Medicare  fee-for-service beneficiaries in the demonstration areas, we developed  several models of fee-for-service utilization (for hospitalization, length of  stay, and outpatient care). We then applied each model to Senior Prime  enrollees—taking account of their demographic characteristics and health  status—to predict what their utilization would have been in Medicare fee- for-service. The ratio of their predicted utilization to their actual Senior  Prime utilization gives a measure of the amount by which Senior Prime  utilization exceeded or fell short of fee-for-service utilization for people  with the enrollees’ characteristics.  Table 13 compares the characteristics  of Senior Prime enrollees with Medicare fee-for-service beneficiaries in the  demonstration area.
section_title: Acute Hospitalization Model
paragraphs: Acute hospitalization is a relatively rare event: only one out of five  Medicare beneficiaries (in the counterpart 20-percent fee-for-service  sample) is hospitalized during the year, and about half of those who are  hospitalized are admitted again during the same year.  We therefore used  Poisson regression, which is designed to predict the number of  occurrences (counts) of a rare event during a fixed time frame, to estimate  the number of acute hospitalizations.  Positive coefficients are interpreted  as reflecting factors that increase the hospitalization rate while negative  coefficients indicate a decrease in that rate.  The strongest factor affecting  the number of hospitalizations is the HCC score, which measures how ill  and how costly a person is. Its effect is not linear—both squared and cubed  terms enter the model.  (See table 14.)
section_title: Outpatient Physician Visit Model
paragraphs: Diagnostic groupings are based on the International Classification of Diseases, 9th  Revision, Clinical Modification (ICD-9-CM).
Endocrine, nutritional, and metabolic diseases and  immunity disorders Diseases of the nervous system and sense organs Diseases of the musculoskeletal system and  connective tissue Supplementary classification (V01-V82)
section_title: Profile of Sites’ Utilization and Risk Factors
paragraphs: Using the same approach and models, we examined utilization at each site.   (See table 16.)  Adjusting for risk, both hospital stays and outpatient visits  were substantially greater in Senior Prime than in fee-for-service at all sites.   However, the differences in length of stay were small, with lengths of stay  generally higher in fee-for-service.
section_title: Crowd-Out of Nonenrollees
paragraphs: “Crowd-outs” were nonenrollees who had used MTF care before the  demonstration but were unable to do so after the demonstration started.  In  this report, we define crowd-outs as those 4,594 nonenrollees (6 percent of  all nonenrollees) who had, according to their survey answers, received all  or most of their care at an MTF before the demonstration but received none  or only some of their care at an MTF after the demonstration started.
However, as table 17 shows, crowd-out can be defined either more  narrowly or more broadly.  By the narrowest definition of crowd-out— those nonenrollees who received all of their care at an MTF before the  demonstration but none of their care at an MTF after the demonstration  started—only 1,498 persons (2 percent of all nonenrollees) were crowded  out.  However, if we count all those who received less care than before,  12,133 (16 percent of nonenrollees) nonenrollees were crowded out.
subsections: section_title: Change in Satisfaction With Access to Military Care Among Crowd- Outs
paragraphs: As expected, many of the 4,594 nonenrollees whom we characterized as  crowd-outs changed their attitudes toward military care during the  demonstration.  As shown in table 18, they reported a decline in access to  MTF care as well as lower satisfaction with care in MTFs. However, they  did not report significant changes in satisfaction on issues not explicitly  connected to MTFs.
section_title: Trend in Utilization Among Crowd-Outs
paragraphs: DOD’s MTF encounter data and network claims data confirmed the self- reports of crowd-outs.  The crowd-outs’ MTF outpatient care dropped  dramatically during the demonstration and the increase in fee-for-service  (FFS) outpatient visits was not sufficient to offset this decline.  However,  as shown in table 19, there was no decline in acute hospitalizations.
section_title: Health Outcomes Analysis
paragraphs: In this appendix, we describe our methods for analyzing the effects of the  subvention demonstration on three indicators of health outcomes— mortality, health status, and preventable hospitalization.
subsections: section_title: Mortality Analysis
paragraphs: Using our first survey, we calculated the mortality rate from the date of the  survey response to January 31, 2001.  The source of death information was  the Medicare Enrollment Database.  We excluded Medicare+Choice  members because we could not obtain their diagnoses, which we needed to  calculate risk factors.
