Medicare Managed Care Enrollees and the Medicare Utilization Files

Medicare Managed Care Enrollees and the Medicare Utilization Files

Current Version Date: 
06/01/2011

Medicare Managed Care Plans

Medicare managed care began in 1985 and it has evolved from the traditional Health Maintenance Organization plans to additional managed care plans offered under Medicare Part C.

The structure and payment rules for each type of managed care plan vary.  For current definitions of the various Medicare managed care plans, refer to the Medicare Managed Care Manual, (100-16) Chapter 1, Section 30 – Types of MA Plans http://www.cms.hhs.gov/manuals/downloads/mc86c01.pdf.

Medicare Managed Care Enrollment

Trends in Medicare managed care enrollment have fluctuated since its inception. Prior to the introduction of the Medicare prescription drug program (Medicare Part D), Medicare managed care enrollment peaked in 1999 with over 17% of the Medicare beneficiaries enrolled in a managed care plan. In the early 2000s, Medicare managed enrollment slowly declined to just below 15% in 2005. However, following the establishment of Medicare Part D in 2006, Medicare managed care enrollment has steadily risen again to nearly 24% of all Medicare beneficiaries.  Table 1 presents Medicare managed care enrollment trends from 1985 to 2009.

Table 1. Medicare Managed Care Enrollment Trends

Medicare Managed Care Enrollment




Enrollment by Plan Type for Years 1985-2010




Year (a) Risk Based Enrollment Risk Based % of Total Cost Based Enrollment Cost Based % of Total Total Mgd Care Enrollment Total Mgd Care % of Total Total Medicare Enrollment % of Total
1985 497,654 1.6% 773,399 2.5% 1,271,053 4.1% 31,082,801 100.0%
1986 892,976 2.8% 711,173 2.2% 1,604,149 5.1% 31,749,708 100.0%
1987 1,084,670 3.3% 718,196 2.2% 1,802,866 5.6% 32,411,204 100.0%
1988 1,134,875 3.4% 671,130 2.0% 1,806,005 5.5% 32,980,033 100.0%
1989 1,161,513 3.5% 681,041 2.0% 1,842,554 5.5% 33,579,449 100.0%
1990 1,280,839 3.7% 736,754 2.2% 2,017,593 5.9% 34,203,383 100.0%
1991 1,407,270 4.0% 749,666 2.1% 2,156,936 6.2% 34,870,240 100.0%
1992 1,587,511 4.5% 769,549 2.2% 2,357,060 6.6% 35,579,149 100.0%
1993 1,833,115 5.0% 798,591 2.2% 2,631,706 7.2% 36,305,903 100.0%
1994 2,290,706 6.2% 764,892 2.1% 3,055,598 8.3% 36,935,366 100.0%
1995 3,108,122 8.3% 704,648 1.9% 3,812,770 10.2% 37,535,024 100.0%
1996 4,160,252 10.9% 627,703 1.6% 4,787,955 12.6% 38,064,130 100.0%
1997 5,300,819 13.8% 594,408 1.5% 5,895,227 15.3% 38,444,739 100.0%
1998 (c) 6,534,801 16.8% 224,741 0.6% 6,759,542 17.4% 38,824,855 100.0%
1999 6,679,174 17.1% 341,022 0.9% 7,020,196 17.9% 39,140,386 100.0%
2000 6,529,150 16.5% 297,727 0.8% 6,826,877 17.2% 39,619,986 100.0%
2001 5,767,020 14.4% 294,232 0.7% 6,061,252 15.1% 40,025,724 100.0%
2002 5,204,730 12.9% 289,554 0.7% 5,494,284 13.6% 40,488,878 100.0%
2003 4,989,723 12.1% 334,378 0.8% 5,324,101 13.0% 41,086,981 100.0%
2004 5,155,875 12.4% 342,619 0.8% 5,498,494 13.2% 41,693,375 100.0%
2005 5,763,537 13.6% 514,931 1.2% 6,278,468 14.8% 42,342,234 100.0%
2006 (d) 7,175,096 16.6% 402,104 0.9% 7,577,200 17.5% 43,252,055 100.0%
2007 8,595,881 19.5% 386,160 0.9% 8,982,041 20.4% 44,009,689 100.0%
2008 9,933,379 21.8% 349,697 0.8% 10,283,076 22.6% 45,517,331 100.0%
2009 10,943,107 23.5% 359,637 0.8% 11,302,744 24.3% 46,560,767 100.0%
revised 04/28/2011






