Medicare: Changes to HMO Rate Setting Method Are Needed to Reduce Program CostsExamines Medicare's HMO rate setting methodology to assess the existence & magnitude of cost problems & reviews proposed solutions. Also reviews the impact of favorable selection & rate variation on the ability of the Medicare risk contract program to provide cost savings. Charts & tables |
Common terms and phrases
AAPCC addition adjustors administrative burdens Alternative Risk Adjustment alth analysts areas average biased selection cancer capitated payments capitation rate clinical measure clinical-indicator system cost savings demonstration diagnosis codes differences disenrollment emotional health estimates evaluate example favorable selection fee-for-service costs fee-for-service sector functional status HCFA HCFA's current system health care costs Health Care Financing Health Economics Health Maintenance Organization health plans healthier high-cost HMO enrollees HMO payment rates HMO Rate Setting HMO's hospital incentives for HMOs inpatient less Mathematica Policy Research Medicaid Medicare beneficiaries Medicare Costs Medicare risk contract Medicare's Medigap methodology participating HMOs patients pay HMOs percent physicians potential predictive power prior utilization proposed Rate Setting Method reduce HMOS retrospective Risk Adjus risk adjustment mechanisms risk adjustment methods risk adjustment system risk adjustment variables risk contract HMOs risk contract program self-reported data self-reported health status sicker tracer conditions within-cell selection
Popular passages
Page 12 - XVm of the Social Security Act) that assists most elderly aged 65 or older and certain disabled people in paying for their health care. The program is administered by the Health Care Financing Administration (HCFA), under the Department of Health and Human Services (HHS). It provides two basic forms of protection: Part A, Hospital Insurance, is financed primarily by social security payment taxes and covers inpatient hospital services, post-hospital care in skilled nursing facilities, hospice care,...
Page 34 - ... order additional services), then HMO payment rates will be relatively high in that county. In contrast, if Medicare fee-for-service beneficiaries use few services — perhaps because of inadequate transportation or a lack of providers in rural areas — then HMO payment rates will be relatively low. As a result, rates in some areas are too low to induce HMO participation in the risk contract program, while in other areas rates are too high for Medicare to realize the potential cost savings generated...
Page 36 - ... used by Medicare beneficiaries. Much of this variation may, however, be attributable to underutilization of health care in some areas and overutilization in others instead of differences in the cost of providing appropriate health care. If fee-for-service beneficiaries use a large number of services (either because beneficiaries demand these services or because their doctors order additional services), then HMO payment rates will be relatively high in that county. In contrast, if Medicare fee-for-service...
Page 7 - In the fourth approach, HMO capitation payments would be linked to beneficiaries' own views of their physical and emotional health. Improving the AAPCC .Capitation Rate HCFA could require steeper discounts from HMOs than the present 5-percent discount off the estimated local fee-forservlce cost.
Page 28 - ... reduce favorable selection, create Incentives for HMOs to provide appropriate care, and would not be subject to manipulation by participating HMOs. However, no risk adjuster Is likely to exhibit all these positive traits because these criteria have tradeoffs. For example, a more complex risk adjustor may be more successful In reducing favorable selection but may do so only at a high administrative cost. Recently, we evaluated 10 possible risk ad justors.
Page 81 - The health status and utilization patterns of the elderly: implications for setting Medicare payments to HMO's", in: Scheffler, RM, and LF Rossiter (eds.), Advances in health economics and health services research, Vol.
Page 6 - For example, a good risk adjuster would be inexpensive to administer, would reduce favorable selection, would create incentives for HMOS to provide appropriate care, and would not be subject to manipulation by participating HMOS. However, no risk adjuster is likely to exhibit all these positive traits because there are trade-offs among these criteria.
Page 87 - Biased Selection and Regression Toward the Mean in Three Medicare HMO Demonstrations: A Survival Analysis of Enrollees and Disenrollees.
Page 7 - One of these adjusters — clinical indicators — would adjust capitation rates for the presence or absence of a particular chronic health condition (such as heart disease, stroke, or cancer). Two other promising...
Page 84 - HCFA Needs to Take Stronger Actions Against HMOs Violating Federal Standards. HRD-92-11 (November 12, 1991); Medicare Advocacy Project, Inc., Medicare Risk-Contract HMOs in California: A Study of Marketing. Quality, and Due Process Rights (January 1993); E.