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Abstract
The ACA created a new type of nonprofit health insurance entity, the "Consumer Operated and Oriented Plan" ("co-op"). Most of the newly created co-ops soon lost money, and only 4 of the original 23 remain. We interviewed key stakeholders and conducted in-depth case studies of 3 of these co-ops. We discovered that politicians and regulators made it unlikely the program could succeed, that most of the co-ops did not have the management capacity to overcome these political obstacles, and that even those with good managers lacked the needed fiscal resilience. We also considered lessons suggested for those proposing a newly created "public option." The main one is that a successful public option requires a supportive political environment, strong management, and significant fiscal capacity, none of which comes easily. A better route may be a quasi-public option in which the government subcontracts the operation of its newly created plan to a private firm. Although it is uncertain whether federal regulators have the capacity to hold such private for-profit firms accountable, pragmatism suggests that a combination of public-sector regulation and private-sector implementation may be the most direct path toward a US version of affordable universal coverage.
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Zheng S, Hanchate A, Shwartz M. One-year costs of medical admissions with and without a 30-day readmission and enhanced risk adjustment. BMC Health Serv Res 2019; 19:155. [PMID: 30866904 PMCID: PMC6416984 DOI: 10.1186/s12913-019-3983-7] [Citation(s) in RCA: 10] [Impact Index Per Article: 2.0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Download PDF] [Journal Information] [Subscribe] [Scholar Register] [Received: 10/13/2018] [Accepted: 03/01/2019] [Indexed: 11/10/2022] Open
Abstract
BACKGROUND To overcome the limitations of administrative data in adequately adjusting for differences in patients' risk of readmissions, recent studies have added supplemental data from patient surveys and other sources (e.g., electronic health records). However, judging the adequacy of enhanced risk adjustment for use in assessment of 30-day readmission as a hospital quality indicator is not straightforward. In this paper, we evaluate the adequacy of risk adjustment by comparing the one-year costs of those readmitted within 30 days to those not after excluding the costs of the readmission. METHODS In this two-step study, we first used comprehensive administrative and survey data on a nationally representative Medicare cohort of hospitalized patients to compare patients with a medical admission who experienced a 30-day readmission to patients without a readmission in terms of their overall Medicare payments during 12 months following the index discharge. We then examined the extent to which a series of enhanced risk adjustment models incorporating code-based comorbidities, self-reported health status and prior healthcare utilization, reduced the payment differences between the admitted and not readmitted groups. RESULTS Our analytic cohort consisted 4684 index medical hospitalization of which 842 met the 30-day readmission criteria. Those readmitted were more likely to be older, White, sicker and with higher healthcare utilization in the previous year. The unadjusted subsequent one-year Medicare spending among those readmitted ($56,856) was 60% higher than that among the non-readmitted ($35,465). Even with enhanced risk adjustment, and across a variety of sensitivity analyses, one-year Medicare spending remained substantially higher (46.6%, p < 0.01) among readmitted patients. CONCLUSIONS Enhanced risk adjustment models combining health status indicators from administrative and survey data with previous healthcare utilization are unable to substantially reduce the cost differences between those medical admission patients readmitted within 30 days and those not. The unmeasured patient severity that these cost differences most likely reflect raises the question of the fairness of programs that place large penalties on hospitals with higher than expected readmission rates.
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Affiliation(s)
- Sarah Zheng
- University of Victoria Gustavson School of Business, 3800 Finnerty Rd, Victoria, BC V8P 5C2 Canada
| | - Amresh Hanchate
- Boston University School of Medicine, 801 Massachusetts Ave Crosstown Center, Boston, MA 02118 USA
| | - Michael Shwartz
- Operations and Technology Management Department, Boston University Questrom School of Business, 595 Commonwealth Avenue, Boston, MA 02215 USA
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Jacobs PD, Kronick R. Getting What We Pay For: How Do Risk-Based Payments to Medicare Advantage Plans Compare with Alternative Measures of Beneficiary Health Risk? Health Serv Res 2018; 53:4997-5015. [PMID: 29790162 PMCID: PMC6232441 DOI: 10.1111/1475-6773.12977] [Citation(s) in RCA: 6] [Impact Index Per Article: 1.0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 12/21/2022] Open
Abstract
OBJECTIVE To estimate the relative health risk of Medicare Advantage (MA) beneficiaries compared to those in Traditional Medicare (TM). DATA SOURCES/STUDY SETTING Medicare claims and enrollment records for the sample of beneficiaries enrolled in Part D between 2008 and 2015. STUDY DESIGN We assigned therapeutic classes to Medicare beneficiaries based on their prescription drug utilization. We then regressed nondrug health spending for TM beneficiaries in 2015 on demographic and therapeutic class identifiers for 2014 and used coefficients from this regression to predict relative risk of both MA and TM beneficiaries. PRINCIPAL FINDINGS Based on prescription drug utilization data, beneficiaries enrolled in MA in 2015 had 6.9 percent lower health risk than beneficiaries in TM, but differences based on coded diagnoses suggested MA beneficiaries were 6.2 percent higher risk. The relative health risk based on drug usage of MA beneficiaries compared to those in TM increased by 3.4 p.p. from 2008 to 2015, while the relative risk using diagnoses increased 9.8 p.p. CONCLUSIONS Our results add to a growing body of evidence suggesting MA receives favorable, or, at worst, neutral selection. If MA beneficiaries are no healthier and no sicker than similar beneficiaries in TM, then payments to MA plans exceed what is warranted based on their health status.
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Affiliation(s)
- Paul D. Jacobs
- Center for Financing, Access, and Cost TrendsAgency for Healthcare Research and QualityRockvilleMD
| | - Richard Kronick
- Department of FamilyMedicine and Public HealthUniversity of California San DiegoLa JollaCA
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4
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Affiliation(s)
- Zirui Song
- From Harvard Medical School and Massachusetts General Hospital - both in Boston
| | - John D Goodson
- From Harvard Medical School and Massachusetts General Hospital - both in Boston
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5
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Layton TJ, McGuire TG, van Kleef RC. Deriving risk adjustment payment weights to maximize efficiency of health insurance markets. J Health Econ 2018; 61:93-110. [PMID: 30099218 PMCID: PMC6471663 DOI: 10.1016/j.jhealeco.2018.07.001] [Citation(s) in RCA: 8] [Impact Index Per Article: 1.3] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 07/06/2017] [Revised: 07/03/2018] [Accepted: 07/05/2018] [Indexed: 05/21/2023]
Abstract
Risk-adjustment is critical to the functioning of regulated health insurance markets. To date, estimation and evaluation of a risk-adjustment model has been based on statistical rather than economic objective functions. We develop a framework where the objective of risk-adjustment is to minimize the efficiency loss from service-level distortions due to adverse selection, and we use the framework to develop a welfare-grounded method for estimating risk-adjustment weights. We show that when the number of risk adjustor variables exceeds the number of decisions plans make about service allocations, incentives for service-level distortion can always be eliminated via a constrained least-squares regression. When the number of plan service-level allocation decisions exceeds the number of risk-adjusters, the optimal weights can be found by an OLS regression on a straightforward transformation of the data. We illustrate this method with the data used to estimate risk-adjustment payment weights in the Netherlands (N = 16.5 million).