Notes:







(a) All managed care enrollment numbers are based on December 31 of that year, unless otherwise noted.
The managed care enrollment are based on the report Monthly Managed Care Contract Summary report for years 1985-2005, (https://www.cms.gov/HealthPlanRepFileData/04_Monthly.asp)
(b) Total Medicare enrollment is based on the following report "Medicare Enrollment: National Trends 1966-2009" from the website http://www.cms.gov/MedicareEnRpts/Downloads/HISMI2009.pdf retrieved on 4/28/11. Enrollment figures as of July 1 of each year.
(c) In 1998, a cost-based plan (Health Care Prepayment Plan transitioned to a risk-based plan).
(d) Includes beneficiaries that enrolled in a managed care plan with Part D drug benefit and beneficiaries that are only enrolled in a managed care plan. Source: Monthly Summary Report - http://www.cms.hhs.gov/MCRAdvPartDEnrolData/MCESR/list.asp

Risk-Based Managed Care Organization (MCO) Encounter Records

CMS began collecting managed care encounter information from risk-based MCOs in July 1, 1997.  However, CMS started using the encounter information for the purpose of risk adjusting the MCO capitated payment rates starting in July 1, 1998.  CMS required MCOs to submit inpatient encounter information using a complete or abbreviated UB-92 format or using a format called the ANSI 837.1  CMS used demographic and diagnosis information from the inpatient hospitalization to risk adjust payments.  Prior to 1997, CMS based the capitated rate on the fee-for-service information because they did not collect any utilization information from risk-based plans.2

CMS began collecting physician encounter information October 1, 2000 and outpatient encounter data January 1, 2001 for the purpose of further risk adjusting MCO capitated payments.  However, between May 25, 2001 and June 30, 2002, CMS suspended collection of these data because of undue administrative burden in collecting these data.  Outpatient and physician encounter information began to be collected again on July 1, 2002.  All risk-based encounter records (inpatient, outpatient, and physician) have been maintained by CMS in a stand-alone system and have not been available for research purposes.3

Cost-Based MCO Claims

Cost-based MCOs may elect to directly process and pay for some services. Specifically, MCOs may handle payment for services rendered by hospitals and skilled nursing facilities (SNF). CMS requires that each MCO decide if CMS will process and pay for the services provided (Option 1) or if the MCO will process and pay for the services provided (Option 2).4  If the MCO elects to have CMS process and pay for the claim, the claim will be found in the Medicare fee-for-service utilization files.  If the MCO elects Option 2, then the MCO will maintain the claim in a stand-alone system.  Researchers would be able to identify the cost-based plans that have CMS process the claims by reviewing the HMO indicator variable in the Beneficiary Summary file (also known as the Denominator file) with a value of 1 (non lock-in, CMS to process provider claims.)  See the “Beneficiary Summary File” section for more information.

However, as outlined in Chapter 17 of the Medicare Managed Care Manual,5 MCOs “are required to process all non-hospital and SNF Part B bills, with some exceptions. These exceptions, as noted below, are processed by the carrier or intermediary:

• Claims for services by an independent physical therapist;

• Claims for outpatient blood transfusions;

• Claims from physicians for dialysis and related services provided through an approved dialysis facility;

• Claims for home health services received under cost reports beginning on or after January 1, 2005; and

• Hospice care by Medicare participating hospices, except:

a. Services of the enrollee’s attending physician if the physician is an employee or contractor of the organization and is not employed by or under contract to the member’s hospice; and

b. Services not related to the treatment of, or a condition related to, the terminal condition.”

In short, this means that you can expect to see some claims paid for by cost-based MCOs in the inpatient, SNF, MedPAR, and outpatient files, but will see very few of these claims in the other files.

