THE EFFECTS OF CAPITATION ON HEALTH AND FUNCTIONAL STATUS OF THE MEDICAID ELDERLY - A RANDOMIZED TRIAL

Purpose: To determine the effect on health and functional status outco mes of enrollment of noninstitutionalized elderly Medicaid recipients in prepaid plans compared with traditional fee-for-service Medicaid. D esign: A randomized controlled trial. Beneficiaries were randomly assi gned to prepaid care in one of seven capitated health plans compared w ith fee-for-service care. Only the Medicaid portion of their care was capitated. Patients were followed for 1 year. Setting: The Medicaid De monstration Project in Hennepin County, Minnesota, which includes Minn eapolis. Patients: 800 Medicaid beneficiaries who were 65 years or old er at the beginning of the evaluation. Beneficiaries were interviewed at baseline (time 1) and 1 year later (time 2). Ninety-six percent of beneficiaries were available for follow-up interviews at time 2. Main Outcome Measures: General health status, physical functioning, mental health status, activities of daily living, instrumental activities of daily living, corrected visual acuity, and blood pressure and glycosyl ated hemoglobin measurements for hypertensive and diabetic persons, re spectively. Results:There were no differences between prepaid and fee- for-service groups in the number of deaths (20 compared with 24, P > 0 .2), the proportion in fair or poor health (56.5% compared with 59.7%, P > 0.2), physical functioning, activities of daily living, visual ac uity, or blood pressure or diabetic control. Patients in the prepaid g roup reported a trend toward better general health rating scores (10.2 compared with 9.8, P = 0.06) and well-being scores (10.0 compared wit h 9.7, P = 0.07) than patients in the fee-for-service group. The diffe rence in the likelihood of a patient in the prepaid group having a phy sician visit relative to the fee-for-service group was -16.5% (adjuste d odds ratio, 0.46; 95% CI, 0.29 to 0.74) and for an inpatient visit w as -11.2% (adjusted odds ratio, 0.55; CI, 0.32 to 0.94). Conclusions: There was no evidence of harmful effects of enrolling elderly Medicaid patients in prepaid plans, at least in the short run. Whether these f indings also apply to settings in which health maintenance organizatio ns are formed exclusively for Medicaid patients should be studied furt her.