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Affiliation(s)
- Timothy J Layton
- Department of Health Care Policy, Harvard Medical School and NBER, United States.
| | - Thomas G McGuire
- Department of Health Care Policy, Harvard Medical School and NBER, United States
| | - Richard C van Kleef
- Erasmus School of Health Policy and Management, Erasmus University Rotterdam, The Netherlands
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Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS). Adoption of the Methodology for the HHS-Operated Permanent Risk Adjustment Program Under the Patient Protection and Affordable Care Act for the 2017 Benefit Year. Final rule. Fed Regist 2018; 83:36456-60. [PMID: 30074735] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/08/2023]
Abstract
The Secretary of Education (Secretary) amends the regulations implementing Parts B and C of the Individuals with Disabilities Education Act (IDEA). These conforming changes are needed to implement statutory amendments made to the IDEA by the Every Student Succeeds Act (ESSA), enacted on December 10, 2015. These regulations remove and revise IDEA definitions based on changes made to the definitions in the Elementary and Secondary Education Act of 1965 (ESEA), as amended by the ESSA, and also update several State eligibility requirements to reflect amendments to the IDEA made by the ESSA. They also update relevant cross-references in the IDEA regulations to sections of the ESEA to reflect changes made by the ESSA. These regulations also include several technical corrections to previously published IDEA Part B regulations.
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Marton J, Yelowitz A, Talbert JC. Medicaid program choice, inertia and adverse selection. J Health Econ 2017; 56:292-316. [PMID: 29248057 DOI: 10.1016/j.jhealeco.2017.04.006] [Citation(s) in RCA: 6] [Impact Index Per Article: 0.9] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 09/30/2016] [Revised: 04/17/2017] [Accepted: 04/28/2017] [Indexed: 06/07/2023]
Abstract
In 2012, Kentucky implemented Medicaid managed care statewide, auto-assigned enrollees to three plans, and allowed switching. Using administrative data, we find that the state's auto-assignment algorithm most heavily weighted cost-minimization and plan balancing, and placed little weight on the quality of the enrollee-plan match. Immobility - apparently driven by health plan inertia - contributed to the success of the cost-minimization strategy, as more than half of enrollees auto-assigned to even the lowest quality plans did not opt-out. High-cost enrollees were more likely to opt-out of their auto-assigned plan, creating adverse selection. The plan with arguably the highest quality incurred the largest initial profit margin reduction due to adverse selection prior to risk adjustment, as it attracted a disproportionate share of high-cost enrollees. The presence of such selection, caused by differential degrees of mobility, raises concerns about the long run viability of the Medicaid managed care market without such risk adjustment.
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Affiliation(s)
- James Marton
- Georgia State University, Georgia State University, Department of Economics, P.O. Box 3992, Atlanta, GA, United States.
| | - Aaron Yelowitz
- University of Kentucky, Department of Economics, 223B Gatton Business and Economics Building, Lexington, KY, United States.
| | - Jeffery C Talbert
- University of Kentucky, College of Pharmacy, 789 South Limestone St., Lexington, KY, United States.
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Centers for Medicare & Medicaid Services (CMS), HHS. Medicare and Medicaid Programs; CY 2018 Home Health Prospective Payment System Rate Update and CY 2019 Case-Mix Adjustment Methodology Refinements; Home Health Value-Based Purchasing Model; and Home Health Quality Reporting Requirements. Final rule. Fed Regist 2017; 82:51676-752. [PMID: 29111624] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/07/2023]
Abstract
This final rule updates the home health prospective payment system (HH PPS) payment rates, including the national, standardized 60-day episode payment rates, the national per-visit rates, and the non-routine medical supply (NRS) conversion factor, effective for home health episodes of care ending on or after January 1, 2018. This rule also: Updates the HH PPS case-mix weights using the most current, complete data available at the time of rulemaking; implements the third year of a 3-year phase-in of a reduction to the national, standardized 60-day episode payment to account for estimated case-mix growth unrelated to increases in patient acuity (that is, nominal case-mix growth) between calendar year (CY) 2012 and CY 2014; and discusses our efforts to monitor the potential impacts of the rebasing adjustments that were implemented in CY 2014 through CY 2017. In addition, this rule finalizes changes to the Home Health Value-Based Purchasing (HHVBP) Model and to the Home Health Quality Reporting Program (HH QRP). We are not finalizing the implementation of the Home Health Groupings Model (HHGM) in this final rule.
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Harrop C. THE ROAD TO RISK-BASED CONTRACTING. MGMA Connex 2017; 17:30-32. [PMID: 30358261] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/08/2023]
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Centers for Medicare and Medicaid Services (CMS), HHS. Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2018; Amendments to Special Enrollment Periods and the Consumer Operated and Oriented Plan Program. Final rule. Fed Regist 2016; 81:94058-183. [PMID: 28068048] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/06/2023]
Abstract
This final rule sets forth payment parameters and provisions related to the risk adjustment program; cost-sharing parameters and cost-sharing reductions; and user fees for Federally-facilitated Exchanges and State-based Exchanges on the Federal platform. It also provides additional guidance relating to standardized options; qualified health plans; consumer assistance tools; network adequacy; the Small Business Health Options Programs; stand-alone dental plans; fair health insurance premiums; guaranteed availability and guaranteed renewability; the medical loss ratio program; eligibility and enrollment; appeals; consumer-operated and oriented plans; special enrollment periods; and other related topics.
