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Nicholas LH, Polsky D, Darden M, Xu J, Anderson K, Meyers DJ. Is there an advantage? Considerations for researchers studying the effects of the type of Medicare coverage. Health Serv Res 2024; 59:e14264. [PMID: 38043544 PMCID: PMC10771908 DOI: 10.1111/1475-6773.14264] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 12/05/2023] Open
Abstract
OBJECTIVE To describe common methodological problems that arise in comparisons of Medicare Advantage (MA) and Traditional Medicare (TM) and within-MA studies and provide suggestions of how researchers can address these issues. STUDY SETTING Published research evaluating Medicare coverage options in the United States. STUDY DESIGN We considered key conceptual challenges and promising solutions that have been used thus far and suggest additional directions. DATA COLLECTION Not available. PRINCIPAL FINDINGS Many existing studies of MA versus TM include significant limitations, such as failing to account for unobserved confounders driving both beneficiary coverage choice and health outcomes once enrolled, not accounting for variation in benefit generosity, provider networks, or plan design across MA plans, and/or having been conducted at a time when MA enrollment was less than a third of all Medicare beneficiaries. We provide a review of methods that can help researchers to overcome these weaknesses and suggest additional methods and data sources that may aid future research. CONCLUSIONS The MA program is becoming an essential part of the US healthcare system. By accounting for non-random movement into and out of MA and studying the heterogeneity of beneficiary experience across plan and market characteristics, researchers can provide the high-quality evidence necessary for policymakers to design the program and reform TM in ways that maximize beneficiary outcomes.
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Affiliation(s)
- Lauren Hersch Nicholas
- Department of Medicine, Division of GeriatricsUniversity of Colorado Anschutz Medical CampusAuroraColoradoUSA
- Department of EconomicsUniverity of Colorado Denver
| | - Dan Polsky
- Department of Health Policy and ManagementJohns Hopkins Bloomberg School of Public HealthBaltimoreMarylandUSA
- Carey School of BusinessJohn Hopkins UniversityWashingtonDCUSA
| | - Michael Darden
- Carey School of BusinessJohn Hopkins UniversityWashingtonDCUSA
| | - Jianhui Xu
- Department of Health Policy and ManagementJohns Hopkins Bloomberg School of Public HealthBaltimoreMarylandUSA
| | - Kelly Anderson
- Skaggs School of Pharmacy and Pharmaceutical SciencesUniversity of ColoradoAuroraColoradoUSA
| | - David J. Meyers
- Department of Health Services, Policy, and PracticeBrown University School of Public HealthProvidenceRhode IslandUSA
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2
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McNamara C, Serna N. The impact of a national formulary expansion on diabetics. HEALTH ECONOMICS 2022; 31:2311-2332. [PMID: 35943900 DOI: 10.1002/hec.4583] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 08/02/2021] [Revised: 07/18/2022] [Accepted: 07/19/2022] [Indexed: 06/15/2023]
Abstract
This paper estimates the causal effect of the expansion of Colombia's national prescription drug formulary to include five new types of insulin on the healthcare utilization and costs of type I diabetics and explores the mechanisms through which outpatient cost reductions are realized. We find that expanded coverage generates an increase in the cost of insulin for type I diabetics equal to 17% of their baseline healthcare costs. At the same time, their annual outpatient care utilization falls by 1.9 claims. We devise tests to explore the relative importance of two mechanisms by which the expansion may have lowered type I diabetics' non-drug healthcare utilization: spillovers from drug to non-drug spending and rationing of care. We find no evidence that the formulary expansion reduces the rate of complications from diabetes and find substantial declines in non-drug costs even among the subset of diabetics with no scope for spillovers. We find large reductions in the utilization of discretionary care including diagnostic tests, but no such declines for the use of essential drugs, suggesting that rationing of care is the primary driver of observed cost savings.
