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APHA Scientific Session and Event Listing

Hangsheng Liu, MS, Department of Community & Preventive Medicine, School of Medicine, University of Rochester, 601 Elmwood Ave., Box 644, Rochester, NY 14642, 1-585-275-7380, Hangsheng_Liu@urmc.rochester.edu and Charles E. Phelps, PhD, Office of the Provost, University of Rochester, 200 Wallis Hall, Rochester, NY 14627.

[Objective] To estimate the effect of non-price competition among managed care plans on quality of care in the contractual setting of New York State (NYS) Child Health Plus market. [Data Source] US Census 2000; 2002 NYS Managed Care Plan Performance Report; and 2001 NYS Managed Care Annual Enrollment Report. [Study Design] Taking account of the endogenous relationship between market competition (measured by the number of plans) and quality of care, we estimate two-stage least squares regressions, where population is assumed to affect the number of managed care plans in a market but not quality of care. Using population as an instrument, in the first equation, we regress the number of plans on the exogenous variables that determine market demand and supply, including population size and other market characteristics. Five Health Plan Employer Data and Information Set (HEDIS®) scores enter the second stage analysis, all measured in percentages. Each measure is regressed separately on the predicted number of plans, plan features and market characteristics. [Principle Findings] We find a negative association between the number of managed care plans in a market and the quality of care. An additional managed care plan would lead to 0.24 unit of decrease in provider communication score, 0.44 unit of increase in problem of getting care needed, 0.23 unit of increase in problem with service, 0.16 unit of decrease in well-child and preventive care visits, 0.42 unit of decrease in use of appropriate medications for people with asthma, and 0.87 unit of decrease in childhood immunization. All findings are statistically significant except the preventive care visits. Sub-analysis of markets within the same pricing regions shows a slight increase in quality with an increase in competition, but not statistically significant. [Conclusions] In contrast to most previous studies, we find that increasing competition is associated with decreasing quality of care. In this contractual setting, the State government sets the prices for each plan separately based on its cost experience and the regional average cost. It is likely that the State government's price policy is binding so that a negative relationship is observed, though further research is needed. Competition might lead to better quality, which this data does not detect due to small sample size. [Policy Implications] In the contractual settings, the government should adjust prices fully according to both the production cost and the target quality level so that resources can be allocated appropriately across markets.

Learning Objectives: The participants will be able to

• Improve the understanding of government payment policy's effect on quality of medical care;
• Assess the market structure's effect on quality of care using two-stage least squares regression technique;
• Identify 4 important factors that affects the managed care plan quality of care in a market;
• Predict whether the quality of care would increase or not under a certain non-price competition setting after considering the four important factors.

Presenting author's disclosure statement:

Not Answered