A longitudinal study of hospitalization rates for patients with chronic disease: results from the Medical Outcomes Study.

OBJECTIVE To prospectively compare inpatient and outpatient utilization rates between prepaid (PPD) and fee-for-service (FFS) insurance coverage for patients with chronic disease. DATA SOURCE/STUDY SETTING Data from the Medical Outcomes Study, a longitudinal observational study of chronic disease patients conducted in Boston, Chicago, and Los Angeles. STUDY DESIGN A four-year prospective study of resource utilization among 1,681 patients under treatment for hypertension, diabetes, myocardial infarction, or congestive heart failure in the practices of 367 clinicians. DATA COLLECTION/EXTRACTION METHODS Insurance payment system (PPD or FFS), hospitalizations, and office visits were obtained from patient reports. Disease and severity indicators, sociodemographics, and self-reported functional status were used to adjust for patient mix and to compute expected utilization rates. PRINCIPAL FINDINGS Compared to FFS, PPD patients had 31 percent fewer observed hospitalizations before adjustment for patient differences (p = .005) and 15 percent fewer hospitalizations than expected after adjustment (p = .078). The observed rate of FFS hospitalizations exceeded the expected rate by 9 percent. These results are not explained by system differences in patient mix or trends in hospital use over four years. Half of the PPD/FFS difference in hospitalization rate is due to intrinsic characteristics of the payment system itself. CONCLUSIONS PPD patients with chronic medical conditions followed prospectively over four years, after extensive patient-mix adjustment, had 15 percent fewer hospitalizations than their FFS counterparts owing to differences intrinsic to the insurance reimbursement system.