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Affiliation(s)
- Cici McNamara
- Department Economics, Georgia Institute of Technology, Atlanta, Georgia, USA
| | - Natalia Serna
- Department Economics, University of Wisconsin Madison Graduate School, Madison, Wisconsin, USA
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3
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Landon BE, Zaslavsky AM, Souza J, Ayanian JZ. Use of diabetes medications in traditional Medicare and Medicare Advantage. AMERICAN JOURNAL OF MANAGED CARE 2021; 27:e80-e88. [PMID: 33720673 DOI: 10.37765/ajmc.2021.88602] [Citation(s) in RCA: 4] [Impact Index Per Article: 1.3] [Reference Citation Analysis] [Abstract] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 12/30/2022]
Abstract
OBJECTIVES To compare use of diabetes medications between beneficiaries enrolled in Medicare Advantage (MA) and traditional Medicare (TM). STUDY DESIGN Retrospective cohort analysis of Medicare enrollment and Part D event claims during 2015-2016. METHODS Data came from 1,027,884 TM and 838,420 MA beneficiaries who received at least 1 prescription for an oral or injectable diabetes medication. After matching MA and TM enrollees by demographic characteristics and geography, we analyzed use of medication overall, choices of first diabetes medication for those new to medication, and patterns of adding medications. RESULTS Overall and for patients on 1, 2, or 3 diabetes medications, use of metformin was higher in MA by about 3 percentage points, but use of newer medication classes was 5.1 percentage points higher in TM overall (21.3% vs 16.2%). Use of guideline-recommended first-line agents was higher in MA. For those who started metformin first, use of a sulfonylurea as a second medication was 7.8 percentage points higher in MA than TM (61.5% vs 53.7%), whereas use of medications from newer classes was 7.7 percentage points lower (22.0% vs 29.7%). Mean total spending was $149 higher in TM for those taking 1 medication and $298 higher for those taking 2 medications. Differences in spending among MA plans were of similar magnitude to the MA-TM differences. CONCLUSIONS MA enrollees are more likely to be treated with metformin and sulfonylureas and less likely to receive costly newer medications than those in TM, but there also is substantial variation within MA. A limitation of the study is that we could not assess glucose control using glycated hemoglobin levels.
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Affiliation(s)
- Bruce E Landon
- Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave, Boston, MA 02215.
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4
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Decarolis F, Guglielmo A, Luscombe C. Open enrollment periods and plan choices. HEALTH ECONOMICS 2020; 29:733-747. [PMID: 32100363 DOI: 10.1002/hec.4014] [Citation(s) in RCA: 1] [Impact Index Per Article: 0.3] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 04/14/2018] [Revised: 12/23/2019] [Accepted: 01/27/2020] [Indexed: 06/10/2023]
Abstract
Open enrollment periods are pervasively used in insurance markets to limit adverse selection risks resulting when enrollees can switch plans at will. We exploit a change in the open enrollment rules of Medicare Advantage to analyze how beneficiaries responded to the option of switching to a 5-star-rated plan at anytime, in a setting where insurers adjusted premiums and benefit design to counterbalance the increased selection risk. We present three findings: Within-year switches to 5-star plans increase by 7-16%; demand for 5-star plans across the years does not decline; and the enrollees who switch to a 5-star plan during the year are in better health status than those who do not switch.
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5
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Newhouse JP, Landrum MB, Price M, McWilliams JM, Hsu J, McGuire TG. The Comparative Advantage of Medicare Advantage. AMERICAN JOURNAL OF HEALTH ECONOMICS 2019; 5:281-301. [PMID: 31032383 PMCID: PMC6481953] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Grants] [Subscribe] [Scholar Register] [Indexed: 06/09/2023]
Abstract
We ascertain the degree of service-level selection in Medicare Advantage (MA) using individual level data on the 100 most frequent HCC's or combination of HCC's from two national insurers in 2012-2013. We find differences in the distribution of beneficiaries across HCC's between TM and MA, principally in the smaller share of MA enrollees with no coded HCC, consistent with greater coding intensity in MA. Among those with an HCC code, absolute differences between MA and TM shares of beneficiaries are small, consistent with little service-level selection. Variation in HCC margins does not predict differences between an HCC's share of MA and TM enrollees, although one cannot a priori sign a relationship between margin and service-level selection. Margins are negatively associated with the importance of post-acute care in the HCC. Margins among common chronic disease classes amenable to medical management and typically managed by primary care physicians are larger than among diseases typically managed by specialists. These margin differences by disease are robust against a test for coding effects and suggest that the average technical efficiency of MA relative to TM may vary by diagnosis. If so, service-level selection on the basis of relative technical efficiency could be welfare enhancing.
