Managed care is a technique that is intended to reduce the cost of providing health care and improve the quality of that care. In Florida, Medicaid enrollment grew 3.4 times as fast as population growth from 1990 through 2010 [1–3]. During the same period, Florida’s Medicaid expenditures increased at an annual rate of 10.1 percent . In short, the Florida Medicaid program is the fifth largest program in terms of Medicaid spending and it ranks fourth in enrollment.
In 1984, in order to slow the rate of growth of Medicaid expenditures, Florida adopted Medicaid managed care (MMC) program options such as Health Maintenance Organizations (HMOs) and Provider Service Networks (PSNs). The HMO systems combine the financing and delivery of comprehensive health care services and supplies into one organization. PSN is “a network established or organized and operated by a health care providers or group of affiliated health care providers” . Contrary to HMO, PSN is considered a mean to avoid “middleman” costs because Medicaid pays healthcare providers directly while PSN uses various managed care techniques to control utilization and cost of health care . The Agency for Health Care Administration (AHCA) has primary responsibility for Florida’s Medicaid program and has contracted with HMOs on a prepaid fixed monthly rate per member since 1984. In order to expand Medicaid managed care choices, Florida implemented the Medicaid Provider Access System (MediPass) in 1991. MediPass is a statewide primary care case management program (PCCM) and it is a non-risk form of managed care. With the MediPass, primary care physicians (PCPs) provide care coordination services and disease management services to MediPass enrollees in return for a small monthly patient management fee (i.e., $2) per enrollee, plus Medicaid reimbursement for services that are rendered. On March 1, 2000, a contract between South Florida Community Care Network and AHCA officially created a Medicaid PSN in Florida . As of February 2012, there are 18 Medicaid HMOs plans in Florida and 7 Medicaid PSNs as of October 2011. In 2008, Medicaid HMOs, MediPass, and Medicaid PSNs accounted for approximately 46%, 54%, and 1% of total Medicaid managed care enrollments, respectively. Currently, Florida Medicaid recipients have at least 15 different managed care program options in Medicaid and more than two-thirds (i.e., about 1.9 million) of all Florida Medicaid recipients were enrolled in one of the managed care programs [7, 8].
Florida statues mandate most Medicaid recipients to enroll in a managed care plan or MediPass. However, individuals in an institution, individuals enrolled in the Medicaid medically needy program or patients receiving hospice care are exempted from managed care programs by state and/or federal law. Florida statues also allow people in exemption categories to voluntarily enroll in managed care programs, such as certain pregnant women and those dually eligible for Medicaid and Medicare. In 2011, Part IV of Chapter 409, Florida Statues, was created by the Florida Legislature to establish the Statewide Medicaid Managed Care program in which more Medicaid beneficiaries are required to enroll in a managed care program on a mandatory basis.
As noted above, the intent of adopting managed care plans is to improve access to health care services while containing costs. In an HMO, a member must select a primary care physician. Contracted primary care physicians (PCPs) are responsible for the overall care of the HMO members and act as gatekeepers. An HMO member pays a fixed monthly fee regardless of how much care they receive. As a result, HMO members have a low cost barrier to getting health care, especially to primary care, and they seek medical treatment early. However, since Medicaid recipients do not pay premiums and coinsurance, it is not plausible to say Medicaid managed care members have a lower cost barrier to getting primary care than Medicaid FFS enrollees. Thus, we were more concerned with the insurer’s incentive than the patient’s incentive in explaining the relationship between Medicaid managed care and preventable hospitalizations. Since a health maintenance organization has a strong incentive to keep cost and utilization rates low, managed care plans provide cost-containment incentives (i.e., bonuses) to health care providers. Health care providers under managed care plans emphasize preventive care since they have more financial rewards in prevention of illness than treatment of illness. In addition, using various management strategies (i.e., gatekeeper and utilization reviews), managed care plans focus on primary care services to avoid costly specialty visits and hospitalizations. Thus, it is expected that enrollees in Medicaid managed care plans have lower preventable hospitalization rates than enrollees in Medicaid FFS.