The unadjusted 2-year mortality rate was 0.06 for Senior Prime enrollees  and 0.08 for nonenrollees.  Although the difference is significant, it  disappears when we adjust for individual risk.  The adjusted 2-year  mortality rate is 0.06 for both enrollees and nonenrollees.  (See table 20.)
We used the Cox proportional hazard model to calculate individuals’ risk- adjusted mortality rate. A hazard ratio greater than 1 indicates a higher risk  of death while a hazard ratio less than 1 indicates a lower risk.  For  example, a hazard rate for males of 1.5 means that males are 50 percent  more likely to die than females, holding other factors constant.   Similarly, a  hazard rate of 0.5 for retirees with HCC scores in the lowest quartile means  that they are 50 percent less likely to die than those with HCC scores in the  middle two quartiles, holding other factors constant. Enrollment in Senior  Prime did not have a significant effect on mortality. (See table 21 for a  description of the factors that entered our model and of their estimated  effects.)
section_title: Health Status Analysis
paragraphs: See Ware, J. E., Kosinski, M., and Keller, S. D., SF-12: How to Score the SF-12 Physical and  Mental Health Summary Scales, The Health Institute, New England Medical Center, Second  Edition, pp. 12-13.
The change in the score between the two times was also insignificant.  We  examined both the unadjusted score and the adjusted score, using a linear  regression model (see table 23), but neither was significant, and enrollment  in Senior Prime was not a significant factor in the model.
section_title: Preventable Hospitalizations
paragraphs: We analyzed preventable hospitalizations—hospital stays that can often be  avoided by appropriate outpatient care—using several alternate models.   Specifically, we estimated the effect of Senior Prime enrollment on the  likelihood of having a preventable hospitalization, adjusting for age, sex,  and health conditions.  Measures of a person’s health conditions included  the HCC score, an index of comorbidities, and the number of recent  hospitalizations.  In addition, we controlled for the number of outpatient  clinic and physician visits, since outpatient care is considered a means of  preventing hospitalization.
We analyzed data on Senior Prime enrollees and on Medicare fee-for- service beneficiaries who were not military retirees and who lived in the  demonstration areas.  Within this combined group of enrollees and fee-for- service beneficiaries, we modeled preventable hospitalizations for two  populations: (1) those who had been hospitalized in 1999 and (2) those who  had at least one chronic disease in 1999—whether they had been  hospitalized or not.
Our analysis of the demonstration’s effect on preventable hospitalizations  yielded inconsistent results. For the first population (hospitalizations), we  found that Senior Prime enrollment was associated with more preventable  hospitalizations.  By contrast, for the second population (the chronically  ill), Senior Prime enrollment was associated with fewer preventable  hospitalizations.
section_title: Comments From the Department of Defense
section_title: Comments From the Centers for Medicare and Medicaid Services
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: Other GAO staff who made significant contributions to this work included  Jessica Farb, Maria Kronenburg and Dae Park.  Robin Burke provided  technical advice and Martha Wood provided technical advice and  assistance.
section_title: Related GAO Products
paragraphs: Medicare Subvention Demonstration: DOD Costs and Medicare Spending  (GAO-02-67, Oct. 31, 2001).
Medicare Subvention Demonstration: DOD’s Pilot Appealed to Seniors,  Underscored Management Complexities (GAO-01-671, June 14, 2001).
Medicare Subvention Demonstration: Enrollment in DOD Pilot Reflects  Retiree Experiences and Local Markets (GAO/HEHS-00-35, Jan. 31, 2000).
Defense Health Care: Appointment Timeliness Goals Not Met;  Measurement Tools Need Improvement (GAO/HEHS-99-168, Sept. 30,  1999).
Medicare Subvention Demonstration: DOD Start-up Overcame Obstacles,  Yields Lessons, and Raises Issues (GAO/GGD/HEHS-99-161, Sept. 28,  1999).
Medicare Subvention Demonstration: DOD Data Limitations May  Require Adjustments and Raise Broader Concerns (GAO/HEHS-99-39,  May 28, 1999).
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section_title: Public Affairs