HMO Ratings May Be Sending Mixed Signals to Consumers

2-9-98
University Park, Pa. --- Health plan ratings are potentially useful for consumers in a managed care marketplace, but current ratings vary widely in their evaluation methods, sending mixed signals to consumers, says a new study by researchers at Penn State and the University of Michigan.

A study published in the just-released January issue of The Joint Commission Journal on Quality Improvement compared ratings from seven health plan report cards publicly available in fall 1996. The report cards included those produced by major publications, a large national employer, a non-profit consumer group, a health maintenance organization accreditation agency, and a consortium of large employers. The journal is published by The Joint Commission on Accreditation Of Healthcare Organizations.

"We found that although plan ratings were sometimes similar, there were instances where the same health plans received conflicting ratings from different report cards," says Dennis Scanlon, lead author of the study and assistant professor of health policy and administration in the College of Health and Human Development.

An example was one large California health maintenance organization, which received an overall rating of "excellent" from one report card, while receiving the worst possible overall rating from another report card.

The study attributes discrepancies in health plan ratings to the methods used to determine how many and which health plans are included, what kind of performance measures are applied, and the way all the individual factors were pooled and evaluated to construct plan ratings.

For example, "some of the report cards focused solely on preventive care, while others embraced a wider range of services including preventive, primary and surgical care," the Penn State researcher says. "In addition, report cards varied in terms of how they valued certain treatment and utilization rates. Report cards commonly assume that plans with higher surgical rates are worse despite the fact that the average age or illness rate of the HMO's patient population is usually not considered.

"Moreover, consumers (or employees) may have values that are different from employers or health insurance purchasers," he adds. "For example, a higher surgical rate may actually be viewed favorably by consumers if it suggests more access to services in a plan.

"Unfortunately, consumers are not always made aware of the fine print. They often just see the headlines and may mistakenly take the ratings at face value," he notes.

Another inconsistency is that for a sample city, i.e. Chicago, most of the report cards studied included only a fraction of the plans available to consumers in that market. Usually the plans that were omitted were the smaller plans in terms of total enrollment.

"A competitive market requires information on all health insurance options available to consumers," Scanlon says. "By excluding some plans from the ratings -- usually the smaller HMOs -- the report cards are providing only partial information on the managed care options that are available in a given area and may encourage consumers to make false assumptions about those plans that are not included.

"The discrepancies in HMO ratings are not surprising given the lack of agreement among employers, health care providers and consumers on what constitutes the quality of a health plan and how that quality should be communicated," he adds.

However, the study authors cite two examples of on-going improvement that may benefit consumers in the future: the continued refinement of the Health Plan Employer Data and Information Set (HEDIS) conducted by the National Committee on Quality Assurance, and the Consumer Assessment of Health Plans Project (CAHPS), which is in the demonstration phase, by the Agency for Health Care Policy and Research in Washington, D.C.

Employers and individual consumers will continue to demand information about the quality of managed care plans, with nearly 75 percent of the non-Medicare population with employer-sponsored coverage now enrolled in these plans, the authors say. Only 13 percent of Medicare patients are enrolled in an HMO, and it's likely that a push to enroll this population in managed care will continue in the coming years.

Scanlon adds, "We urge that future report cards by employers, media or health care agencies become more standardized, include a wider set of health plans, and use the information most important to consumers. More research is needed to improve how we measure the quality of a plan and how complex information can be presented in a report card. But some changes are beginning as seen with the HEDIS and CAHPS projects; other report card authors may want to cooperate on a common framework."

"In the meantime, report card users may want to consult several ratings to understand the wide range of information and evaluations," he says. "And, report cards should be viewed as a complement, rather than a substitute, for information from friends, colleagues and physicians."

The authors conclude: "As competition heightens in health insurance markets, superior plans will be rewarded only if consumers are able to identify these plans from consistent and standardized information."

Study authors are Scanlon; Michael Chernew, assistant professor, University of Michigan; Sue Sheffler, president, Sheffler Associates, Arlington, Mass.; A. Mark Fendrick, assistant professor, University of Michigan, and co-director of Consortium for Health Outcomes, Innovation and Cost-Effectiveness Studies, University of Michigan. Support was provided by the Health Care Financing Administration, U.S. Department of Health and Human Services.

**vf**

EDITORS: Mr. Scanlon is at (814) 865-1925 office, or at dpscanlon@psu.edu by email.

Contacts:
Vicki Fong (814) 865-9481 (office) (814) 238-1221 (home) vyf1@psu.edu