Social Health Maintenance Organizations: Transition into the Medicare+Choice Program

Examines two generations of Social HMOs (S/HMO I and S/HMO II), models of managed care that incorporate additional long-term care benefits and care coordination services for Medicare beneficiaries. Finds that one of the three S/HMO I plans examined has implemented innovative geriatric approaches. However, costs for the plans are 15 to 27 percent higher than under the regular Medicare HMO payment method. The higher payments appear unwarranted, because only one plan has frailer enrollees than local Medicare HMOs. Furthermore, plans are not spending the full 5 percent supplementary payment on extra services as intended. The newer S/HMO II plan also has implemented innovative geriatric programs and is not overpaid for 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, and S/HMOs do not appear to have a greater effect than regular HMOs on beneficiaries' health and functioning. The authors recommend that the S/HMO plans be phased into the regular M+C program by 2004, and that the special payment method be phased out.