This study also assesses how rurality is related to obtaining primary care services because Medicaid recipients may face barriers to receiving primary care depending on their residence. For example, residents in rural communities are less likely to receive primary health care of reasonable quality regardless of their insurance type because of limited accessibility to primary care . This geographic barrier is associated with lack of availability and quality of local primary care in rural areas. In short, an insufficient number of primary care physicians, lack of hospitals and clinics, lack of information, and long travel distances to access care characterize healthcare in rural areas.
The availability of consumer choice and competition in Medicaid managed care is different across markets. While some counties use PCCM only, other counties use both PCCM and HMO. The number of Medicaid managed care plans that counties provide is not uniform, ranging 1 to 11 across the 67 counties in Florida . Also, there are different levels of competition in the Medicaid managed care markets across counties. Some Medicaid HMOs face high levels of competition. In other counties, Medicaid HMOs are in a more subdued competitive environment. These different market structures may yield different effects on access to primary care for Medicaid managed care enrollees. In addition to the direct relationship between Medicaid managed care organization market structure and preventable hospitalizations, we added the interaction between MMC enrollment and MMC market structure to assess differences in the relationship between managed care enrollment and preventable hospitalizations in the Medicaid managed care market structure. The competitive behavior of Medicaid managed care organizations is likely to be affected by different market structures. We expect that increased competition in the managed care market benefits Medicaid managed care enrollees by enhancing the quality of care. Since there is a lack of a price mechanism between Medicaid managed care organizations and their enrollees, a different quality of product—such as more comprehensive coverage and better access to providers—can affect the health care plan selection of Medicaid enrollees .
The purpose of this study is to investigate how managed care, county-level rurality, and market structure (i.e., number of competitors and degree of competition) of Medicaid managed care are related to potentially preventable hospitalizations. We also study the spillover of Medicaid managed care on access to primary care because growth in the managed care delivery system could affect those who are not covered by managed care plans [12, 13]. The growth of managed care may affect physician practice pattern throughout the area [14, 15]. To reduce preventable hospitalizations, for example, non-HMO providers could follow the HMO model . In addition, the prevalence of managed care could influence the kind of services available and the “variation in the mix of services” available in their areas . Finally, this article presents empirical evidence regarding the relationship between other external barriers–health care resources (i.e., the presence of federally qualified health centers and rural health clinics and physician supply, etc.) – and the likelihood of hospitalizations for ambulatory care sensitive conditions (ACSCs).
Using the 2008 hospital inpatient discharge data in Florida and 2011-2012 Area Resource File, we test multiple logistic regression models for the likelihood that a Medicaid patient will be admitted for ACSCs. Better understanding of the relationship between managed care, geographic barriers, market structure and potentially preventable hospitalizations can usefully inform policy. To date, there have been a number of studies that examine this relationship [9, 16–19]. However, the results from previous studies have been inconsistent. Since 2000, five studies have examined whether Medicaid managed care affects preventable hospitalization patterns [16, 20–23], but none of them analyzed the Medicaid population in Florida. Previous studies did not demonstrate a clear benefit of Medicaid managed care [16, 20]. For example, Basu et al.  found that Medicaid managed care was not associated with a decrease in the number of preventable hospitalizations. Also, relatively little is known about how the level of rurality affects preventable hospital admissions among Medicaid adults. Only two out of five studies controlled for rurality in their analytic models [16, 22]. Regarding HMO market-level factors, there has been limited research regarding the effect of levels of HMO competition on preventable hospitalizations .
Overall, this study contributes to the current understanding of Medicaid managed care by examining whether Medicaid managed care is related to preventable hospitalizations and how Medicaid managed care interacts with county-level characteristics and market-level factors in estimating avoidable hospitalizations. Specifically, the following research questions were addressed in the study:
Is Medicaid managed care enrollment related to preventable hospitalizations?
What is the indirect association of Medicaid managed care penetration with preventable hospitalizations of those who are not covered by a managed care plan?
How does the association of managed care with preventable hospitalizations vary by race, county-level characteristics, or market-level factors?