Health Benefits Program Research Articles

Adverse Selection and the Capped Premium Subsidy in the Federal Employees Health Benefits Program

AbstractThis article examines the relationship between adverse selection and the capped premium subsidy in the Federal Employees Health Benefit Program (FEHBP). Understanding this relationship is important, not only because the FEHBP is the largest employer‐sponsored health program in the United States, but also because it has been proposed as a market‐based model for the reform of both Medicare and the market for nongroup private coverage. We present a theoretical model of the FEHBP that we then test using enrollee data. In particular, we exploit the natural experiment that arises from variation in the premium subsidy cap across Metropolitan Statistical Areas (MSAs). Although the nominalsubsidy cap is constant across MSAs, its real value varies greatly across MSAs with different price levels. The empirical analysis herein supports the contention that the premium subsidy in the FEHBP helps reduce adverse selection.

New Insurance Option Leaves Many Unanswered Questions

New Insurance Option Leaves Many Unanswered Questions

APIRE Fills Unique Niche In Psychiatric Research

Back to table of contents Previous article Next article Association NewsFull AccessAPIRE Fills Unique Niche In Psychiatric ResearchEve KupersaninEve KupersaninSearch for more papers by this authorPublished Online:19 Oct 2001https://doi.org/10.1176/pn.36.20.0018There is no shortage of opportunities for psychiatrists to get involved in psychiatric research through APIRE, the research, education, and training component of APA.Darrel Regier, M.D., M.P.H.: One of APIRE’s research missions is to provide information to shape public mental health policy.According to APIRE Executive Director Darrel Regier, M.D., M.P.H., the opportunity is one of a kind. “We do not conduct just any type of research; we fill a particular niche by identifying areas that have generalizable importance to a national organization like APA,” he said. “National mental health policy issues such as the effect of parity in mental health insurance coverage on increasing access and quality of care is one such example. In addition, we are interested in research that informs us about ways to improve the validity of DSM-IV diagnostic criteria, as well as ways to improve the utility of APA treatment guidelines.”Along with directing the research programs at APIRE, Regier continues to serve as a consultant to the federal Office of Personnel Management. In that role, he provides expertise on the impact of the Federal Employees Health Benefits Program (FEHBP) on access to care in the Washington, D.C., area. In addition, Regier recently testified on behalf of APA before the Senate Health, Education, Labor, and Pensions’ (HELP) Committee on new federal parity legislation, S 543.With new board leadership and research staff (Original article: see accompanying story), APIRE is in a prime position to move forward with several ongoing projects. Some of APIRE’s new projects and initiatives are described below.• The 2001 National Survey of Psychiatric Practice: This survey will be sent next month to a random sample of 2,000 psychiatrists across the country. The study tracks trends in the psychiatric workforce and examines current policy and clinical issues by obtaining detailed information about psychiatric services provided in routine clinical practice settings. For instance, psychiatrists will be asked to report on some of the characteristics of their practice, such as work setting, certain aspects of their patient caseloads, and factors that might affect the provision of psychiatric care, such as administrative burden.New questions on this year’s survey will examine the following topics: the shortage of psychiatrists and limited access to psychiatrists for new patients; clinicians’ comfort in treating opiate-dependent patients in office-based settings with opiate-agonist treatments; informed consent issues and how they affect communication with family members; and the time psychiatrists and their office staff spend in dealing with health plans, insurance companies, and managed care.• FEHBP Parity Study: APIRE sent a baseline survey to psychiatrists in the Washington, D.C., area in December 2000 to assess psychiatric practice for federal employees before parity for this population went into effect in January 2001. APIRE has plans to send the survey again to the same group of psychiatrists to assess the changes in financial arrangements and management of benefits within the FEHBP. Factors studied range from access to treatment for FEHBP patients, continuity and coordination of care, quality and costs of care, provider satisfaction, and network participation.APIRE also has a commitment to improving research training opportunities in psychiatry. For instance, the National Institutes of Health awarded APIRE a $445,000 grant last May to extend the Research Colloquium for Junior Investigators for an additional five years. The colloquium, which began in 1996, is held each year at APA’s annual meeting. The junior investigators, who range from third- and fourth-year residents to postresidency fellows and junior faculty, present research on three topics. To date, more than 270 residents, fellows, and junior faculty have participated in the daylong event.In yet another endeavor to increase psychiatrists’ skill and involvement in research, APA will convene a meeting in early November in conjunction with the National Institute of Mental Health (NIMH) to discuss how to increase research training within psychiatry residency programs. Representatives from organizations such as the Residency Review Committee (RRC) of the Accreditation Council for Graduate Medical Education and residency training directors, along with leaders from APA and NIMH, will discuss this educational approach as a means of getting more psychiatrists involved in research.In addition, APIRE is developing innovative educational approaches from the medical student level to the continuing medical education (CME) level for APA members.James Thompson, M.D., director of APA’s Division of Education, Minority, and National Programs, heads the educational programs that have used funding through APIRE to support training for APA members. Examples include the Psychiatric Self-Assessment Review, CME programs, and a training program on treatment for patients affected by HIV/AIDS. ▪ ISSUES NewArchived

