Assessing the impact of a Medicaid managed care program on health care utilization: A two-stage hurdle regression approach

From the early 1980's to the present time, a major shift occurred in the primary funding mechanism for medical care from the traditional "fee for service" model to some form of "managed care" paradigm. The term "managed care" may be used to refer to a wide variety of reimbursement arrangements ranging from primary care physicians acting as "gatekeepers" for more specialized care to Health Maintenance Organizations providing for an individual's entire health care needs in return for a fixed fee.; Medicaid---the federal-state program to finance health care for low-income persons---has followed this trend. By 1996, 43 states had Medicaid Managed Care Programs (MMC) of varying size and scope and providing coverage for almost one-third of the national Medicaid population.; The driving force behind managed care programs has clearly been cost control, with the promise of increased availability of medical services sometimes cited as a secondary consideration. For this reason, the evaluation of such funding mechanisms has tended to focus on expenditure and utilization measures.; This research departed from more traditional evaluation methodologies, and focused instead on the underlying decision making processes that drive the demand for health care services. Individual non-linear regression models for the decision to seek health care services and the decision to supply services were developed. These models were in turn used to evaluate the impact of Georgia's MMC on health care utilization.; This research differed from previous studies in two important ways. First, previous research has tended to rely upon data that do not permit contemporaneous comparison of MMC and non-MMC groups, nor do the data cover sufficient time periods to permit valid longitudinal comparisons. The data set available for this study was much richer than those previously available, both due to its length (20 quarters) and to the fact that the Georgia Medicaid Managed Care program was phased in---by groups of counties---over a three and three-quarter year period.; The research analyzed and quantified the impact of Georgia Better Health Care Georgia's Medicare managed care program---on physician and emergency room utilization and on inpatient admissions. Statistically significant reductions in utilization were documented for physicians---both primary care and speciality---and for emergency room visits. No significant impact on inpatient admissions was detected.