MCO Claims in the Medicare Utilization Files

Even though the Medicare utilization files contain predominately fee-for-service claims, CMS does require MCOs (both risk-based and cost-based) to submit certain types of claims to Medicare Administrative Contractor (MAC), formerly known as  Fiscal Intermediaries or Carriers, for processing.  For example, all Hospice services are considered a carve-out and are processed by a Fiscal Intermediary with only two exceptions (see above for more information).  Since 1985, the Code of Federal Regulations has had a section on Special Rules governing Hospice care.  In the 10/1/2005 version of the CFR (42 CFR) section  417.585 (http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=42&PART=417&SECTION=585&TYPE=PDF) , it stipulates that “During the time the election is in effect, the HMO or CMP may bill CMS on a fee-for-service basis …”. This means that all Hospice claims for both Medicare fee-for-service enrollees and managed care enrollees would be processed by a Fiscal Intermediary/Medicare Administrative Contractor (MAC) and would be found in the Hospice Standard Analytical File from 1991 forward. 

Beginning on 1/7/2008  hospitals were instructed to submit information only claims to the Medicare Administrative Contractor or Fiscal Intermediary for their managed care beneficiaries so these days can be captured for proper documentation of Disproportionate Share calculations.6 These information only claims will be identified using Condition Codes equal to 04 or 69. See additional information about these claims below.

Other types of services that would be found in the Medicare utilization files include services deemed “significant cost” services, clinical trials, and out-of-network services, as examples.  Because CMS calculates payment based on covered services provided during the previous year, CMS does evaluate the impact of National Coverage Determinations (NCDs) on MCO payment.  National Coverage Determination “…sets forth the extent to which Medicare will cover specific services, procedures, or technologies on a national basis. Medicare contractors are required to follow NCDs.” If the impact of an NCD meets CMS’s definition of “significant cost”, then CMS will pay for these services on a fee-for-service basis.7  This means that certain MCO claims deemed to be “significant cost” will be found in the Medicare utilization files.  From the 2002 5% Inpatient Standard Analytical File, a total of 50 out of 667,831 claims or .007% were identified as “significant cost” claims.

Beginning on September 19, 2000, claims for clinical trials are to be submitted to either a Fiscal Intermediary, Carrier, or MAC for processing.  CMS did not include the cost for providing these benefits in the payment.8 Therefore, clinical trial claims will appear in the Medicare utilization files.

MCO institutional claims may be identified through Condition Codes9 (i.e. 04-Information Only Bill, 30-Qualifying Clinical Trial) or Revenue Center ANSI codes (i.e. 24-Charges covered under capitation agreement and 104-Managed care withholding).  In the non-institutional utilization files, MCO claims may be identified through HCPCS modifiers (KZ-New coverage not implemented by managed care).

Below is a list of CMS documents that instruct MCOs to submit claims to MACs for processing.  This is not an exhaustive list and it is provided to illustrate situations where researchers would find MCO claims in the Medicare fee-for-service utilization files. 

Example CMS documents instructing Managed Care Plans to submit claims to a Fiscal Intermediary or Carrier:

 

Finding Managed Care Beneficiaries and Services in the Medicare Utilization Files

Master Beneficiary Summary File (formerly known as the Beneficiary Summary File and Denominator file)

In the Master Beneficiary Summary File Base/Enrollment segment, the variable called the HMO indicator will identify those beneficiaries that were enrolled in some type of managed care plan. (Please note that CMS uses the terms “HMO” and “GHO” generically to indicate a managed care plan.) An indicator of 0 indicates that the beneficiary was not a member of a managed care plan. Indicator 4 indicates that the beneficiary is participating in a fee-for-service disease management program. While this is a special program, it is not considered a managed care plan. Claims for these individuals with an indicator equal to 4 would be found in the Medicare claims.

The other HMO indicators including 1, 2, A, B, C identify some type of managed care enrollment. More specifically, the HMO indicators equal to 1 or 2 are cost-based managed care plans. HMO indicators equal to A, B, or C, are considered risk-based plans. Figure 1 shows the variable “HMO Indicator” and the associated variable values as they appear in the Master Beneficiary Summary file record layout.

Figure 1. HMO Indictor Variable from the Master Beneficiary Summary File

HMO INDICATOR    CODE INDICATING BENEFICIARY HAS MEMBERSHIP IN HEALTH MAINTENANCE ORGANIZATION.

