Health outcomes and Medicaid costs for frail older individuals: A case study of a MCO versus fee-for-service care

Older individuals receiving both Medicare and Medicaid benefits are known to have a disproportionate burden of illness and high medical care costs. Elder Health, Inc., a private, for-profit managed care organization operating in Maryland under capitation rates from both Medicare and Medicaid, has tailored a medical practice to these individuals, with the stated objective of providing integrated care. This study compared 200 Elder Health patients with a closely matched group of dually eligible older individuals receiving care in fee-for-service practices. There was a baseline in-home structured interview with the patient, followed 1 year later with a telephone interview. Other data sources were Medicaid claims data and Elder Health's utilization records. The outcomes of interest were the patients' health and functional status, their satisfaction with care, rates of use of medical services, and costs to Medicaid. Elder Health patients had similar general health status, better functional status, and greater satisfaction with access to care but less satisfaction with information giving than the fee-for-service group. They received more primary care and preventive services and had less than half the number of hospital days. Costs to Medicaid were nearly identical. Institutional and community-based long-term care costs were not included in the analysis. As pressures mount for the Health Care Financing Administration to expand its prepaid contracts with private health plans and the need for integrated programs increase, quantitative assessment of innovative delivery models such as Elder Health, Inc. will be essential to ensure that patients' and the publics' interests are well served.