Medicare Managed Care Plans Can Control Health Market Costs, Study Finds

RESEARCH TRIANGLE PARK, N.C.—Medicare managed health care plans can be effective in reducing costs and encouraging appropriate care, according to a new study by researchers at RTI International, Arizona State University, the University of California, and the University of North Carolina at Chapel Hill.

The study, published online in Health Services Research, assessed whether Medicare managed care plans indirectly affected the use of endoscopy services (sigmoidoscopy, colonoscopy) for colorectal cancer screening among fee-for-service Medicare recipients between 2001 and 2006.

"Our study showed that even though fee-for-service constituents were not enrolled in Medicare managed care plans, those plans broadly influenced adoption of technology and practice styles among providers in the markets where fee-for-service constituents lived,” said Lee Mobley, senior fellow in spatial science and health economics at RTI International. “This sort of 'spillover effect' from managed care onto market participants is a well-known phenomenon studied by health economists."

The study findings showed that Medicare managed care plans fostered the continued use of sigmoidoscopy, an older and less expensive technology, at a time when sigmoidoscopies were rapidly being replaced by the newer, more expensive colonoscopies.

Sigmoidoscopy only examines up to the sigmoid, the lower part of the colon, while colonoscopy examines the whole large bowel.

A recent RTI study found that while colonoscopies are the most accurate method for the early detection of colorectal cancers, they are not the most cost-effective. Researchers and policy makers have recently begun to question the cost-effectiveness of using colonoscopy technology for persons at average risk for colorectal cancer. However, colonoscopy is considered by some to be the "gold standard" for detecting colorectal cancers.

"Medicare managed care plans may have played an important role in sustaining the practice of sigmoidoscopy and slowing down the diffusion of colonoscopy," Mobley said. "Perhaps in this time of increased cost consciousness, managed care practices will return to positions of influence and imbue more constraint on the diffusion of cost-increasing technologies."

According to the new research, counties with higher Medicare managed care penetration had lower colonoscopy use but higher sigmoidoscopy use among fee-for-service Medicare beneficiaries.

Counties with 10 percent higher Medicare managed care penetration than average saw about 3 to 6 percent lower colonoscopy rates and 8 to 12 percent higher sigmoidoscopy rates during 2001-2006.

"Managed care plans can control costs by assessing the cost-effectiveness of various treatment options," Mobley said. "Managed care disseminates information and guidelines regarding the preferred protocols for preventive health services."

According to the American Cancer Society, colorectal cancer remains the second leading cause of cancer death in the United States. Survival rates are 90 percent if diagnosed early, but only 39 percent of cases are diagnosed at an early stage.

"Because trends in endoscopy use among Medicare and private populations have been similar, the Medicare market may provide useful albeit indirect evidence about the managed care impact across the entire U.S. insurance market," Mobley said. "Conversely, what we observe for the Medicare market may reflect larger forces at work than simply the influence of Medicare managed care plans on Medicare constituents' behavior."

The research was supported by the American Reinvestment and Recovery Act (ARRA) supplement to the National Institutes of Health grant award number R01CA126858 from the National Cancer Institute. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Cancer Institute or the National Institutes of Health.