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Affiliation(s)
- Joseph P Newhouse
- Department of Health Care Policy, Harvard Medical School, Harvard University, Boston
| | - Mary Beth Landrum
- Department of Health Care Policy, Harvard Medical School, Harvard University, Boston
| | | | - J Michael McWilliams
- Department of Health Care Policy, Harvard Medical School, Harvard University and Department of Medicine, Brigham and Women's Hospital, Boston
| | - John Hsu
- Mongan Institute for Health Care Policy, Massachusetts General Hospital and Department of Health Care Policy, Harvard Medical School, Harvard University, Boston
| | - Thomas G McGuire
- Department of Health Care Policy, Harvard Medical School, Harvard University
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6
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Nicholas LH, Wu S. Do Medicare Advantage Rebates Reduce Enrollees' Out-of-Pocket Spending? Med Care Res Rev 2018; 77:474-482. [PMID: 30382801 DOI: 10.1177/1077558718807847] [Citation(s) in RCA: 2] [Impact Index Per Article: 0.3] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/17/2022]
Abstract
The majority of Medicare Advantage (MA) plans receive payments that exceed their costs of providing basic Medicare benefits. There is controversy about whether these payments are passed on to the enrollees as supplemental benefits or are retained by plans. We used survey data on MA beneficiaries' actual out-of-pocket (OOP) spending linked to MA payment information to test whether higher plan payments and rebates lowered enrollee OOP spending. We used instrumental variables regression models to address concerns that plan payments and rebates may reflect anticipation of enrollees with particular health-spending profiles. We found that beneficiaries recovered only $0.65 of every $1.00 in payments exceeding fee-for-service spending through lower OOP spending but more than fully recovered the value of the rebates supporting supplemental benefits.
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Affiliation(s)
| | - Shannon Wu
- Johns Hopkins University, Baltimore, MD, USA
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7
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Hayford TB, Burns AL. Medicare Advantage Enrollment and Beneficiary Risk Scores: Difference-in-Differences Analyses Show Increases for All Enrollees On Account of Market-Wide Changes. INQUIRY: The Journal of Health Care Organization, Provision, and Financing 2018; 55:46958018788640. [PMID: 30052104 PMCID: PMC6077888 DOI: 10.1177/0046958018788640] [Citation(s) in RCA: 1] [Impact Index Per Article: 0.2] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Download PDF] [Figures] [Subscribe] [Scholar Register] [Indexed: 11/15/2022]
Abstract
Medicare adjusts payments to Medicare Advantage (MA) insurers using risk scores that summarize the relationship between fee-for-service (FFS) Medicare spending and beneficiaries’ demographic characteristics and documented health conditions. Research shows that MA insurers have increasingly documented conditions more thoroughly than traditional Medicare—resulting in higher payments to insurers—but little is known about what factors contribute to diverging risk scores. We apportion that divergence between market-wide increases and increases that vary with length of MA enrollment. We also examine whether effects vary across plan types and whether the enrollment duration effect is contingent upon remaining with the same insurer. Using Medicare administrative data from 2008 to 2013, we employ a difference-in-differences model to compare the growth in risk scores of Medicare beneficiaries who switch from FFS to MA to that of beneficiaries who remain in FFS. We find that the effect of MA enrollment on risk scores increased from 5% in 2009 to 8% in 2012 and that continuous enrollment in MA was associated with an additional 1.2% increase per year, regardless of continuous enrollment with an insurer. Thus, even among those who switched to MA in 2009, enrollment duration comprised less than one-third of the coding intensity difference in 2012. We also find that risk scores grew faster in areas with greater MA penetration and among Health Maintenance Organization enrollees. Overall, our findings suggest that market-wide factors contributed most to the increasing divergence between FFS and MA risk scores.