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Risk-corridor payments Ranked by insurance issuers owed the most for 2015 and 2014 ($ in millions). Mod Healthc 2016; 46:38. [PMID: 30399262] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/08/2023]
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Clement RC, Derman PB, Kheir MM, Soo AE, Flynn DN, Levin LS, Fleisher L. Risk Adjustment for Medicare Total Knee Arthroplasty Bundled Payments. Orthopedics 2016; 39:e911-6. [PMID: 27359282 DOI: 10.3928/01477447-20160623-04] [Citation(s) in RCA: 25] [Impact Index Per Article: 3.1] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Track Full Text] [Journal Information] [Submit a Manuscript] [Subscribe] [Scholar Register] [Received: 01/20/2016] [Accepted: 04/11/2016] [Indexed: 02/03/2023]
Abstract
The use of bundled payments is growing because of their potential to align providers and hospitals on the goal of cost reduction. However, such gain sharing could incentivize providers to "cherry-pick" more profitable patients. Risk adjustment can prevent this unintended consequence, yet most bundling programs include minimal adjustment techniques. This study was conducted to determine how bundled payments for total knee arthroplasty (TKA) should be adjusted for risk. The authors collected financial data for all Medicare patients (age≥65 years) undergoing primary unilateral TKA at an academic center over a period of 2 years (n=941). Multivariate regression was performed to assess the effect of patient factors on the costs of acute inpatient care, including unplanned 30-day readmissions. This analysis mirrors a bundling model used in the Medicare Bundled Payments for Care Improvement initiative. Increased age, American Society of Anesthesiologists (ASA) class, and the presence of a Medicare Major Complications/Comorbid Conditions (MCC) modifier (typically representing major complications) were associated with increased costs (regression coefficients, $57 per year; $729 per ASA class beyond I; and $3122 for patients meeting MCC criteria; P=.003, P=.001, and P<.001, respectively). Differences in costs were not associated with body mass index, sex, or race. If the results are generalizable, Medicare bundled payments for TKA encompassing acute inpatient care should be adjusted upward by the stated amounts for older patients, those with elevated ASA class, and patients meeting MCC criteria. This is likely an underestimate for many bundling models, including the Comprehensive Care for Joint Replacement program, incorporating varying degrees of postacute care. Failure to adjust for factors that affect costs may create adverse incentives, creating barriers to care for certain patient populations. [Orthopedics. 2016; 39(5):e911-e916.].
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van Kleef RC, van Vliet RCJA, van de Ven WPMM. Overpaying morbidity adjusters in risk equalization models. Eur J Health Econ 2016; 17:885-895. [PMID: 26420555 DOI: 10.1007/s10198-015-0729-2] [Citation(s) in RCA: 3] [Impact Index Per Article: 0.4] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 02/16/2015] [Accepted: 09/15/2015] [Indexed: 06/05/2023]
Abstract
Most competitive social health insurance markets include risk equalization to compensate insurers for predictable variation in healthcare expenses. Empirical literature shows that even the most sophisticated risk equalization models-with advanced morbidity adjusters-substantially undercompensate insurers for selected groups of high-risk individuals. In the presence of premium regulation, these undercompensations confront consumers and insurers with incentives for risk selection. An important reason for the undercompensations is that not all information with predictive value regarding healthcare expenses is appropriate for use as a morbidity adjuster. To reduce incentives for selection regarding specific groups we propose overpaying morbidity adjusters that are already included in the risk equalization model. This paper illustrates the idea of overpaying by merging data on morbidity adjusters and healthcare expenses with health survey information, and derives three preconditions for meaningful application. Given these preconditions, we think overpaying may be particularly useful for pharmacy-based cost groups.
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Affiliation(s)
- R C van Kleef
- Institute of Health Policy and Management, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR, Rotterdam, The Netherlands.
| | - R C J A van Vliet
- Institute of Health Policy and Management, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR, Rotterdam, The Netherlands
| | - W P M M van de Ven
- Institute of Health Policy and Management, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR, Rotterdam, The Netherlands
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Keegan C, Teljeur C, Turner B, Thomas S. Switching insurer in the Irish voluntary health insurance market: determinants, incentives, and risk equalization. Eur J Health Econ 2016; 17:823-831. [PMID: 26359243 DOI: 10.1007/s10198-015-0724-7] [Citation(s) in RCA: 3] [Impact Index Per Article: 0.4] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 01/21/2015] [Accepted: 08/19/2015] [Indexed: 06/05/2023]
Abstract
BACKGROUND The determinants of consumer mobility in voluntary health insurance markets providing duplicate cover are not well understood. Consumer mobility can have important implications for competition. Consumers should be price-responsive and be willing to switch insurer in search of the best-value products. Moreover, although theory suggests low-risk consumers are more likely to switch insurer, this process should not be driven by insurers looking to attract low risks. METHODS This study utilizes data on 320,830 VHI healthcare policies due for renewal between August 2013 and June 2014. At the time of renewal, policyholders were categorized as either 'switchers' or 'stayers', and policy information was collected for the prior 12 months. Differences between these groups were assessed by means of logistic regression. The ability of Ireland's risk equalization scheme to account for the relative attractiveness of switchers was also examined. RESULTS Policyholders were price sensitive (OR 1.052, p < 0.01), however, price-sensitivity declined with age. Age (OR 0.971; p < 0.01) and hospital utilization (OR 0.977; p < 0.01) were both negatively associated with switching. In line with these findings, switchers were less costly than stayers for the 12 months prior to the switch/renew decision for single person (difference in average cost = €540.64) and multiple-person policies (difference in average cost = €450.74). Some cost differences remain for single-person policies following risk equalization (difference in average cost = €88.12). CONCLUSIONS Consumers appear price-responsive, which is important for competition provided it is based on correct incentives. Risk equalization payments largely eliminated the profitable status of switchers, although further refinements may be required.
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Affiliation(s)
- Conor Keegan
- Centre of Health Policy and Management, Trinity College Dublin (TCD), Dublin 2, Ireland.
| | - Conor Teljeur
- Health Information and Quality Authority (HIQA), Dublin 7, Ireland
| | - Brian Turner
- School of Economics, University College Cork (UCC), Cork, Ireland
| | - Steve Thomas
- Centre of Health Policy and Management, Trinity College Dublin (TCD), Dublin 2, Ireland
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Yeatts JP, Sangvai D. HCC Coding, Risk Adjustment, and Physician Income: What You Need to Know. Fam Pract Manag 2016; 23:24-27. [PMID: 27626116] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/06/2023]
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Centers for Medicare & Medicaid Services (CMS), HHS. Medicare Program; Inpatient Rehabilitation Facility Prospective Payment System for Federal Fiscal Year 2017. Final rule. Fed Regist 2016; 81:52055-141. [PMID: 27529901] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/06/2023]
Abstract
This final rule will update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2017 as required by the statute. As required by section 1886(j)(5) of the Act, this rule includes the classification and weighting factors for the IRF prospective payment system's (IRF PPS's) case-mix groups and a description of the methodologies and data used in computing the prospective payment rates for FY 2017. This final rule also revises and updates quality measures and reporting requirements under the IRF quality reporting program (QRP).
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Centers for Medicare & Medicaid Services (CMS), HHS. Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2017, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, and SNF Payment Models Research. Final rule. Fed Regist 2016; 81:51969-2053. [PMID: 27529900] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/06/2023]
Abstract
This final rule updates the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2017. In addition, it specifies a potentially preventable readmission measure for the Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP), and implements requirements for that program, including performance standards, a scoring methodology, and a review and correction process for performance information to be made public, aimed at implementing value-based purchasing for SNFs. Additionally, this final rule includes additional polices and measures in the Skilled Nursing Facility Quality Reporting Program (SNF QRP). This final rule also responds to comments on the SNF Payment Models Research (PMR) project.