0 = NOT A MEMBER OF HMO

1 = NON LOCK-IN, CMS TO PROCESS PROVIDER CLAIMS

2 = NON LOCK-IN, GHO TO PROCESS IN-PLAN PART A AND IN-AREA PART B CLAIMS

4 = FEE-FOR-SERVICE PARTICIPANT IN CASE OR DISEASE MANAGEMENT

DEMONSTRATION PROJECTS (EFFECTIVE 2005 FORWARD)

A = LOCK-IN, CMS TO PROCESS PROVIDER CLAIMS

B = LOCK-IN, GHO TO PROCESS IN-PLAN PART A AND IN-AREA PART B CLAIMS

C = LOCK-IN, GHO TO PROCESS ALL PROVIDER CLAIMS

Table 2 shows the frequency of the HMO Indicator variable for selected years.  For values equal to 0 (not a member of HMO), 1 (non lock-in, CMS to process provider claims), and A (lock-in, CMS to process provider claims), and 4 (FFS Bene in Demo Program, CMS to process Claims) the claims data will be present in the Medicare utilization files because CMS processed the claim.  For all other categories including 2, B, and C, the vast majority of the claims data will not be present in the utilization files.10 

Table 2. Frequency of the HMO Indicator Variable in the Denominator file

Code Description July 1998 July 2003 July 2006 July 2007
0 NOT A MEMBER OF HMO     84.1%     87.7%     83.2%     80.9%
1 NON LOCK-IN, CMS TO PROCESS PROVIDER CLAIMS 1.3% 0.9% 0.8% 0.7%
2 NON LOCK-IN, GHO TO PROCESS IN-PLAN PART A AND IN-AREA PART B CLAIMS 0.1% 0.1% 0.1% 0.1%
4 FFS BENE IN DEMO PROGRAM, CMS TO PROCESS CLAIMS          NA          NA       0.4%       0.3%
A LOCK-IN, CMS TO PROCESS PROVIDER CLAIMS 0.0% 0.0% 0.0% 0.0%
B LOCK-IN, GHO TO PROCESS IN-PLAN PART A AND IN-AREA PART B CLAIMS 0.0% 0.0% 0.0% 0.0%
C LOCK-IN, GHO TO PROCESS ALL PROVIDER CLAIMS 14.6% 11.3% 15.6% 18.0%

 

MedPAR File

The MedPAR file contains a variable called the MedPAR GHO Paid Code (http://www.resdac.umn.edu/ddme/NewFiles/GHOPDCD.htm)  According to the MedPAR record layout, this code should indicate whether or not a Group Health Organization (i.e. MCO) has paid the provider for the claim. See Figure 2 for the variable description and values from the MedPAR record layout.

Figure 2. GHO Paid Code Variable from the MedPAR File

MEDPAR GHO Paid Code        The code indicating whether or not a GHO has paid the provider for the claim(s).

1 = GHO has paid the claim

Blank Or 0 = GHO has not paid the provider

 

An empirical analysis was conducting using the 2002 5% MedPAR file and 5% Denominator file to quantify how accurately the GHO Paid Code variable categorized the hospitalizations in the MedPAR file.  In general, the GHO Paid Code contains roughly 99.99% blank values, meaning that nearly all of the hospitalizations in the file are Medicare fee-for-service hospitalizations.  However, for the .01% GHO paid hospitalizations identified, the 5% MedPAR file did identify the GHO paid hospitalization correctly.  More specifically, the analysis involved matching the 5% Denominator HMO monthly indicator with the month of the admission for each hospitalization in the 5% MedPAR file.  Then, the GHO_PD code in the 5% MedPAR file was cross-tabulated against the HMO status indicator (0-not hmo, 1-non lock in, etc.) found in the 5% Denominator file. 

Over 95% of the time, the GHO Paid code variable correctly identified the hospitalizations that were paid by a GHO.  But, for a very small number of hospitalizations, the variable misidentified the hospitalization as being paid by a GHO when the beneficiary was not enrolled in a managed care plan, according to the 5% Denominator file. 

Therefore, ResDAC recommends that researchers use the monthly HMO Indicator variable found in the Master Beneficiary Summary file to determine when a beneficiary was enrolled in a MCO.  The GHO paid code field does, on occasion, incorrectly identify hospitalizations paid by a GHO.  Further, the GHO paid code gives no information about the months that a person was enrolled in an MCO, so this variable can’t be used to calculate rates based on person-months.

