Selection bias between 2 medicare capitated benefit programs

Walter Leutz, Kathleen K. Brody, Lucy L. Nonnenkamp, Nancy A. Perrin

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


Objectives: To assess enrollment selection bias between a standard Medicare health maintenance organization (HMO) and a higher-priced social health maintenance organization (SHMO) offering full prescription drug and unique home-based and community-based benefits and to assess how adverse selection was handled through SHMO finances. Study Design: Kaiser Permanente Northwest offered the dual-choice option in the greater Portland region from 1985 to 2002. Analysis focused on 3 "choice points" when options were clear and highlighted for beneficiaries. Data collected included age and sex, utilization 1 year before and after the choice points, health status data at enrollment (1999-2002 only), mortality, and cost and revenues. Data were extracted from health plan databases. Methods: Hospital, pharmacy, and nursing facility utilization for 1 year before and after the choice points are compared for HMO and SHMO choosers. Health and functional status data are compared from 1999 to 2002. Utilization and mortality data are controlled by age and sex. Results: SHMO joiners evidenced adverse selection, while healthier members tended to stay in the HMO, with leaner benefits. Despite adverse selection, the health plan maintained margins in the SHMO, assisted by frailty-adjusted Medicare payments and member premiums. Conclusion: This high-low option strategy sought to offer the "right care at the right time" and may be a model for managed care organizations to serve aging and disabled beneficiaries under Medicare's new special needs plan option.

Original languageEnglish (US)
Pages (from-to)201-207
Number of pages7
JournalAmerican Journal of Managed Care
Issue number4
StatePublished - Apr 1 2007
Externally publishedYes

ASJC Scopus subject areas

  • Health Policy


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