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Profits Don't Deter Surgical Care in HMOs

Similar rates of costly operations in profit, nonprofit Medicare plans

WEDNESDAY, Jan. 7, 2004 (HealthDayNews) -- Medicare recipients enrolled in for-profit health plans don't get shortchanged on costly care by their insurers' quest for profits, a new study has found.

Some critics of for-profit health plans assume that enrollees are less likely to receive expensive surgeries than people served by plans where a profit motive isn't at work. But the new study found that not only were rates of care similar for 10 of 12 operations reviewed, for-profit plans did a better job covering the other two procedures.

"It was a hypothesis that some people expected to be true," says study author Alan Zaslavsky, a health statistician at Harvard Medical School. "We were somewhat surprised" by the results.

"One of the questions that comes up when you compare for-profit and not-for-profit plans is, is there really any reason to think that the difference between the two is primarily an economic difference?" Zaslavsky says.

After all, nonprofit plans do need to break even or generate at surplus to stay in business. With that in mind, he says, the question becomes: Which plans better control their costs? At that point, "it's not obvious that the tax status [of a plan] tells you something about effectiveness."

The study, which appears in the Jan. 8 issue of the New England Journal of Medicine, doesn't address whether the absolute levels of care in either for-profit or nonprofit health plans are sufficient, Zaslavsky adds.

The researchers analyzed patient records from more than 3.7 million men and women enrolled in 254 Medicare health plans in 1997, the last year for which complete data were available.

To test the hypothesis that for-profit plans would limit coverage more than non-profit insurers, they identified 12 common but costly operations, from heart surgery to knee replacement.

After accounting for age, location of the health plan, and other factors that influence rates of service, the researchers saw that for-profit and nonprofit plans offered equivalent service for nearly all the procedures. And rates for two operations -- one involving colon surgery, the other for gall bladder problems -- were significantly higher for patients in for-profit plans.

The researchers say they're not sure what accounts for the findings. It may be that managers of for-profit plans do a better job of promoting care that reduces the need for costly surgeries, they suggest. Similarly, they may be more adept than their nonprofit counterparts at negotiating price discounts from hospitals and cutting down on care related to surgical procedures while providing coverage of the operations themselves.

For-profit plans may also be sensitive to the political and legal pressures of failing to cover expensive procedures. Or, the researchers write, "our results are also consistent with the possibility that for-profit and not-for-profit plans perceive similar incentives to control costs and use similar approaches."

Mohit Ghose, director of public affairs for the American Association of Health Plans-Health Insurance Association of America, which represents private health plans, says his group doesn't distinguish between profit and nonprofit companies. Both, he says, provide more superior care than the conventional fee-for-service model of Medicare. "For us the question has always been, why aren't more people joining managed care?" Ghose says.

But Dr. David Himmelstein, a Harvard Medical School researcher who has studied managed care, says the latest work doesn't say much at all. "It tells us neither about cost, nor about quality," he says. "None of these things is particularly a measure of good quality care or not."

A better test, Himmelstein says, is what happens with elective care. His own studies in this area, and those of "many other" researchers, have turned up disparities between for-profit and nonprofit plans, he says. "It's the things that are close calls or judgments, or how rushed you are [as a doctor] -- those are much more the things that hang in the balance."

Medicare, the government's insurance program for the elderly and disabled, now covers about 40 million people. Of those, 5.3 million, or roughly 13 percent, are enrolled in managed-care plans, according to the Center for Medicare and Medicaid Services, which oversees the two programs.

More information

For more on Medicare, visit the Center for Medicare and Medicaid Services. For more on health plans, try the American Association of Health Plans.

SOURCES: Alan Zaslavsky, Ph.D., professor, health care policy, Harvard Medical School, Boston; Mohit Ghose, director, public affairs, American Association of Health Plans-Health Insurance Association of America, Washington, D.C.; David Himmelstein, M.D., associate professor, medicine, Harvard Medical School, Boston; Jan. 8, 2004, New England Journal of Medicine
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