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Park S, Basu A. Alternative evaluation metrics for risk adjustment methods. HEALTH ECONOMICS 2018; 27:984-1010. [PMID: 29577489 DOI: 10.1002/hec.3657] [Citation(s) in RCA: 12] [Impact Index Per Article: 2.0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 03/27/2017] [Revised: 01/02/2018] [Accepted: 02/21/2018] [Indexed: 06/08/2023]
Abstract
Risk adjustment is instituted to counter risk selection by accurately equating payments with expected expenditures. Traditional risk-adjustment methods are designed to estimate accurate payments at the group level. However, this generates residual risks at the individual level, especially for high-expenditure individuals, thereby inducing health plans to avoid those with high residual risks. To identify an optimal risk-adjustment method, we perform a comprehensive comparison of prediction accuracies at the group level, at the tail distributions, and at the individual level across 19 estimators: 9 parametric regression, 7 machine learning, and 3 distributional estimators. Using the 2013-2014 MarketScan database, we find that no one estimator performs best in all prediction accuracies. Generally, machine learning and distribution-based estimators achieve higher group-level prediction accuracy than parametric regression estimators. However, parametric regression estimators show higher tail distribution prediction accuracy and individual-level prediction accuracy, especially at the tails of the distribution. This suggests that there is a trade-off in selecting an appropriate risk-adjustment method between estimating accurate payments at the group level and lower residual risks at the individual level. Our results indicate that an optimal method cannot be determined solely on the basis of statistical metrics but rather needs to account for simulating plans' risk selective behaviors.
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Affiliation(s)
- Sungchul Park
- Department of Health Services, University of Washington, Seattle, WA, USA
| | - Anirban Basu
- Department of Health Services, University of Washington, Seattle, WA, USA
- The CHOICE Institute, Department of Pharmacy, University of Washington, Seattle, WA, USA
- Department of Economics, University of Washington, Seattle, WA, USA
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9
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Layton TJ, Ellis RP, McGuire TG, van Kleef R. Measuring efficiency of health plan payment systems in managed competition health insurance markets. JOURNAL OF HEALTH ECONOMICS 2017; 56:237-255. [PMID: 29248054 PMCID: PMC5737816 DOI: 10.1016/j.jhealeco.2017.05.004] [Citation(s) in RCA: 22] [Impact Index Per Article: 3.1] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 05/20/2023]
Abstract
Adverse selection in health insurance markets leads to two types of inefficiency. On the demand side, adverse selection leads to plan price distortions resulting in inefficient sorting of consumers across health plans. On the supply side, adverse selection creates incentives for plans to inefficiently distort benefits to attract profitable enrollees. Reinsurance, risk adjustment, and premium categories address these problems. Building on prior research on health plan payment system evaluation, we develop measures of the efficiency consequences of price and benefit distortions under a given payment system. Our measures are based on explicit economic models of insurer behavior under adverse selection, incorporate multiple features of plan payment systems, and can be calculated prior to observing actual insurer and consumer behavior. We illustrate the use of these measures with data from a simulated market for individual health insurance.
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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 van Kleef
- Institute of Health Policy and Management, Erasmus University Rotterdam, The Netherlands
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10
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Decarolis F, Guglielmo A. Insurers' response to selection risk: Evidence from Medicare enrollment reforms. JOURNAL OF HEALTH ECONOMICS 2017; 56:383-396. [PMID: 29248062 DOI: 10.1016/j.jhealeco.2017.02.007] [Citation(s) in RCA: 8] [Impact Index Per Article: 1.1] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 09/30/2016] [Revised: 02/24/2017] [Accepted: 02/27/2017] [Indexed: 06/07/2023]
Abstract
Evidence on insurers' behavior in environments with both risk selection and market power is largely missing. We fill this gap by providing one of the first empirical accounts of how insurers adjust plan features when faced with potential changes in selection. Our strategy exploits a 2012 reform allowing Medicare enrollees to switch to 5-star contracts at anytime. This policy increased enrollment into 5-star contracts, but without risk selection worsening. Our findings show that this is due to 5-star plans lowering both premiums and generosity, thus becoming more appealing for most beneficiaries, but less so for those in worse health conditions.
