Enrollment Eligibility Research Articles

Providing Managed Care Options for a Large Population: Evaluating the CHAMPUS Reform Initiative

To evaluate a managed care demonstration project in CHAMPUS (Civilian Health and Medical Program of the Uniformed Services), the insurance program covering physical and mental health care services for the dependents of active duty military personnel, military retirees, and the retirees' dependents. The demonstration project added a health maintenance organization (HMO) option and a preferred provider organization (PPO) option to the standard CHAMPUS coverage and allowed beneficiaries to select the coverage option they preferred. Utilization, costs, access, and beneficiary satisfaction were measured using data from CHAMPUS claims records, the Defense Enrollment Eligibility Reporting System, the demonstration project contractor's HMO enrollment file, the contractor's list of network hospitals, and two surveys of CHAMPUS beneficiaries. Changes in utilization at 11 demonstration sites were compared with changes in utilization at 11 matched control sites. The effect of the demonstration project on costs was evaluated by estimating the costs for the demonstration sites both with and without the managed care options based on data from the control sites. Access to care and satisfaction were compared between the demonstration sites and control sites based on beneficiary surveys. All claims in both demonstration and control sites were used in estimating utilization changes. Two mailed surveys were sent to a randomly selected sample of active duty and retiree households with CHAMPUS beneficiaries; the sample was stratified by beneficiary type (active duty or retiree) and site. Overall utilization in the CHAMPUS system decreased at the demonstration sites but stayed approximately the same at the control sites. Utilization among the enrollees in the HMO demonstration option, however, increased dramatically. Patient access to care and satisfaction generally remained at the same levels at both demonstration and control sites, but enrollees in the HMO option reported higher satisfaction. Costs to the government at the demonstration areas, based on regression estimates from the control sites, were about the same or slightly higher than what they would have been under the standard CHAMPUS system. Managed care plans for large government-sponsored insurance programs can reduce utilization and maintain patient access and satisfaction. Careful structuring of such plans is needed, however, if they are to reduce costs.