Parity Is Cost-Effective and Affordable, APA Tells Senators

Parity Is Cost-Effective and Affordable, APA Tells Senators

Borenstein Looks Back on Presidential-Year Achievements

Borenstein Looks Back on Presidential-Year Achievements

Increasing health insurance coverage through an extended Federal Employees Health Benefits Program.

The Federal Employees Health Benefits Program (FEHBP) could be combined with health insurance tax credits to extend coverage to the uninsured. An extended FEHBP, or "E-FEHBP," would be open to all individuals who were not covered through work or public programs and who also were eligible for the tax credits on the basis of income. E-FEHBP also would be open to employees of very small firms, regardless of their eligibility for tax credits. Most plans available to FEHBP participants would be required to offer enrollment to E-FEHBP participants, although premiums would be rated separately. High-risk individuals would be diverted to a separate high-risk pool, the cost of which would be subsidized by the federal government. E-FEHBP would be administered by the states, or if a state declined, by an entity that contracted with the Office of Personnel Management. While E-FEHBP would provide group insurance to people who otherwise could not get it, premiums could exceed the tax-credit amount and some people still might find the coverage unaffordable.

Economic grand rounds: the costs of parity mandates for mental health and substance abuse insurance benefits.

Employer-sponsored health plans typically provide less coverage for mental health and substance abuse treatment than for medical or surgical treatment. The merits and costs of mandating parity, or equivalent coverage, for insurance benefits for mental health and substance abuse treatment have been a recent topic of significant public debate. This article presents cost estimates for a variety of comprehensive parity mandates, including parity for different diagnoses, benefit provisions, and types of health insurance delivery systems.

Utilization of Common Analgesic and Anxiolytic Medications by Registered First Nations Residents of Western Canada

The study examined utilization of acetaminophen with codeine and benzodiazepine drugs among Non-Insured Health Benefits (NIHB) program registered First Nations residents in the four western provinces of Canada and sought preliminary indicators of factors influencing utilization. A small percentage of NIHB clients in the four western provinces were excessive users of acetaminophen with codeine and/or benzodiazepines, but overall utilization of these central nervous system drugs was moderate and within the bounds of non-First Nations population use examined in this study. The study also demonstrated that utilization of acetaminophen with codeine among NIHB claimants was inversely related to the stringency of provincial regulation.

Market incentives, plan choice, and price increases.

The Federal Employees Health Benefits Program (FEHBP) has attracted considerable interest for its ability to control health care costs. We examine the impact of the FEHBP's maximum dollar contribution on incentives to select low-cost plans and the growth in insurance premiums over time. Unless the maximum dollar contribution is pegged to a low-price plan, few enrollees select such plans. Moreover, premiums rise at least five percentage points per year faster among plans below this fixed subsidy level than they do in plans above it. Our results have important implications for the design of similar market-based approaches.

Consumer-choice markets: lessons from FEHBP mental health coverage.

Fe d e r a l p o l i c y a n a l y s t s are debating proposals to restructure the Medicare program as a consumer-choice model along the lines of the Federal Employees Health Benefits Program (FEHBP). A popular assumption underlying the current interest in consumer-choice markets is that giving enrollees choices among plans will drive competing insurers to improve product quality and efficiency. The validity of this assumption warrants careful review. As illustrated by the history of mental health coverage in the FEHBP, competitive pressures in consumer-choice markets and the use of managed care techniques to control costs may result in more restricted benefits and reduced plan payments, particularly for patients with severe and persistent conditions. Although there are unique aspects to mental health services and benefits, patients with other types of conditions that also are lacking clear treatment protocols and outcome measures may be similarly affected. The FEHBP experience suggests that for insurance markets to work effectively for such high-cost populations, employers or other plan sponsors and policymakers must ensure the adequacy of coverage, benefit financing levels, and performance requirements for competing plans.