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11
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Abstract
BACKGROUND Two common ways of measuring disease prevalence include: (1) using self-reported disease diagnosis from survey responses; and (2) using disease-specific diagnosis codes found in administrative data. Because they do not suffer from self-report biases, claims are often assumed to be more objective. However, it is not clear that claims always produce better prevalence estimates. OBJECTIVE Conduct an assessment of discrepancies between self-report and claims-based measures for 2 diseases in the US elderly to investigate definition, selection, and measurement error issues which may help explain divergence between claims and self-report estimates of prevalence. DATA Self-reported data from 3 sources are included: the Health and Retirement Study, the Medicare Current Beneficiary Survey, and the National Health and Nutrition Examination Survey. Claims-based disease measurements are provided from Medicare claims linked to Health and Retirement Study and Medicare Current Beneficiary Survey participants, comprehensive claims data from a 20% random sample of Medicare enrollees, and private health insurance claims from Humana Inc. METHODS Prevalence of diagnosed disease in the US elderly are computed and compared across sources. Two medical conditions are considered: diabetes and heart attack. RESULTS Comparisons of diagnosed diabetes and heart attack prevalence show similar trends by source, but claims differ from self-reports with regard to levels. Selection into insurance plans, disease definitions, and the reference period used by algorithms are identified as sources contributing to differences. CONCLUSIONS Claims and self-reports both have strengths and weaknesses, which researchers need to consider when interpreting estimates of prevalence from these 2 sources.
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12
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van de Ven WPMM, van Vliet RCJA, van Kleef RC. How can the regulator show evidence of (no) risk selection in health insurance markets? Conceptual framework and empirical evidence. THE EUROPEAN JOURNAL OF HEALTH ECONOMICS : HEPAC : HEALTH ECONOMICS IN PREVENTION AND CARE 2017; 18:167-180. [PMID: 26837411 PMCID: PMC5313580 DOI: 10.1007/s10198-016-0764-7] [Citation(s) in RCA: 8] [Impact Index Per Article: 1.1] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 03/09/2015] [Accepted: 01/14/2016] [Indexed: 05/25/2023]
Abstract
If consumers have a choice of health plan, risk selection is often a serious problem (e.g., as in Germany, Israel, the Netherlands, the United States of America, and Switzerland). Risk selection may threaten the quality of care for chronically ill people, and may reduce the affordability and efficiency of healthcare. Therefore, an important question is: how can the regulator show evidence of (no) risk selection? Although this seems easy, showing such evidence is not straightforward. The novelty of this paper is two-fold. First, we provide a conceptual framework for showing evidence of risk selection in competitive health insurance markets. It is not easy to disentangle risk selection and the insurers' efficiency. We suggest two methods to measure risk selection that are not biased by the insurers' efficiency. Because these measures underestimate the true risk selection, we also provide a list of signals of selection that can be measured and that, in particular in combination, can show evidence of risk selection. It is impossible to show the absence of risk selection. Second, we empirically measure risk selection among the switchers, taking into account the insurers' efficiency. Based on 2-year administrative data on healthcare expenses and risk characteristics of nearly all individuals with basic health insurance in the Netherlands (N > 16 million) we find significant risk selection for most health insurers. This is the first publication of hard empirical evidence of risk selection in the Dutch health insurance market.
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Affiliation(s)
- Wynand P M M van de Ven
- Department of Health Policy and Management, Erasmus University Rotterdam, Rotterdam, The Netherlands.
| | - René C J A van Vliet
- Department of Health Policy and Management, Erasmus University Rotterdam, Rotterdam, The Netherlands
| | - Richard C van Kleef
- Department of Health Policy and Management, Erasmus University Rotterdam, Rotterdam, The Netherlands
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13
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Kronick R. Projected Coding Intensity In Medicare Advantage Could Increase Medicare Spending By $200 Billion Over Ten Years. Health Aff (Millwood) 2017; 36:320-327. [DOI: 10.1377/hlthaff.2016.0768] [Citation(s) in RCA: 22] [Impact Index Per Article: 3.1] [Reference Citation Analysis] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/05/2022]
Affiliation(s)
- Richard Kronick
- Richard Kronick ( ) is a professor in the Department of Family Medicine and Public Health at the University of California, San Diego, in La Jolla
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14
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Currie J, MacLeod WB. Diagnosing Expertise: Human Capital, Decision Making, and Performance among Physicians. JOURNAL OF LABOR ECONOMICS 2017; 35:18977. [PMID: 29276336 PMCID: PMC5736164 DOI: 10.3386/w18977] [Citation(s) in RCA: 3] [Impact Index Per Article: 0.4] [Reference Citation Analysis] [Abstract] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 05/21/2023]
Abstract
Expert performance is often evaluated assuming that good experts have good outcomes. We examine expertise in medicine and develop a model that allows for two dimensions of physician performance: decision making and procedural skill. Better procedural skill increases the use of intensive procedures for everyone, while better decision making results in a reallocation of procedures from fewer low-risk to high-risk cases. We show that poor diagnosticians can be identified using administrative data and that improving decision making improves birth outcomes by reducing C-section rates at the bottom of the risk distribution and increasing them at the top of the distribution.
