Study Finds For-Profit Health Plans Deliver Lower Quality Care Than Not-For-Profit Health Plans (press release)

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Federal policy has encouraged enrollment of Medicare beneficiaries in health plans, the majority of which are for-profit plans. Eric Schneider, MD, MSc and Arnold Epstein, MD, MA, from the Harvard School of Public Health (HSPH) and Alan Zaslavsky, PhD from Harvard Medical School, analyzing quality of care scores from the Medicare Health Plan Employer Data and Information Set (HEDIS) found that not-for-profit health plans provided significantly higher quality of care to enrollees than for-profit plans on four important clinical services; breast cancer screening, diabetic eye examination, beta-blocker medication after heart attack and follow-up after hospitalization for mental illness. The study appears in the December, 2005 issue of The American Journal of Medicine.

Since 1997 all health plans that care for Medicare beneficiaries are required to report HEDIS data to the Centers for Medicare and Medicaid Services through the National Committee for Quality Assurance. For this study, the researchers analyzed HEDIS data from 1998, the first year complete data were available, encompassing more than 280,000 beneficiaries in 231 health plans. The majority of beneficiaries (64 percent) were enrolled in for-profit health plans. The data included measures for four clinical services, breast cancer screening, diabetic eye examination, beta-blocker medication after heart attack and follow-up after hospitalization for mental illness. These clinical services are believed to reduce the incidence of disease complications and death.

The researchers found that on average, quality of care was lower in for-profit health plans on all four clinical measures studied, with for-profit plans scoring 7.3 percentage points below not-for-profit health plans on breast cancer screenings, 14.1 percentage points below on diabetic eye exams, 12.1 percentage points below on beta-blockers administered after heart attack, and 18.3 percentage points below on follow-up after hospitalization for mental illness. After adjusting for sociodemographic and geographic variables, for-profit health plans still underperformed in three of the four clinical services.

Compared with not-for-profit health plans, for-profit plans had lower total enrollment, had been in operation a shorter period of time and were less prevalent in the New England and Pacific regions. Additionally, for-profit health plans enrolled a smaller proportion of beneficiaries between the ages of 65 and 69, fewer women, white and rural residents and enrolled a high percentage of African Americans and beneficiaries with lower educational attainment compared to not-for-profit health plans.

Eric Schneider, lead author of the study and assistant professor in the Department of Health Policy and Management at HSPH, said, “We were surprised by the magnitude of the difference in quality between for-profit and not-for-profit health plans. Many past studies show that care varies depending on where it is delivered so we expected that the quality of care differences between for-profit and a not-for-profit health plans were probably due to other factors such as the geographic locations selected by health plans or differences in the populations they enrolled. Instead, even after controlling for geography and other factors, the quality-of-care differences were persistent.”

He continued, “One of the assumptions of Medicare beneficiaries is that health care quality should be relatively similar, regardless of where in the United States they live or which health plan or provider they select. Our results challenge that assumption. They also demonstrate the value of collecting and analyzing data on the quality of health care in the U.S. so that steps can be taken to improve quality. Overall, very few plans, either for-profit or not-for-profit, had achieved the target levels of performance on these measures.”

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