Quality & Parity In The Mental Health Market

From the Editor-In-Chief Health AffairsVol. 18, No. 5 Quality & Parity In The Mental Health MarketJane Hiebert-White AffiliationsExecutive EditorPUBLISHED:September/October 1999Free Accesshttps://doi.org/10.1377/hlthaff.18.5.6AboutSectionsView PDFPermissions ShareShare onFacebookTwitterLinked InRedditEmail ToolsAdd to favoritesDownload CitationsTrack CitationsPermissionsDownload Exhibits TOPICSQuality of careMental healthMarketsFederal Employees Health Benefits program The marketplace for mental health/substance abuse (MH/SA) treatment at the end of the millennium has evolved to a highly managed, cost-conscious environment. Managed behavioral health plans now cover 176.8 million Americans, or 78 percent of the population who have private or public health insurance, according to the latest data reported by Steven Findlay in this issue of Health Affairs. The policy voices calling for renewed attention to quality, value, and parity of MH/SA treatment have risen as well. U.S. Surgeon General David Satcher is due to release a major report on mental health—what is understood about prevention, promotion, and treatment as a scientific basis for future policy making—by late 1999/early 2000.Twenty-four states have passed mental health parity laws, and twenty more are considering such legislation. And, at a first-ever White House conference on mental health in June 1999, President Bill Clinton directed the Office of Personnel Management to achieve parity in the Federal Employees Health Benefits Program (FEHBP) by 2001. He added, “We must make it clear once and for all: mental illness is no different from physical illness—and our nation's health plans should provide both with the same quality coverage.” The FEHBP's experience with relying on consumer choice to drive the market led to a striking reduction in a once-rich mental health benefit package, as Sandra Foote and Stanley Jones report. This edition of Health Affairs is devoted to addressing how best to achieve equity, quality, and value in mental health care in the new market. We are grateful to the John D. and Catherine T. MacArthur Foundation for support of this issue, the third such issue that the foundation has underwritten over the past decade. We also are indebted to current and former editorial board members Richard Frank and Howard Goldman for extensive assistance in peer review and publication advice. Loading Comments... Please enable JavaScript to view the comments powered by Disqus. DetailsExhibitsReferencesRelated Article Metrics History Published online 1 September 1999 InformationCopyright © by Project HOPE: The People-to-People Health Foundation, Inc.PDF download

Moving Medicare to the FEHBP model, or how to make an elephant fly.

Transforming Medicare into a Federal Employees Health Benefits Program (FEHBP)-type program holds the promise of more choice, lower costs (in the long term), and higher quality--a fine concept that will collapse in its implementation unless at least three conditions are met. (1) Congress gets the regulatory structure right and then refrains from annual tinkering, (2) Congress does not set unrealistic expectations regarding "cost savings," especially if a prescription drug benefit is added, and (3) administrative agency staff have the requisite training and a "privatizing" orientation. Given Medicare's history and the "Medicare-industrial complex," none of those conditions is likely to be met.

Does A Fixed-Dollar Premium Contribution Lower Spending?

In a multiple-option health benefits program, the employer's premium contribution determines the incentives facing employees and participating health plans. Advocates of managed contribution argue that a fixed-dollar contribution policy will result in lower health spending by encouraging cost-conscious choices by employees and price competition among plans. The University of California (UC), which adopted a fixed-dollar contribution policy in 1994, provides a useful case study for assessing this claim. This DataWatch documents the effect of this policy on health maintenance organization (HMO) premiums and per employee health spending in the UC health benefits program.

The costs of children with sickle cell anemia: preparing for managed care.