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Affiliation(s)
- Janet Currie
- Princeton University and National Bureau of Economic Research
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15
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Goldberg EM, Trivedi AN, Mor V, Jung HY, Rahman M. Favorable Risk Selection in Medicare Advantage: Trends in Mortality and Plan Exits Among Nursing Home Beneficiaries. Med Care Res Rev 2016; 74:736-749. [PMID: 27516452 DOI: 10.1177/1077558716662565] [Citation(s) in RCA: 19] [Impact Index Per Article: 2.4] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/16/2022]
Abstract
The 2003 Medicare Modernization Act (MMA) increased payments to Medicare Advantage plans and instituted a new risk-adjustment payment model to reduce plans' incentives to enroll healthier Medicare beneficiaries and avoid those with higher costs. Whether the MMA reduced risk selection remains debatable. This study uses mortality differences, nursing home utilization, and switch rates to assess whether the MMA successfully decreased risk selection from 2000 to 2012. We found no decrease in the mortality difference or adjusted difference in nursing home use between plan beneficiaries pre- and post the MMA. Among beneficiaries with nursing home use, disenrollment from Medicare Advantage plans declined from 20% to 12%, but it remained 6 times higher than the switch rate from traditional Medicare to Medicare Advantage. These findings suggest that the MMA was not associated with reductions in favorable risk selection, as measured by mortality, nursing home use, and switch rates.
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Affiliation(s)
- Elizabeth M Goldberg
- 1 Center of Gerontology and Healthcare Research, Brown University, Providence, RI, USA.,2 Department of Emergency Medicine, Brown University, Providence, RI, USA
| | - Amal N Trivedi
- 1 Center of Gerontology and Healthcare Research, Brown University, Providence, RI, USA.,3 Providence Veterans Administration Medical Center, Providence, RI, USA
| | - Vincent Mor
- 1 Center of Gerontology and Healthcare Research, Brown University, Providence, RI, USA.,3 Providence Veterans Administration Medical Center, Providence, RI, USA
| | - Hye-Young Jung
- 4 Weill Cornell Graduate School of Medical Sciences, New York, NY, USA
| | - Momotazur Rahman
- 1 Center of Gerontology and Healthcare Research, Brown University, Providence, RI, USA
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16
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Montz E, Layton T, Busch AB, Ellis RP, Rose S, McGuire TG. Risk-Adjustment Simulation: Plans May Have Incentives To Distort Mental Health And Substance Use Coverage. Health Aff (Millwood) 2016; 35:1022-8. [PMID: 27269018 PMCID: PMC5027954 DOI: 10.1377/hlthaff.2015.1668] [Citation(s) in RCA: 37] [Impact Index Per Article: 4.6] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/05/2022]
Abstract
Under the Affordable Care Act, the risk-adjustment program is designed to compensate health plans for enrolling people with poorer health status so that plans compete on cost and quality rather than the avoidance of high-cost individuals. This study examined health plan incentives to limit covered services for mental health and substance use disorders under the risk-adjustment system used in the health insurance Marketplaces. Through a simulation of the program on a population constructed to reflect Marketplace enrollees, we analyzed the cost consequences for plans enrolling people with mental health and substance use disorders. Our assessment points to systematic underpayment to plans for people with these diagnoses. We document how Marketplace risk adjustment does not remove incentives for plans to limit coverage for services associated with mental health and substance use disorders. Adding mental health and substance use diagnoses used in Medicare Part D risk adjustment is one potential policy step toward addressing this problem in the Marketplaces.
