Social HMOs: A New Model of Managed Care for the Elderly

The social HMO (S/HMO) was developed in the 1980s as a new way to improve care for frail Medicare beneficiaries in the community. Combining managed care and expanded home- and community-based services, S/HMOs now enroll a broad spectrum of Medicare beneficiaries. The extra services are targeted to those who are at greatest risk of being admitted to a nursing home, or who have significant health care needs.

A new report examines two generations of social HMOs (S/HMO I and S/HMO II). S/HMO I plans are in Brooklyn, NY; Portland, OR; and Long Beach, CA. The S/HMO II is in Las Vegas/Reno, NV. Only one of the three S/HMO I plans examined has implemented innovative geriatric approaches. However, costs for the S/HMO I plans are 15 to 27 percent higher than they would have been had the plans been paid under the same formula as traditional Medicare HMOs. The higher payments appear unwarranted for two of the three plans, because their enrollees are no frailer than comparably aged enrollees in local Medicare HMOs. Furthermore, plans report spending less than the full supplementary payment on the extra services the supplement was intended to cover. The S/HMO II plan, a newer model, also has implemented innovative geriatric programs and is not overpaid relative to the health of its enrollees.

Despite the enhanced services, member satisfaction with the four S/HMOs is about the same as for regular Medicare HMOs in the same cities. The most innovative of the S/HMOs—the S/HMO II plan—does not appear to have a greater effect than regular HMOs on beneficiaries' health and functioning. Given these findings, the authors recommend that the S/HMO plans be phased into the regular Medicare+Choice (now Medicare Advantage) program by 2007, and that the special payment method be phased out. The authors also discuss several alternative ways to integrate the S/HMO plans into the M+C program.

The evaluation was conducted for the Centers for Medicare and Medicaid Services. For a printed copy of "Social Health Maintenance Organizations: Transition into Medicare+Choice,” contact Jackie Allen at 609-275-2350.

Back to Top