To anticipate the clinical challenges and financial risks facing physicians and managed care organizations who care for children with chronic illnesses, such as sickle cell anemia (SCA), under capitated managed care arrangements. A cross-sectional study based on claims data from the Washington State Medicaid Program (WSMP) and the Federal Employees Health Benefits Program (FEP). Expenditure patterns were compared for children 18 years of age or younger for whom a claim with a diagnosis of SCA was submitted and paid in the State of Washington during fiscal year 1993 (FY1993) or by the FEP during FY1992 to expenditure patterns for all children. Children with SCA had mean expenditures 8.8 times the mean expenditures for all children in WSMP. There was wide variation in the annual expenditures among children with SCA; the most expensive 10% of children accounted for 56% of total expenditures. Ninety-seven percent of the expenditures were concentrated in four broad categories: 72% for inpatient care, 11% for outpatient care, 11% for physician payments, and 3% for prescription drugs. Examination of expenditure and utilization patterns for children with sickle cell anemia enrolled in the FEP yielded similar results. Unless managed care organizations and capitated pediatricians receive payment rates that reflect the higher expected expenditures of caring for these children, access to and quality of care may suffer. Analyses of practice guidelines and utilization patterns suggest that newborn screening, regular access to specialty facilities, and comprehensive education programs are critical areas that are vulnerable to reductions under capitation.

Effective Outcomes Management in Occupational and Environmental Health

In the final analysis, outcomes management is about changing behavior, specifically in the occupational and environmental health practitioner's communication process and practice patterns and in the workers' prevention and compliance behavior. Outcomes management is also about quantifying results, establishing occupational and environmental health performance benchmarks, developing a best practices model and asking even more questions. As health care embraces the use of outcomes in evaluating its effectiveness, similar developments can be anticipated in occupational and environmental health. While occupational and environmental health outcomes management is still in its infancy, nurses in the workplace are well positioned to "shape it" into a useful tool that meets the needs of all the various practice settings. As nurses in the workplace begin to evaluate, report, and benchmark results, measurement tools will be refined, data bases will grow and new, useful benchmarks will be established. Because occupational and environmental health programs usually operate as part of a larger business unit, nurses in the workplace are continually faced with the challenge of ensuring that corporate programs including workers' compensation, health and disability benefit programs, vaccination programs, injury prevention, and health promotion or wellness programs are delivered in an efficient and cost-effective manner and that the expected outcomes are achieved. Effective outcomes management programs are the vehicles to effective goal achievement.

Implications of HMOs for rural providers and consumers.

The impact of the six HMOs studied on rural providers has, to this point, been relatively small. To expand their provider networks in rural areas, the HMOs have been responsive to provider concerns, implementing payment arrangements and utilization management approaches that are acceptable to most rural providers. However, at some sites, changes in HMO and provider relations appear to be on the horizon. These changes include the acceptance of greater financial risk by rural providers and the more aggressive management of costs by the HMOs. With respect to employers, the impact of HMOs have been largely positive. The presence of HMOs in the rural study areas has provided rural employers with new options for structuring health benefits programs. According to some rural employers, health insurance costs have been reduced, or at least constrained, as a result. Rural employers have dealt with employee concerns about access limitations by demanding that HMOs offer broad provider networks and products that permit the use of non-network providers subject to co-payments and deductibles. The impact on rural employees, as evidenced by their responses as well as the views of their employers, has been mixed. Rural employees generally appreciate the broader benefit coverage offered by HMOs as well as reduced paperwork and, sometimes, lower required out-of-pocket contributions toward premiums. However, as with their urban counterparts, rural employees are concerned about restrictions on access to providers of their choice and financial incentives in physician payment arrangements that may discourage the provision of services or the arrangement of referrals.

