Market and beneficiary characteristics associated with enrollment in Medicare managed care plans and fee-for-service.

Background: Risk selection in the Medicare managed care program ("Medicare Advantage") is an important policy concern. Past research has shown that Medicare managed care plans tend to attract healthier beneficiaries and that market characteristics such as managed care penetration may also affect risk selection.

Objectives: To assess whether patient enrollment in Medicare managed care (MMC) or traditional fee-for-service (FFS) Medicare is related to beneficiary and market characteristics and provide a baseline for understanding how changes in Medicare policy affect MMC enrollment over time.

Research Design: Data sources were the 2004 Medicare MMC and FFS CAHPS surveys, the Social Security Administration's Master Beneficiary Record, MMC Market Penetration Files, and 2000 Census data. We estimated logistic regression models to assess what beneficiary characteristics predict enrollment in MMC and the moderating effects of market characteristics.

Results: Enrollees in MMC plans tend to have better health than those in FFS. This effect is weaker in areas with more competition. Latinos and beneficiaries with less education and lower income, as indicated by earnings history or local-area median income, are more likely to enroll in MMC.

Conclusions: Enrollment in MMC is related to beneficiary characteristics, including health status and socioeconomic status, and is modified by MMC presence in the local market. Because vulnerable subgroups are more likely to enroll in MMC plans, the Centers for Medicare & Medicaid Services should monitor how changes to Medicare Advantage policies and payment methods may affect beneficiaries in those groups.