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Centers for Medicare & Medicaid Services (CMS), HHS. Medicare Program; Medicare Shared Savings Program; Accountable Care Organizations--Revised Benchmark Rebasing Methodology, Facilitating Transition to Performance-Based Risk, and Administrative Finality of Financial Calculations. Final rule. Fed Regist 2016; 81:37949-8017. [PMID: 27295736] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/06/2023]
Abstract
Under the Medicare Shared Savings Program (Shared Savings Program), providers of services and suppliers that participate in an Accountable Care Organization (ACO) continue to receive traditional Medicare fee-for-service (FFS) payments under Parts A and B, but the ACO may be eligible to receive a shared savings payment if it meets specified quality and savings requirements. This final rule addresses changes to the Shared Savings Program, including: Modifications to the program's benchmarking methodology, when resetting (rebasing) the ACO's benchmark for a second or subsequent agreement period, to encourage ACOs' continued investment in care coordination and quality improvement; an alternative participation option to encourage ACOs to enter performance-based risk arrangements earlier in their participation under the program; and policies for reopening of payment determinations to make corrections after financial calculations have been performed and ACO shared savings and shared losses for a performance year have been determined.
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Kittelsen SAC, Anthun KS, Goude F, Huitfeldt IMS, Häkkinen U, Kruse M, Medin E, Rehnberg C, Rättö H. Costs and Quality at the Hospital Level in the Nordic Countries. Health Econ 2015; 24 Suppl 2:140-63. [PMID: 26633873 DOI: 10.1002/hec.3260] [Citation(s) in RCA: 10] [Impact Index Per Article: 1.1] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 03/05/2014] [Revised: 04/27/2015] [Accepted: 05/11/2015] [Indexed: 05/21/2023]
Abstract
This article develops and analyzes patient register-based measures of quality for the major Nordic countries. Previous studies show that Finnish hospitals have significantly higher average productivity than hospitals in Sweden, Denmark, and Norway and also a substantial variation within each country. This paper examines whether quality differences can form part of the explanation and attempts to uncover quality-cost trade-offs. Data on costs and discharges in each diagnosis-related group for 160 acute hospitals in 2008-2009 were collected. Patient register-based measures of quality such as readmissions, mortality (in hospital or outside), and patient safety indices were developed and case-mix adjusted. Productivity is estimated using bootstrapped data envelopment analysis. Results indicate that case-mix adjustment is important, and there are significant differences in the case-mix adjusted performance measures as well as in productivity both at the national and hospital levels. For most quality indicators, the performance measures reveal room for improvement. There is a weak but statistical significant trade-off between productivity and inpatient readmissions within 30 days but a tendency that hospitals with high 30-day mortality also have higher costs. Hence, no clear cost-quality trade-off pattern was discovered. Patient registers can be used and developed to improve future quality and cost comparisons.
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Affiliation(s)
| | | | - Fanny Goude
- Medical Management Centre, Karolinska Institutet, Stockholm, Sweden
| | | | - Unto Häkkinen
- Centre for Health and Social Economics CHESS, National Institute for Health and Welfare, Helsinki, Finland
| | - Marie Kruse
- COHERE, University of Southern Denmark, Odense, Denmark
| | - Emma Medin
- Medical Management Centre, Karolinska Institutet, Stockholm, Sweden
| | - Clas Rehnberg
- Medical Management Centre, Karolinska Institutet, Stockholm, Sweden
| | - Hanna Rättö
- Centre for Health and Social Economics CHESS, National Institute for Health and Welfare, Helsinki, Finland
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Centers for Medicare & Medicaid Services, (CMS), HHS. Patient Protection and Affordable Care Act; HHS notice of benefit and payment parameters for 2016. Final rule. Fed Regist 2015; 80:10749-877. [PMID: 25898427] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/04/2023]
Abstract
This final rule sets forth payment parameters and provisions related to the risk adjustment, reinsurance, and risk corridors programs; cost sharing parameters and cost-sharing reductions; and user fees for Federally-facilitated Exchanges. It also finalizes additional standards for the individual market annual open enrollment period for the 2016 benefit year, essential health benefits, qualified health plans, network adequacy, quality improvement strategies, the Small Business Health Options Program, guaranteed availability, guaranteed renewability, minimum essential coverage, the rate review program, the medical loss ratio program, and other related topics.
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Siegel M. Risk-adjusted base payments can support the move to value. Healthc Financ Manage 2015; 69:38-41. [PMID: 26665986] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/05/2023]
Abstract
Value-based care delivery and payment continue to penetrate the marketplace, redefining the roles primary care physicians are expected to play. Risk-adjusted base payments can help ensure that these physicians receive stable, predictable monthly or quarterly payments for the added responsibilities they will take on managing the health of populations through accountable care organizations, patient- centered medical homes, and other value-based organizations. As payerand provider incentives become aligned in value-based care delivery, payment arrangements should be designed to reflect that alignment.
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Abstract
Beginning in 2014, individuals and small businesses will be able to purchase private health insurance through competitive marketplaces. The Affordable Care Act (ACA) provides for a program of risk adjustment in the individual and small group markets in 2014 as Marketplaces are implemented and new market reforms take effect. The purpose of risk adjustment is to lessen or eliminate the influence of risk selection on the premiums that plans charge and the incentive for plans to avoid sicker enrollees. This article--the first of three in the Medicare & Medicaid Research Review--describes the key program goal and issues in the Department of Health and Human Services (HHS) developed risk adjustment methodology, and identifies key choices in how the methodology responds to these issues. The goal of the HHS risk adjustment methodology is to compensate health insurance plans for differences in enrollee health mix so that plan premiums reflect differences in scope of coverage and other plan factors, but not differences in health status. The methodology includes a risk adjustment model and a risk transfer formula that together address this program goal as well as three issues specific to ACA risk adjustment: 1) new population; 2) cost and rating factors; and 3) balanced transfers within state/market. The risk adjustment model, described in the second article, estimates differences in health risks taking into account the new population and scope of coverage (actuarial value level). The transfer formula, described in the third article, calculates balanced transfers that are intended to account for health risk differences while preserving permissible premium differences.
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Pope GC, Bachofer H, Pearlman A, Kautter J, Hunter E, Miller D, Keenan P. Risk transfer formula for individual and small group markets under the Affordable Care Act. Medicare Medicaid Res Rev 2014; 4:mmrr2014-004-03-a04. [PMID: 25352994 PMCID: PMC4209298 DOI: 10.5600/mmrr.004.03.a04] [Citation(s) in RCA: 5] [Impact Index Per Article: 0.5] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 11/03/2022]
Abstract
The Affordable Care Act provides for a program of risk adjustment in the individual and small group health insurance markets in 2014 as Marketplaces are implemented and new market reforms take effect. The purpose of risk adjustment is to lessen or eliminate the influence of risk selection on the premiums that plans charge. The risk adjustment methodology includes the risk adjustment model and the risk transfer formula. This article is the third of three in this issue of the Medicare & Medicaid Research Review that describe the ACA risk adjustment methodology and focuses on the risk transfer formula. In our first companion article, we discussed the key issues and choices in developing the methodology. In our second companion paper, we described the risk adjustment model that is used to calculate risk scores. In this article we present the risk transfer formula. We first describe how the plan risk score is combined with factors for the plan allowable premium rating, actuarial value, induced demand, geographic cost, and the statewide average premium in a formula that calculates transfers among plans. We then show how each plan factor is determined, as well as how the factors relate to each other in the risk transfer formula. The goal of risk transfers is to offset the effects of risk selection on plan costs while preserving premium differences due to factors such as actuarial value differences. Illustrative numerical simulations show the risk transfer formula operating as anticipated in hypothetical scenarios.