Driving down Health Care Costs 1995: Strategies and Solutions

Driving Down Health Care Costs 1995: Strategies and Solutions (Panel Publishers: A Division of Aspen Publishers, Inc, 1995). Driving Down Health Care Costs 1995: Strategies and Solutions is one in a series of how-to books published by Panel Publishers designed to assist business professionals, owners of small to medium-sized businesses, and their legal and financial advisers. This book and the others in the series are designed to be updated on a periodic basis with supplements reflecting important changes in the subject matter. Fifty-seven authors contributed the 45 articles contained in this text. Twenty of the articles are reprinted from a variety of publications, including Compensation and Benefits Management, Employee Benefits Journal, and Benefits Quarterly. The other 25 articles appear to be original works authored specifically for this book. The book's 474 pages are divided into 13 sections, each of which covers an important topic dealing with health care costs and related strategies and solutions. Part One addresses three important issues related to reform. The first article presents a comparison of issues raised by the 1993 Clinton Health Security Act and contains two appendices with specific comparisons of the Clinton proposal with several other proposals from 1993. The other two articles present an overview of state health reform activity and a picture of the dramatic recent evolution in the entire health care delivery system. Part Two presents eight articles related to managed care. Two articles on HMOs deal with trends in HMO development and Digital Equipment Corporation's approach to managing HMOs. The other articles focus on some important managed care topics, including employer liability and the legal risks associated with managed care plans, the success of the Federal Employees Health Benefits Program, case management, utilization management, and pay-related plans. Part Three focuses on the emerging roles of employers in dealing with rising health care costs. The first article examines how GTE managed to avoid severe cutbacks in its benefits plan by making strategic changes to its plans, including changes in the management of payments and an evaluation process to measure costs and quality. A unique step was the formation of a partnership between GTE and PHP Healthcare Corporation of Alexandria, Virginia, to establish and manage two GTE Family Health Centers in the Tampa, Florida, area. The next article deals with how employers in Owatonna, Minnesota, a rural community of about 22,000 people, dealt with many of the problems facing them from rising health care costs. Another article describes how self-management of health care by Parker Hannifin, a Fortune 200 company with 20,000 employees, has led to lowering the rate of increase in employee health benefit costs. The last article in this section discusses how coalitions of human resources executives in approximately 100 cities have used their combined purchasing power to try to improve the quality of health care and its cost-effectiveness. Part Four describes the flexible benefits plans of Quaker Oats and Southwest Airlines. Part Five discusses some important aspects of self-insurance, including the use of self-insurance and stop-loss coverage by smaller companies, the law related to retrospective insurance premiums, and issues related to third-party administrators regarding flexible benefits and self-insurance. Part Six focuses on the elements of effective plan design. The articles in this section describe ways to reduce medical costs using employee claims data, use drug formularies to control drug budget costs, save through inventory simplification and volume purchasing, and use the resource-based relative value scale (RBRVS) to help control physician costs. Also discussed are how dental plans have remained strong despite changes and cutbacks in medical benefit plans and the cost-effective steps that have been taken by some employers related to AIDS and HIV. …

Integrating Medical and Business Values in Health Benefits Management

Contemporary health benefits management is forcing business to join the medical profession in judging what is valued in health care delivery. The judgments are particularly difficult, ranging from allowable treatments, including potentially lifeprolonging measures, to the use of sensitive medical data about employees and their personal behaviors. Although medical experts may advise them, corporations and their managers retain ultimate economic, moral, and, increasingly, legal responsibility for these decisions. This article shows that innovations in corporate health benefits make it imperative for business to integrate medical and business values considerations into the daily work of benefits planning and administration. To accomplish this goal, the article provides a six-step model senior managers can use to identify and respond to the unique nature of these concerns in their own companies. It also supplies a set of principles to help managers think more comprehensively and clearly about the values issues emerging in their health benefits programs.

Live Long and Prosper?

There 's no doubt that populations in the United States and elsewhere in the developed world are growing older, threatening to overwhelm government-supported benefits programs. But demographers differ sharply on just how big the challenge will be. They cite major uncertainties about how fast the over-65 age group will grow, as well as about whether increased life-spans will be accompanied by prolonged health or simply more years of disability and decline. There are also uncertainties about whether families will be able to take up the slack and support their elderly members if government pension and health benefit programs have to be scaled back. More information about many aspects of aging can be accessed at the following Web sites: http://www.psc.lsa.umich.edu/aging/others.html; http://www.dml.georgetown.edu/places/ger.html ) and http://www.nih.gov/nia.

Involuntary health plan switching: case study of a corporate health benefits program.

This study examined the extent of health plan switching in one large corporation due to changes in employment, compared it with the extent of voluntary switching among continuously employed individuals, and evaluated the risk mix of health plan stayers, voluntary switchers, and involuntary switchers. Of 14,791 workers enrolled in the firm's fee-for-service plan in 1987, only 5,320 remained in 1990. Of the 11,494 employees enrolled in the large health maintenance organization (HMO) and the 7,677 enrolled in the small HMOs in 1987, only 5,299 and 3,026, respectively, remained in their HMOs and insured by the firm in 1990. These large enrollment losses were offset by large enrollment gains from new employees. Health plan leavers were at a lower risk of using medical services than were health plan stayers. The lowest expected annual expenditures were among newly hired health plan joiners.