Utilization and costs of home-based and community-based care within a social HMO: trends over an 18-year period

PURPOSE: Our objective was to describe the utilization and costs of services from 1985 to 2002 of a Social Health Maintenance Organization (SHMO) demonstration project providing a benefit for home-based and community-based as well as short-term institutional (HCB) care at Kaiser Permanente Northwest (KPNW), serving the Portland, Oregon area. The HCB care benefit was offered by KPNW as a supplement to Medicare's acute care medical benefits, which KPNW provides in an HMO model. KPNW receives a monthly per capita payment from Medicare to provide medical benefits, and Medicare beneficiaries who choose to join pay a supplemental premium that covers prescription drugs, HCB care benefits, and other services. A HCB care benefit of up to $12,000 per year in services was available to SHMO members meeting requirement for nursing home certification (NHC). METHODS: We used aggregate data to track temporal changes in the period 1985 to 2002 on member eligibility, enrollment in HCB care plans, age, service utilization and co-payments. Trends in the overall costs and financing of the HCB care benefit were extracted from quarterly reports, management data, and finance data. RESULTS: During the time period, 14,815 members enrolled in the SHMO and membership averaged 4,531. The proportion of SHMO members aged 85 or older grew from 12 to 25%; proportion meeting requirements for NHC rose from 4 to 27%; and proportion with HCB care plans rose from 4 to 18%. Costs for the HCB care benefit rose from $21 per SHMO member per month in 1985 to $95 in 2002. The HCB care costs were equivalent to 12% to 16% of Medicare reimbursement. The HCB program costs were covered by member premiums (which rose from $49 to $180) and co-payments from members with care plans. Over the 18-year period, spending shifted from nursing homes to a range of community services, e.g. personal care, homemaking, member reimbursement, lifeline, equipment, transportation, shift care, home nursing, adult day care, respite care, and dentures. Rising costs per month per SHMO member reflected increasing HCB eligibility rather than costs per member with HCB care, which actually fell from $6,164 in 1989 to $4,328 in 2002. Care management accounted for about one-quarter of community care costs since 1992. CONCLUSIONS: The Kaiser Permanente Northwest SHMO served an increasingly aged and disabled membership by reducing costs per HCB member care plan and shifting utilization to a broad range of community care services. Supported by a disability-based Medicare payment formula and by SHMO beneficiaries willing to pay increasing premiums, KPNW has been able to offer comprehensive community care. The model could be replicated by other HMOs with the support of favorable federal policies.