PRIOR AND CURRENT COSTS IN CAPITATED HEALTH PLANS - THE EFFECTS OF HEALTH-STATUS AT ENROLLMENT

We compared the prior and current costs of persons age 65 and older en rolling in a Social/Health Maintenance Organization in each of four si tes with samples of persons using standard Medicare benefits in each s ite. Analyses were adjusted for individual health differences using ca se mix scores. Costs were examined in the year before S/HMO enrollment or prior to the sampling of a person using regular Medicare services as well as costs during the study. Costs during the study are analyzed using a two-stage procedure where first the propensity to enroll in a S/HMO is modeled and then costs derived from either Medicare sources or shadow prices assigned to service units provided in a S/HMO are mod eled. The costs for case mix groups with different health and function al characteristics varied significantly. Cost differences between case mix classes differed between the S/HMO and FFS populations.