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Grunow M, Nuscheler R. Public and private health insurance in Germany: the ignored risk selection problem. Health Econ 2014; 23:670-687. [PMID: 23696240 DOI: 10.1002/hec.2942] [Citation(s) in RCA: 8] [Impact Index Per Article: 0.8] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 08/20/2010] [Revised: 05/11/2012] [Accepted: 04/10/2013] [Indexed: 06/02/2023]
Abstract
We investigate risk selection between public and private health insurance in Germany. With risk-rated premiums in the private system and community-rated premiums in the public system, advantageous selection in favor of private insurers is expected. Using 2000 to 2007 data from the German Socio-Economic Panel Study (SOEP), we find such selection. While private insurers are unable to select the healthy upon enrollment, they profit from an increase in the probability to switch from private to public health insurance of those individuals who have experienced a negative health shock. To avoid distorted competition between the two branches of health care financing, risk-adjusted transfers from private to public insurers should be instituted.
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Affiliation(s)
- Martina Grunow
- University of Augsburg, Department of Economics, Augsburg, Germany
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Kautter J, Pope GC, Ingber M, Freeman S, Patterson L, Cohen M, Keenan P. The HHS-HCC risk adjustment model for individual and small group markets under the Affordable Care Act. Medicare Medicaid Res Rev 2014; 4:mmrr2014-004-03-a03. [PMID: 25360387 PMCID: PMC4214270 DOI: 10.5600/mmrr2014-004-03-a03] [Citation(s) in RCA: 37] [Impact Index Per Article: 3.7] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 11/03/2022]
Abstract
Beginning in 2014, individuals and small businesses are able to purchase private health insurance through competitive Marketplaces. The Affordable Care Act (ACA) provides for a program of risk adjustment in the individual and small group markets in 2014 as Marketplaces are implemented and new market reforms take effect. The purpose of risk adjustment is to lessen or eliminate the influence of risk selection on the premiums that plans charge. The risk adjustment methodology includes the risk adjustment model and the risk transfer formula. This article is the second of three in this issue of the Review that describe the Department of Health and Human Services (HHS) risk adjustment methodology and focuses on the risk adjustment model. In our first companion article, we discuss the key issues and choices in developing the methodology. In this article, we present the risk adjustment model, which is named the HHS-Hierarchical Condition Categories (HHS-HCC) risk adjustment model. We first summarize the HHS-HCC diagnostic classification, which is the key element of the risk adjustment model. Then the data and methods, results, and evaluation of the risk adjustment model are presented. Fifteen separate models are developed. For each age group (adult, child, and infant), a model is developed for each cost sharing level (platinum, gold, silver, and bronze metal levels, as well as catastrophic plans). Evaluation of the risk adjustment models shows good predictive accuracy, both for individuals and for groups. Lastly, this article provides examples of how the model output is used to calculate risk scores, which are an input into the risk transfer formula. Our third companion paper describes the risk transfer formula.
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Kautter J, Pope GC, Ingber M, Freeman S, Patterson L, Cohen M, Keenan P. The HHS-HCC risk adjustment model for individual and small group markets under the Affordable Care Act. Medicare Medicaid Res Rev 2014; 4:mmrr2014-004-03-a03. [PMID: 25360387 PMCID: PMC4214270 DOI: 10.5600/mmrr.004.03.a03] [Citation(s) in RCA: 7] [Impact Index Per Article: 0.7] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 05/20/2023]
Abstract
Beginning in 2014, individuals and small businesses are able to purchase private health insurance through competitive Marketplaces. The Affordable Care Act (ACA) provides for a program of risk adjustment in the individual and small group markets in 2014 as Marketplaces are implemented and new market reforms take effect. The purpose of risk adjustment is to lessen or eliminate the influence of risk selection on the premiums that plans charge. The risk adjustment methodology includes the risk adjustment model and the risk transfer formula. This article is the second of three in this issue of the Review that describe the Department of Health and Human Services (HHS) risk adjustment methodology and focuses on the risk adjustment model. In our first companion article, we discuss the key issues and choices in developing the methodology. In this article, we present the risk adjustment model, which is named the HHS-Hierarchical Condition Categories (HHS-HCC) risk adjustment model. We first summarize the HHS-HCC diagnostic classification, which is the key element of the risk adjustment model. Then the data and methods, results, and evaluation of the risk adjustment model are presented. Fifteen separate models are developed. For each age group (adult, child, and infant), a model is developed for each cost sharing level (platinum, gold, silver, and bronze metal levels, as well as catastrophic plans). Evaluation of the risk adjustment models shows good predictive accuracy, both for individuals and for groups. Lastly, this article provides examples of how the model output is used to calculate risk scores, which are an input into the risk transfer formula. Our third companion paper describes the risk transfer formula.
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Markell P. Peter Markell: why risk-based contracts are the present and future. Interview by Rich Daly. Healthc Financ Manage 2013; 67:30-32. [PMID: 24380244] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/03/2023]
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Start C. Affordable Care Act brings new taxes passed on to health insurance buyers. J Mich Dent Assoc 2013; 95:22-53. [PMID: 24427998] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 06/03/2023]
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Gutacker N, Bojke C, Daidone S, Devlin NJ, Parkin D, Street A. Truly inefficient or providing better quality of care? Analysing the relationship between risk-adjusted hospital costs and patients' health outcomes. Health Econ 2013; 22:931-947. [PMID: 22961956 DOI: 10.1002/hec.2871] [Citation(s) in RCA: 24] [Impact Index Per Article: 2.2] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 08/24/2011] [Revised: 07/25/2012] [Accepted: 08/10/2012] [Indexed: 05/27/2023]
Abstract
Observed variation in hospital costs may be attributable to differences in patients' health outcomes. Previous studies have resorted to inherently incomplete outcome measures such as mortality or re-admission rates to assess this claim. This study makes use of a novel dataset of routinely collected patient-reported outcome measures (PROMs) linked to inpatient records to (i) access the degree to which cost variation is associated with variation in patients' health gain and (ii) explore how far judgement about hospital cost performance changes when health outcomes are accounted for. We use multilevel modelling to address the clustering of patients in providers and isolate unexplained cost variation. We find some evidence of a U-shaped relationship between risk-adjusted costs and outcomes for hip replacement surgery. For three other procedures (knee replacement, varicose vein and groin hernia surgery), the estimated relationship is sensitive to the choice of PROM instrument. We do not observe substantial changes in cost performance estimates when outcomes are explicitly accounted for.