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Affiliation(s)
- Ellen Montz
- Ellen Montz is a PhD candidate in the Department of Health Care Policy at Harvard University, in Cambridge, Massachusetts
| | - Tim Layton
- Tim Layton is an assistant professor of health care policy in the Department of Health Care Policy at Harvard Medical School, in Boston, Massachusetts
| | - Alisa B Busch
- Alisa B. Busch is an assistant professor of psychiatry at McLean Hospital and Harvard Medical School, and an assistant professor of health care policy in the Department of Health Care Policy at Harvard Medical School
| | - Randall P Ellis
- Randall P. Ellis is a professor in the Department of Economics at Boston University, in Massachusetts
| | - Sherri Rose
- Sherri Rose is an associate professor of health care policy (biostatistics) in the Department of Health Care Policy at Harvard Medical School
| | - Thomas G McGuire
- Thomas G. McGuire is a professor of health economics in the Department of Health Care Policy at Harvard Medical School, and a research associate at the National Bureau of Economic Research, in Cambridge
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17
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Landon BE, Zaslavsky AM, Saunders R, Pawlson LG, Newhouse JP, Ayanian JZ. A comparison of relative resource use and quality in Medicare Advantage health plans versus traditional Medicare. THE AMERICAN JOURNAL OF MANAGED CARE 2015; 21:559-566. [PMID: 26295355 PMCID: PMC6365159] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [MESH Headings] [Grants] [Subscribe] [Scholar Register] [Indexed: 06/04/2023]
Abstract
OBJECTIVES Prior analyses of Medicare health plans have examined either utilization of services or quality of care, but not both jointly. Our objective was to compare utilization and quality for Medicare Advantage (MA) enrollees with diabetes or cardiovascular disease to that for similarly defined traditional Medicare (TM) beneficiaries. STUDY DESIGN Cross-sectional matched observational study using data for 2007. METHODS We obtained individual-level Healthcare Effectiveness Data and Information Set (HEDIS) relative resource use (RRU) and quality data for patients enrolled in MA, and then developed comparable claims-based measures for matched samples of TM beneficiaries. MAIN OUTCOME MEASURES utilization levels for inpatient care, evaluation and management services, and surgery; number of emergency department (ED) and inpatient visits; and quality of ambulatory care measures. RESULTS We studied approximately 680,000 MA health maintenance organization (HMO) enrollees with diabetes and 270,000 HMO enrollees with cardiovascular conditions. For both conditions and almost all major strata, the RRU was lower for those enrolled in MA than for those in TM. Spending for those with diabetes was $5223 for MA HMO enrollees compared with $6413 for those in TM (cost ratio, 0.81; P < .001). ED utilization rates were consistently lower in MA than TM (567 vs 719 visits/1000 enrollees; rate ratio, 0.79; P < .001). Health plans that are more established, nonprofit, and/or larger generally had lower resource use and better relative quality than did smaller, newer, for-profit HMOs or preferred provider organizations. CONCLUSIONS RRU for those with diabetes or cardiovascular disease is lower in MA, while quality of care is higher. Better MA plans may add value to the care of these major chronic medical conditions.
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Affiliation(s)
- Bruce E Landon
- Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave, Boston, MA 02215. E-mail:
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18
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NEWHOUSE JOSEPHP, PRICE MARY, MCWILLIAMS JMICHAEL, HSU JOHN, MCGUIRE THOMASG. HOW MUCH FAVORABLE SELECTION IS LEFT IN MEDICARE ADVANTAGE? AMERICAN JOURNAL OF HEALTH ECONOMICS 2015; 1:1-26. [PMID: 26389127 PMCID: PMC4572504 DOI: 10.1162/ajhe_a_00001] [Citation(s) in RCA: 60] [Impact Index Per Article: 6.7] [Reference Citation Analysis] [Abstract] [Key Words] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Indexed: 05/28/2023]
Abstract
The health economics literature contains two models of selection, one with endogenous plan characteristics to attract good risks and one with fixed plan characteristics; neither model contains a regulator. Medicare Advantage, a principal example of selection in the literature, is, however, subject to anti-selection regulations. Because selection causes economic inefficiency and because the historically favorable selection into Medicare Advantage plans increased government cost, the effectiveness of the anti-selection regulations is an important policy question, especially since the Medicare Advantage program has grown to comprise 30 percent of Medicare beneficiaries. Moreover, similar anti-selection regulations are being used in health insurance exchanges for those under 65. Contrary to earlier work, we show that the strengthened anti-selection regulations that Medicare introduced starting in 2004 markedly reduced government overpayment attributable to favorable selection in Medicare Advantage. At least some of the remaining selection is plausibly related to fixed plan characteristics of Traditional Medicare versus Medicare Advantage rather than changed selection strategies by Medicare Advantage plans.
