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 outcomes of enrollment of noninstitutionalized elderly Medicaid recipients in prepaid plans compared with traditional fee-for-service Medicaid. Design: A randomized controlled trial. Beneficiaries were randomly assigned to prepaid care in one of seven capitated health plans compared with fee-for-service care. Only the Medicaid portion of their care was capitated. Patients were followed for 1 year. Setting: The Medicaid Demonstration Project in Hennepin County, Minnesota, which includes Minneapolis. Patients: 800 Medicaid beneficiaries who were 65 years or older 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 glycosylated hemoglobin measurements for hypertensive and diabetic persons, respectively. 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 acuity, or blood pressure or diabetic control. Patients in the prepaid group 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 with 9.7, P = 0.07) than patients in the fee-for-service group. The difference in the likelihood of a patient in the prepaid group having a physician visit relative to the fee-for-service group was -16.5% (adjusted odds ratio, 0.46; 95% CI, 0.29 to 0.74) and for an inpatient visit was -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 findings also apply to settings in which health maintenance organizations are formed exclusively for Medicaid patients should be studied further.