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Affiliation(s)
- Nils Gutacker
- Centre for Health Economics, University of York, York, UK.
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Abstract
OBJECTIVES To examine the effects of changes in payment and risk adjustment on (1) the annual enrollment and switching behavior of Medicare Advantage (MA) beneficiaries, and (2) the relative costliness of MA enrollees and disenrollees. DATA From 1999 through 2008 national Medicare claims data from the 5 percent longitudinal sample of Parts A and B expenditures. STUDY DESIGN Retrospective, fixed effects regression analysis of July enrollment and year-long switching into and out of MA. Similar regression analysis of the costliness of those switching into (out of) MA in the 6 months prior to enrollment (after disenrollment) relative to nonswitchers in the same county over the same period. FINDINGS Payment generosity and more sophisticated risk adjustment were associated with substantial increases in MA enrollment and decreases in disenrollment. Claims experience of those newly switching into MA was not affected by any of the policy reforms, but disenrollment became increasingly concentrated among high-cost beneficiaries. CONCLUSIONS Enrollment is very sensitive to payment levels. The use of more sophisticated risk adjustment did not alter favorable selection into MA, but it did affect the costliness of disenrollees.
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Affiliation(s)
- Michael A Morrisey
- Lister Hill Center for Health Policy, University of Alabama at Birmingham, Birmingham, AL 35294-0022, USA.
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31
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Abstract
Health plans participating in the Medicare managed care program, called Medicare Advantage since 2003, have historically attracted healthier enrollees than has the traditional fee-for-service program. Medicare Advantage plans have gained financially from this favorable risk selection since their payments have traditionally been adjusted only minimally for clinical characteristics of enrollees, causing overpayment for healthier enrollees and underpayment for sicker ones. As a result, a new risk-adjustment system was phased in from 2004 to 2007, and a lock-in provision instituted to limit midyear disenrollment by enrollees experiencing health declines whose exodus could benefit plans financially. To determine whether these reforms were associated with intended reductions in risk selection, we compared differences in self-reported health care use and health between Medicare Advantage and traditional Medicare beneficiaries before versus after these reforms were implemented. We similarly compared differences between those who switched into or out of Medicare Advantage and nonswitchers. Most differences in 2001-03 were substantially narrowed by 2006-07, suggesting reduced selection. Similar risk-adjustment methods may help reduce incentives for plans competing in health insurance exchanges and accountable care organizations to select patients with favorable clinical risks.
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Affiliation(s)
- J Michael McWilliams
- Department of Health Care Policy at Harvard Medical School, Boston, Massachusetts, USA.
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Newhouse JP, Price M, Huang J, McWilliams JM, Hsu J. Steps to reduce favorable risk selection in medicare advantage largely succeeded, boding well for health insurance exchanges. Health Aff (Millwood) 2012; 31:2618-28. [PMID: 23213145 PMCID: PMC3535470 DOI: 10.1377/hlthaff.2012.0345] [Citation(s) in RCA: 78] [Impact Index Per Article: 6.5] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/05/2022]
Abstract
Within Medicare, the Medicare Advantage program has historically attracted better risks-healthier, lower-cost patients-than has traditional Medicare. The disproportionate enrollment of lower-cost patients and avoidance of higher-cost ones during the 1990s-known as favorable selection-resulted in Medicare's spending more per beneficiary who enrolled in Medicare Advantage than if the enrollee had remained in traditional Medicare. We looked at two measures that can indicate whether favorable selection is taking place-predicted spending on beneficiaries and mortality-and studied whether policies that Medicare implemented in the past decade succeeded in reducing favorable selection in Medicare Advantage. We found that these policies-an improved risk adjustment formula and a prohibition on monthly disenrollment by beneficiaries-largely succeeded. Differences in predicted spending between those switching from traditional Medicare to Medicare Advantage relative to those who remained in traditional Medicare markedly narrowed, as did adjusted mortality rates. Because insurance exchanges set up under the Affordable Care Act will employ similar policies to combat risk selection, our results give reason for optimism about managing competition among health plans.
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Affiliation(s)
- Joseph P Newhouse
- Division of Health Policy Research and Education, Harvard University, in Boston, Massachusetts, USA.
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33
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Hawkes N. Government abandons plans to use payments to prevent private providers selecting simplest cases. BMJ 2012; 345:e6728. [PMID: 23036919 DOI: 10.1136/bmj.e6728] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Track Full Text] [Journal Information] [Submit a Manuscript] [Subscribe] [Scholar Register] [Indexed: 11/03/2022]
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Abstract
OBJECTIVE In 2014, an estimated 15 million individuals who currently do not have health insurance, including many with chronic mental illness, are expected to obtain coverage through state insurance exchanges. The authors examined how two mechanisms in the Affordable Care Act (ACA), namely, risk adjustment and reinsurance, might perform to ensure the financial solvency of health plans that have a disproportionate share of enrollees with mental health conditions. Risk adjustment is an ACA provision requiring that a federal or state exchange move funds from insurance plans with healthier enrollees to plans with sicker enrollees. Reinsurance is a provision in which all plans in the state contribute to an overall pool of money that is used to reimburse costs to individual market plans for expenditures of any individual enrollee that exceed a high predetermined level. METHOD Using 2006--2007 claims data from a sample of private and public health plans, the authors compared expected health plan compensation under diagnosis-based risk adjustment with actual health care expenditures, under different assumptions for chronic mental health and medical conditions. Analyses were conducted with and without the addition of $100,000 reinsurance. RESULTS Risk adjustment performed well for most plans. For some plans with a high share of enrollees with mental health conditions, underpayment was substantial enough to raise concern. Reinsurance appeared to be helpful in addressing the most serious underpayment problems remaining after risk adjustment. Risk adjustment performed similarly for health plan cohorts that had a disproportionate share of enrollees with chronic mental health and medical conditions. CONCLUSIONS Cost models indicate that the regulatory provisions in the ACA requiring risk adjustment and reinsurance can help protect health plans covering treatment for mentally ill individuals against risk selection. This model analysis may be useful for advocates for individuals with mental illness in considering their own state's insurance exchange.
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Affiliation(s)
- Colleen L Barry
- Department of Health Policy and Management, Johns Hopkins Bloomberg School of Public Health, Baltimore, MD, USA.