 

Inclusion of HMO Paid Inpatient Services 2008 and Forward

Beginning on 1/7/2008, Medicare hospital providers must submit information only claims to the Medicare Fiscal Intermediaries/Medicare Administrative Contractors for beneficiaries enrolled in a Medicare managed care plan if they receive Disproportionate Share payments, Indirect Medical Education or Direct Medical Education adjustments.11 This is required so that CMS can capture the correct number of total hospital days, which is used to calculate the Disproportionate Share, IME and GME adjustments.  According to the 2011 Medicare Cost Reports, approximately 49% of hospitals receive Disproportionate Share, IME, or GME payments.12  This change in policy has resulted in HMO paid stays appearing in MedPAR (LDS and RIF). The Inpatient claims data (LDS and RIF) received from Buccaneer will not include these additional HMO paid claims.

For example, according to information ResDAC has received, researchers could expect to see around 1.4 million stays for Medicare managed care beneficiaries in the FY 2008 MedPAR LDS (final) file.  These stays should have $0 for Medicare payment and the HMO/Paid Indicator Code field should be equal to "1" (Paid by HMO). The managed care stays appear to have similar information related to diagnosis and procedure information as what is found for fee-for-service stays.

For the same reasons described above, ResDAC still recommends that researchers use the monthly HMO Indicator variable found in the Denominator or Master Beneficiary Summary file to determine when a beneficiary was enrolled in a MCO.

How to Exclude Managed Care Beneficiaries and Associated Claims from the Medicare Utilization files

It is necessary to remove managed care beneficiaries from the cohort because the utilization information while they were enrolled in a managed care plan, is not present in the utilization files.  Removing managed care enrollees from the cohort ensures that everyone remaining in the cohort is eligible to have utilization data.  In published literature, most researchers will exclude those beneficiaries with any managed care enrollment during the study period.  In other words, include only those beneficiaries that had 12 months of continuous fee-for-service coverage.  This is determined by looking at the Beneficiary Summary file, HMO Indicator variable and selecting those beneficiaries where all 12 monthly indicators equal “0” or “4”.  However, a researcher may decide to analyze the information by beneficiary month and only exclude those months when the beneficiary was enrolled in a managed care plan. 

Summary

In summary, utilization information for beneficiaries enrolled in a managed care plan, for the most part, will not be found in the Medicare utilization data.  Information for managed care enrollees may be present under certain specific circumstances, such as Hospice care. Beginning in 2008, both the LDS and RIF MedPAR will contain stays for Medicare managed care enrollees identified by $0 listed for Medicare payment amount and a HMO/Paid Indicator Code equal to "1" (Paid by HMO).   ResDAC recommends that researchers consider removing those persons or months a person was enrolled in a Medicare managed care plan from their cohort.   The below table summarizes occasions when researchers can expect to see managed care utilization in the files.

Table 3: Summary of Managed Care Utilization in the Medicare Files

Circumstance When Managed Care Utilization is Expected in Files

Files Impacted

Services deemed “significant cost,” clinical trials, and out-of-network services.*

All files

Non-hospital and non-SNF Part B bills that must be processed by Medicare Administrative Contractors per CMS requirements. †

Outpatient, HHA, Carrier, DME

All hospice services except:

  • Services of the enrollee’s attending physician if the physician is an employee or contractor of the organization and is not employed by or under contract to the member’s hospice.
  • Services not related to the treatment of, or a condition related to, the terminal condition.

Hospice

Hospital and SNF services covered under cost-based MCOs that elect to have CMS process and pay for services.

MedPAR, Inpatient, SNF

Beginning 1/7/2008, information only inpatient claims submitted by hospitals for DSH, IME, and GME adjustments.

MedPAR

Notes:

 

* Likely will represent a very small percentage of claims.

 

† Services include the following: Claims for services by an independent physical therapist; Claims for outpatient blood transfusions; Claims from physicians for dialysis and related services provided through an approved dialysis facility; Claims for home health services received under cost reports beginning on or after January 1, 2005.

Article Number: 
114
This work was performed under CMS Contract Number HHSM-500-2005-00027I.
Related Data File Families: 

Disclaimer

The process and materials mentioned as part of this KnowledgeBase article are current, as of the publication date on the article, to the best of our knowledge. The examples provided are correct in the aggregate but may not apply to every subgroup or circumstance that a researcher may wish to study. It is up to the researcher to conduct analysis and confirm that the patterns described in this KnowledgeBase article apply to his/her particular study. If your research findings appear to contradict the advice provided, please contact ResDAC at resdac@umn.edu.