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Background

Managed care organizations do not submit all claims for health care utilization to the Centers for Medicare and Medicare Services (CMS); therefore Medicare utilization files are only considered complete for fee-for-service beneficiaries. In most cases, researchers will want to exclude beneficiaries enrolled in Medicare managed care in order to accurately characterize the receipt of care for each beneficiary. The information below describes how to create a binary indicator of Managed Care enrollment. Two situations for which CMS does receive information about services received for those enrolled in managed care are: (1) hospice care, which is administered as a “carve out” of managed care; and (2) “information only” claims submitted by facilities for calculation of disproportionate share (DSH), indirect medical education (IME) and graduate medical education (GME) payments. Researchers interested in hospice use or DSH, IME or GME payments may not want to exclude beneficiaries enrolled in Medicare managed care from their cohort.

Identifying Medicare Managed Care Enrollees

Researchers often wish to exclude beneficiaries that were ever enrolled in managed care during the study period.

The variable “HMO indicator” (HMOIND01- HMOIND12 in the MBSF, HMO_INDICATOR1- HMO_INDICATOR12 in the LDS Denominator) is a monthly indicator that identifies whether a beneficiary was enrolled in a Fee-for-Service (FFS) or managed care plan. (Please note that CMS uses the terms “HMO” and “GHO” to indicate a managed care plan.)   In general, HMOINDxx values (‘0’,’4’) indicate fee-for-service beneficiaries, while values (‘1’,’2’,’A’,’B’,’C’) indicate managed care enrollees (Table 1).

Code Value Code Description 2005 2007 2009 2011 2013 2015
FFS 0 Not a member of HMO 38,937,000 (87%) 37,759,000 (81%) 37,661,000 (77%) 39,217,000 (76%) 40,268,000 (73%) 40,310,000 (69%)
MC 1 Non lock-in, CMS to process provider claims 390,000 (1%) 349,000 (1%) 321,000 (1%) 413,000 (1%) 498,000 (1%) 611,000 (1%)
MC 2 Non lock-in, GHO to process in-plan Part A and in-area Part B claims 38,000 (0%) 39,000 (0%) 37,000 (0%) 14,000 (0%) 4,000 (0%)
FFS* 4 Fee-for-service participant in case or disease management demonstration projects (effective 2005 forward) 14,000 (0%) 116,000 (0%) 22,000 (0%) 7,000 (0%)
MC A Lock-in, CMS to process provider claims 0 0 0 0 0 0
MC B Lock-in, GHO to process in-plan Part A and in-area Part B claims 0 0 0 0 0 0
MC C Lock-in, GHO to process all provider claims 5,391,000 (12%) 8,432,208 (18%) 10,885,000 (22%) 12,068,000 (23%) 14,509,000 (26%) 17,244,000 (30%)
TOTAL 44,770,000 46,695,000 48,923,000 51,718,000 55,278,000 58,165,000
Based on HMOIND07 (July) 100% MBSF RIF

Non Lock-in: Participants are allowed to switch managed care plans or move to FFS as desired
Lock-in: Participants are required to remain enrolled in the managed care plan for a certain period of time.
FFS=Fee-for-Service, MC=Managed Care
*researchers interested in chronic conditions from 2005-2009, especially in states where the demonstration projects were active, may wish to exclude these beneficiaries from their analyses (see below for information)

The HMO_Indicator value ‘4’ was established in 2005 for the purpose of identifying beneficiaries participating in a case or disease management demonstration program (CMS Change Request 3410) that is administered by a managed care plan. Claims related to the case or disease management demonstration program will not appear in the claims files, but all other Medicare FFS utilization will be present.  There are few participants in these programs (Table 1) especially after 2009. Researchers studying chronic condition care during these years, especially in those states where the demonstration projects were active, may wish to examine any differences in these groups more carefully.

The HMO_Indicator values ‘1’ and ‘A’ include in their description that CMS is to process provider claims; however, the monthly rate of claims for those with a value of ‘1’, especially for Part B services is much lower than the rate for FFS beneficiaries.  These beneficiaries should be excluded with along with other managed care beneficiaries due to concern that we do not observe all claims.