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35
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State delays release of provider peer grouping report. Minn Med 2012; 95:25. [PMID: 22474889] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 05/31/2023]
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Carreras M, García-Goñi M, Ibern P, Coderch J, Vall-Llosera L, Inoriza JM. Estimates of patient costs related with population morbidity: can indirect costs affect the results? Eur J Health Econ 2011; 12:289-295. [PMID: 20306112 DOI: 10.1007/s10198-010-0227-5] [Citation(s) in RCA: 12] [Impact Index Per Article: 0.9] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 01/16/2009] [Accepted: 02/15/2010] [Indexed: 05/29/2023]
Abstract
A number of health economics studies require patient cost estimates as basic information input. However, the accuracy of cost estimates remains generally unspecified. We propose to investigate how the allocation of indirect costs or overheads can affect the estimation of patient costs and lead to improvements in the analysis of patient cost estimates. Instead of focussing on the costing method, this paper will highlight observed changes in variation explained by a methodology choice. We compare four overhead allocation methods for a specific Spanish population adjusted using the Clinical Risk Groups model. Our main conclusion is that the amount of global variation explained by the risk adjustment model depends mainly on direct costs, regardless of the cost allocation methodology used. Furthermore, the variation explained can be slightly increased, depending on the cost allocation methodology, and is independent of the level of aggregation in the classification system.
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Affiliation(s)
- M Carreras
- Serveis de Salut Integrats del Baix Empordà, DAIR, Hospital 36, 17230, Palamós, Spain.
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37
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Newhouse JP, Huang J, Brand RJ, Fung V, Hsu JT. The structure of risk adjustment for private plans in Medicare. Am J Manag Care 2011; 17:e231-e240. [PMID: 21756017 PMCID: PMC3246270] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Grants] [Subscribe] [Scholar Register] [Indexed: 05/31/2023]
Abstract
Medicare bases its risk adjustment method for Medicare Advantage plan payment on the relative costs of treating various diagnoses in traditional Medicare. However, there are many reasons to doubt that the relative cost of treating different diagnoses is similar between Medicare Advantage plans and traditional Medicare, including the varying applicability of care management methods to different diagnoses and the varying degrees of market power among suppliers of services to plans. We use internal cost data from a large health plan to compare its cost of treating various diagnoses with Medicare's reimbursement. We find substantial variability across diagnoses, implying that the current risk adjustment system creates incentives for Medicare Advantage plans to favor beneficiaries with certain diagnoses, but find no consistent relationship between the costliness of the diagnosis and the difference between reimbursement and cost.
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38
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Hall MA. Risk adjustment under the Affordable Care Act: a guide for federal and state regulators. Issue Brief (Commonw Fund) 2011; 7:1-12. [PMID: 21563348] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 05/30/2023]
Abstract
To achieve the aims of the Affordable Care Act, state and federal regulators must construct an effective system of risk adjustment, one that protects health insurers that attract a disproportionate share of patients with poor health risks. This brief, which summarizes a Commonwealth Fund–supported conference of leading risk adjustment experts, explores the challenges regulators will face, considers the consequences of the law's risk adjustment provisions, and analyzes the merits of different risk adjustment strategies. Among other recommendations, the brief suggests that regulators use diagnostic rather than only demographic risk measures, that they allow states some but limited flexibility to tailor risk adjustment methods to local circumstances, and that they phase in the use of risk transfer payments to give insurers more time to predict and understand the full effects of risk adjustment.
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Abstract
Adult obesity is a growing problem. From 1962 to 2006, obesity prevalence nearly tripled to 35.1 percent of adults. The rising prevalence of obesity is not limited to a particular socioeconomic group and is not unique to the United States. Should this widespread obesity epidemic be a cause for alarm? From a personal health perspective, the answer is an emphatic "yes." But when it comes to justifications of public policy for reducing obesity, the analysis becomes more complex. A common starting point is the assertion that those who are obese impose higher health costs on the rest of the population—a statement which is then taken to justify public policy interventions. But the question of who pays for obesity is an empirical one, and it involves analysis of how obese people fare in labor markets and health insurance markets. We will argue that the existing literature on these topics suggests that obese people on average do bear the costs and benefits of their eating and exercise habits. We begin by estimating the lifetime costs of obesity. We then discuss the extent to which private health insurance pools together obese and thin, whether health insurance causes obesity, and whether being fat might actually cause positive externalities for those who are not obese. If public policy to reduce obesity is not justified on the grounds of external costs imposed on others, then the remaining potential justification would need to be on the basis of helping people to address problems of ignorance or self-control that lead to obesity. In the conclusion, we offer a few thoughts about some complexities of such a justification.
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Affiliation(s)
- Jay Bhattacharya
- Center for Primary Care and Outcomes Research, Stanford University School of Medicine, Stanford, California, USA
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40
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Ballesteros P. [Haemophilia in the German risk adjustment scheme]. Hamostaseologie 2010; 30 Suppl 1:S65-S69. [PMID: 21042686] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 05/30/2023] Open
Abstract
Haemophilia presents a challenge to every risk adjustment scheme even if it uses diagnostical or pharmaceutical data. The German adjustment scheme developed by the Bundesversicherungsamt realizes fairly cost homogenous groups for many expensive diseases. It does not regard haemophilia. This holds true for the original classification system (grouper) from 2009 and for the improved classification procedure in 2010. The extreme peak costs that can originate from haemophilia cases can present a existential risk for small health plans. The chances to form cost-homogeneous subgroups of the haemophilia disease by more specific coding or other measures seem low because of the small number of cases affected by this disease. The complementary (re-)installation of a expenditure-oriented risk sharing is regarded as suited for improvement of the performance of the German risk adjustment scheme. This also corresponds to international experience and practice.
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Affiliation(s)
- P Ballesteros
- Abteilung Grundsatz und Risikostrukturausgleich, Barmer GEK, 42271 Wuppertal.
