The Federal Employees Health Benefits Program: a model for competition in rural America?
BACKGROUND
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) created the Medicare Advantage (MA) program, which promotes the entry of private Preferred Provider Organization (PPO) plans into regions that have not previously had Medicare managed care plans. The assumption that a competitive environment will develop is based on experiences in the Federal Employees Health Benefits Program (FEHBP).


OBJECTIVE
The authors test the hypothesis that the FEHBP has fostered an environment of competing health plans, especially preferred provider organizations (PPOs), in rural areas.


METHODS
Data from the US Office of Personnel Management are used to quantify the number of FEHBP-certified plans in each US county and the number of enrollees in each plan. Data from the Area Resource File are used to measure independent variables in multivariate analysis to account for the number of FEHBP-certified health plans competing in each US county.


RESULTS
While 98% of all counties have at least 3 plans with enrollment, in many sparsely populated rural areas, only 1 of the plans is an open-enrollment plan (excludes plans for letter carriers). There is a strong relationship between the number of FEHBP plans and areas with high population counts and high population density. In many counties with low population counts (under 3,000), most PPOs are not contracting with the nearest primary care provider.


CONCLUSIONS
The FEHBP is not a perfect predictor of MA plan activity because the MA program does not use the FEHBP approach of certifying regional plans that must offer local access. However, the FEHBP experience indicates that plans are attracted to areas with high population counts and high population density.
Mueller
Keith J
KJ
Department of Preventive and Societal Medicine, University of Nebraska Medical Center, Omaha, Nebr. 68198-4350, USA. kmueller@unmc.edu
McBride
Timothy D
TD
Andrews
Courtney
C
Fraser
Roslyn
R
Xu
Liyan
L
D004465:Economic Competition; D035082:Federal Government; D006264:Health Benefit Plans, Employee / Q000706:statistics & numerical data*; D006297:Health Services Accessibility; D006801:Humans; D017146:Models, Organizational; D011243:Preferred Provider Organizations / Q000706:statistics & numerical data*; D019035:Rural Health Services / Q000191:economics* / Q000458:organization & administration; D014481:United States