Glenn Melnick, Ph.D

March 1, 2006

Glenn Melnick, Ph.D., is the Director of the Center for Health Policy and Management at the University of Southern California, School of Policy, Planning, and Development where he holds the Blue Cross of California Chair in Health Care Finance. A senior economist and resident consultant with RAND, Dr. Melnick has been an expert witness for the Federal Trade Commission and recently testified before the House Ways and Committee regarding hospitals pricing to the uninsured.

His research specialties include healthcare competition and managed care. Melnick has extensive experience with foreign healthcare markets and provides technical assistance on issues of health financing and health system organization to other countries. Currently, he focuses on how markets work in health care and the role of competition in improving health system efficiency.

Melnick received his B.A. in Economics from the University of Massachusetts, and an M.H.S.A in Health Services Administration, an M.A.E in Applied Economics and a Ph.D. in Urban and Regional Planning and Health Economics from the University of Michigan. Under the HCFO initiative, he has conducted work on a variety of projects.

Most recently, Melnick led a team that completed a study on the effects of Medicare managed care on access and quality for the general population of managed care beneficiaries and vulnerable populations. The study found that annual disenrollment rates from Medicare risk HMOs to Fee-For-Service in California are higher among vulnerable beneficiaries than among other Medicare beneficiaries, with the highest rates among dual-eligibles. Dual-eligibles in Medicare risk HMOS had lower admission rates, shorter lengths of stay, and fewer inpatient hospital days than dual-eligibles in Medicare FFS. Additionally, researchers found that inpatient use by those who switch to FFS is higher on average than for continuously-enrolled HMO and FFS beneficiaries in California. A quarterly analysis of the year before and after disenrollment suggests that admissions began rising prior to disenrollment. Although Melnick's most recent study of the effect of Medicare HMOs on hospitalization for ambulatory care sensitive conditions (ACSCs; also known as preventable hospitalizations) found that, controlling for selection, Medicare HMO enrollees have both lower ACSC hospitalization rates and fewer total inpatient days than Medicare FFS beneficiaries. This is in contrast to an analysis of non-ACSCs which found no impact of Medicare HMOs on the hospitalization rate, with fewer total inpatient days solely attributable to shorter lengths of stay in HMOs.

Melnick believes that "this collection of studies has important implications for Medicare policy today." The proposed lock-in policy that will restrict how often and when beneficiaries can enroll and disenroll from HMOs may have a negative impact on access and quality of care for a subset of Medicare beneficiaries. A better understanding of why beneficiaries leave HMOs as well as how HMOs manage the care and benefit coordination (which will include prescription drugs) of dual-eligibles is needed. In contrast, when hospitalizations for ACSCs are analyzed, HMOs are able to lower admission rates for these conditions. This finding lends support for the theory that incentives in HMOs to promote effective care in the outpatient setting may benefit patients with ACSCs by reducing their hospitalizations. Finally, a major advantage to policy makers and managers is the fact that ACSC rates and total inpatient days can be computed base on readily available administrative data, making their use as indicators of access to care feasible.

Melnick is the recipient of two new HCFO grants. One will explore how health plan concentration affects hospital performance and the other will look at the relationship between hospital pricing and the uninsured. In the first, "The Effects of Health Plan Concentration on Hospital Pricing Costs, Capacity, Charity Care, and Outcomes" the objective is to discern whether health plan consolidation is welfare decreasing or welfare increasing. Specifically, this project will investigate whether increases in health plan concentration affect hospital price growth; reduce capacity, hospital staffing, and charity care; and affect patient outcomes. The researchers will investigate whether these effects differ depending on the level of managed care penetration and market structure stating, "We are very excited to begin this project since it has important antitrust policy implications and is in an area highlighted in a recent RWJ Synthesis Project Report (February 2006) where we currently know very little."

The second new grant for research on hospital pricing and the uninsured will investigate whether hospital prices to the uninsured systematically differ from prices to the insured by examining the trends in charges (list prices) and net revenues (net prices). If price differences are found, the study will establish whether these differences are related to the type and financial status of the hospital and assess how important these higher prices are to its overall profitability.

For more information on Glenn Melnick, Ph.D., and his other HCFO funded work see HCFO grants. For a list of selected publications, see the School of Policy, Planning and Development at the University of Southern California.