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41
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Mayne T. Dissecting the bundle: the final rules for the prospective payment system for pediatric dialysis. Nephrol News Issues 2010; 24:24-31. [PMID: 21189750] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 05/30/2023]
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Campbell G. Understanding CMI, how to mentor second-career nurses. Nurs Manag (Harrow) 2010; 41:56. [PMID: 20216153 DOI: 10.1097/01.numa.0000369505.30347.76] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 05/28/2023]
Affiliation(s)
- Gladys Campbell
- Northwest Organization of Nurse Executives, Seattle, Washington, USA
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Abstract
BACKGROUND The direct cost burden of epilepsy in the US from a third-party payer perspective has not been evaluated. Furthermore, no study has quantified the indirect (work-loss) cost burden of epilepsy from an employer perspective in the US. OBJECTIVE To assess the annual direct costs for privately insured US patients diagnosed with epilepsy, and indirect costs for a subset of employees from an employer perspective. METHODS A retrospective analysis of a claims database for the privately insured, including employee disability claims from 1999 through 2005 and comprising 17 US companies, was conducted. A total of 4323 patients aged 16-64 years (including 1886 employees) with at least one epilepsy diagnosis (International Classification of Diseases, 9th edition, Clinical Modification [ICD-9-CM] code 345.x) over the period 1999-2004 were included. The control group was a demographically matched cohort of randomly chosen beneficiaries without an epilepsy diagnosis. All had continuous health coverage during 2004 (baseline) and 2005 (study period). Main outcome measures included annual direct (medical and pharmaceutical) costs and, for employees, indirect (disability and medically related absenteeism) and total costs for the study period. Wilcoxon rank-sum tests were used for univariate comparisons of annual direct costs, indirect costs (costs for the subset of employees with these data), and total (direct and indirect) costs during the study period. Two-part multivariate models that adjusted for patient characteristics were also used to compare costs between the study and control groups. RESULTS Patients with epilepsy were an average age of 43 years and 57% were female. They had more co-morbidities than controls. On average, direct annual costs were significantly higher per patient with epilepsy than per control ($US10 258 vs $US3862, respectively; p < 0.0001) [year 2005 values], with an annual per-patient difference of $US6396. Epilepsy-related costs ($US2057) accounted for 20% of direct costs for patients with epilepsy. Annual indirect costs were significantly higher for employees with epilepsy than for employed controls ($US3192 vs $US1242, respectively; p < 0.0001), with a difference of $US1950. Total direct plus indirect costs for employees with epilepsy were also higher than those for employed controls ($US13 595 vs $US5338, respectively; p < 0.0001), with a difference of $US8257. CONCLUSIONS Epilepsy was associated with significant economic burden. The excess direct costs in patients with epilepsy are underestimated when only epilepsy-related costs are considered.
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Biles B, Arnold G. Medicare Advantage reforms: comparing House and Senate bills. Issue Brief (Commonw Fund) 2009; 74:1-12. [PMID: 20183948] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 05/28/2023]
Abstract
The Medicare Advantage (MA) program, which enables Medicare beneficiaries to enjoy private health plan coverage, is a major element of the current health care reform discussion on Capitol Hill--in large part because payments to MA plans in 2009 are expected to run at least $11 billion more than traditional Medicare would have cost. While the pending Senate and House bills both endeavor to reduce these extra MA payments, their approaches are different. The bills also differ on other aspects of reforming the MA program, such as plans' allowable geographic areas, their risk-adjustment systems and reporting requirements, their potential bonuses for achieving high-quality care and providing good management, and their beneficiary protections. This issue brief compares the above and other provisions in the House and Senate bills, which have a common overall goal to improve the value that Medicare obtains for the dollars it spends
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Affiliation(s)
- Brian Biles
- Department of Health Policy, Scool of Public Health and Health Services, George Washington University, USA.
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45
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Zhang W, Anis AH. Health insurance and out-of-pocket expenses. Arthritis Rheum 2009; 61:1467-1469. [PMID: 19877082 DOI: 10.1002/art.24949] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 05/28/2023]
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46
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García-Goñi M, Ibern P, Inoriza JM. Hybrid risk adjustment for pharmaceutical benefits. Eur J Health Econ 2009; 10:299-308. [PMID: 19011914 DOI: 10.1007/s10198-008-0133-2] [Citation(s) in RCA: 9] [Impact Index Per Article: 0.6] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 12/21/2007] [Accepted: 10/16/2008] [Indexed: 05/27/2023]
Abstract
This paper analyses the application of hybrid risk adjustment versus either prospective or concurrent risk adjustment formulae in the context of funding pharmaceutical benefits for the population of an integrated healthcare delivery organisation in Catalonia during years 2002 and 2003. We apply a mixed formula and find that, compared to prospective only models, a hybrid risk adjustment model increases incentives for efficiency in the provision for low risk individuals in health organisations, not only as a whole but also within each internal department, by reducing within-group variation of drug expenditures.
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Affiliation(s)
- Manuel García-Goñi
- Departamento de Economía Aplicada II, Universidad Complutense de Madrid, Campus de Somosaguas, Pozuelo de Alarcón, 28223, Madrid, Spain.
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van Kleef RC, van de Ven WPMM, van Vliet RCJA. Shifted deductibles for high risks: more effective in reducing moral hazard than traditional deductibles. J Health Econ 2009; 28:198-209. [PMID: 18996607 DOI: 10.1016/j.jhealeco.2008.09.007] [Citation(s) in RCA: 6] [Impact Index Per Article: 0.4] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 04/05/2007] [Revised: 09/01/2008] [Accepted: 09/25/2008] [Indexed: 05/27/2023]
Abstract
In health insurance, a traditional deductible (i.e. with a deductible range [0,d]) is in theory not effective in reducing moral hazard for individuals who know (ex-ante) that their expenditures will exceed the deductible amount d, e.g. those with a chronic disease. To increase the effectiveness, this paper proposes to shift the deductible range to [s(i),s(i)+d], with starting point s(i) depending on relevant risk characteristics of individual i. In an empirical illustration we assume the optimal shift to be such that the variance in out-of-pocket expenditures is maximized. Results indicate that for the 10-percent highest risks in our data the optimal starting point of a euro1000-deductible is to be found (far) beyond euro1200, which corresponds with a deductible range of [1200,2200] or further. We conclude that, compared to traditional deductibles, shifted deductibles with a risk-adjusted starting point lower out-of-pocket expenditures and may further reduce moral hazard.
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Affiliation(s)
- R C van Kleef
- Institute of Health Policy and Management, Erasmus Medical Centre/Erasmus University, Rotterdam, The Netherlands.
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Berg GG, Bayes PE, Morgan RG. Asset retirement obligations: a reporting concern for healthcare facilities. Healthc Financ Manage 2008; 62:110-116. [PMID: 18990844] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Subscribe] [Scholar Register] [Indexed: 05/27/2023]
Abstract
FASB statements and SEC guidelines give direction as to how healthcare organizations should account for their asset retirement obligations (AROs) where environmental issues are concerned. A key consideration is that current costs associated with environmental problems, such as encapsulating asbestos, are to be accounted for as part of an asset's cost and depreciated over the asset's remaining life.
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Affiliation(s)
- Gary G Berg
- East Tennessee State University, College of Business and Technology, Johnson City, TN, USA.
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Mougeot M, Naegelen F. Supply-side risk adjustment and outlier payment policy. J Health Econ 2008; 27:1196-1200. [PMID: 18597877 DOI: 10.1016/j.jhealeco.2008.05.007] [Citation(s) in RCA: 3] [Impact Index Per Article: 0.2] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 09/26/2006] [Revised: 05/14/2008] [Accepted: 05/16/2008] [Indexed: 05/26/2023]
Abstract
In most health care systems where a prospective payment system is implemented, an outlier payment is used to cover the hospitals' unusually high costs. When the hospital chooses its cost reduction effort before observing a patient's severity, we show that the best outlier payment is based on the realized cost when the hospital exerts the first best level of effort, for any level of severity.
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Affiliation(s)
- Michel Mougeot
- University of Franche-Comte, CRESE, Besançon Cedex, France.
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