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Affiliation(s)
- JOSEPH P. NEWHOUSE
- Harvard Medical School, Harvard T. H. Chan School of Public Health, Harvard John F. Kennedy School of Government, and National Bureau of Economic Research
| | - MARY PRICE
- Kaiser Permanente Division of Research, Harvard Medical School, and Massachusetts General Hospital
| | | | - JOHN HSU
- Kaiser Permanente Division of Research, Harvard Medical School, and Massachusetts General Hospital
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Abstract
CONTEXT Medicare Part C, or Medicare Advantage (MA), now almost 30 years old, has generally been viewed as a policy disappointment. Enrollment has vacillated but has never come close to the penetration of managed care plans in the commercial insurance market or in Medicaid, and because of payment policy decisions and selection, the MA program is viewed as having added to cost rather than saving funds for the Medicare program. Recent changes in Medicare policy, including improved risk adjustment, however, may have changed this picture. METHODS This article summarizes findings from our group's work evaluating MA's recent performance and investigating payment options for improving its performance even more. We studied the behavior of both beneficiaries and plans, as well as the effects of Medicare policy. FINDINGS Beneficiaries make "mistakes" in their choice of MA plan options that can be explained by behavioral economics. Few beneficiaries make an active choice after they enroll in Medicare. The high prevalence of "zero-premium" plans signals inefficiency in plan design and in the market's functioning. That is, Medicare premium policies interfere with economically efficient choices. The adverse selection problem, in which healthier, lower-cost beneficiaries tend to join MA, appears much diminished. The available measures, while limited, suggest that, on average, MA plans offer care of equal or higher quality and for less cost than traditional Medicare (TM). In counties, greater MA penetration appears to improve TM's performance. CONCLUSIONS Medicare policies regarding lock-in provisions and risk adjustment that were adopted in the mid-2000s have mitigated the adverse selection problem previously plaguing MA. On average, MA plans appear to offer higher value than TM, and positive spillovers from MA into TM imply that reimbursement should not necessarily be neutral. Policy changes in Medicare that reform the way that beneficiaries are charged for MA plan membership are warranted to move more beneficiaries into MA.
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Affiliation(s)
- Joseph P Newhouse
- Harvard Medical School; Harvard School of Public Health; Harvard University, John F. Kennedy School of Government; National Bureau of Economic Research
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McGuire TG, Newhouse JP, Normand SL, Shi J, Zuvekas S. Assessing incentives for service-level selection in private health insurance exchanges. JOURNAL OF HEALTH ECONOMICS 2014; 35:47-63. [PMID: 24603443 PMCID: PMC4040329 DOI: 10.1016/j.jhealeco.2014.01.009] [Citation(s) in RCA: 30] [Impact Index Per Article: 3.0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 02/27/2013] [Revised: 01/28/2014] [Accepted: 01/31/2014] [Indexed: 05/28/2023]
Abstract
Even with open enrollment and mandated purchase, incentives created by adverse selection may undermine the efficiency of service offerings by plans in the new health insurance Exchanges created by the Affordable Care Act. Using data on persons likely to participate in Exchanges drawn from five waves of the Medical Expenditure Panel Survey, we measure plan incentives in two ways. First, we construct predictive ratios, improving on current methods by taking into account the role of premiums in financing plans. Second, relying on an explicit model of plan profit maximization, we measure incentives based on the predictability and predictiveness of various medical diagnoses. Among the chronic diseases studied, plans have the greatest incentive to skimp on care for cancer, and mental health and substance abuse.
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Affiliation(s)
- Thomas G McGuire
- Department of Health Care Policy, Harvard Medical School, United States; NBER, United States.
| | - Joseph P Newhouse
- Department of Health Care Policy, Harvard Medical School, United States; NBER, United States; Department of Health Policy and Management, Harvard School of Public Health, United States; The Harvard Kennedy School, United States
| | - Sharon-Lise Normand
- Department of Health Care Policy, Harvard Medical School, United States; Department of Health Policy and Management, Harvard School of Public Health, United States
| | - Julie Shi
- Department of Health Care Policy, Harvard Medical School, United States
| | - Samuel Zuvekas
- Agency for Healthcare Research and Quality, United States
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