Medicare Managed Care

1
Medicare Managed Care

• Risk Selection and Payment Issues
• MedicareChoice

2
Plan for Today

• Review homework
• Tie up discussion of risk-selection
• Fruitbasket ! MedicareChoice
• Checkpoint 5
• Team meetings (Medicare)

3
Chart Comparing Health Status
4
Risk Selection

• Insurers (or capitated providers) mix of
  high-cost and low-cost enrollees does not match
  the average
• More low-cost enrollees Favorable selection
• More high-cost enrollees Adverse selection

5
Risk-Adjustment

• Adjusting capitation payments to an insurer (or
  provider) to reflect actual (not average) mix of
  high-cost and low-cost enrollees
• Equivalent to paying different rates for
  high-cost and low-cost enrollees
• Similar to Medicares inpatient Diagnosis-Related
  Groups (DRGs)
• The challenge is identifying who is in which
  group

6
Medicare Risk-Adjustment

• Instituted by Balanced Budget Act of 1997
• Based initially on inpatient diagnoses
• Goals
• Stop overpaying plans that serve healthier mix of
  enrollees (save 2 billion per year)
• Encourage plans to serve sicker enrollees
• Get plans to compete on price and quality, not by
  skimming off good risks

7
Checkpoints

• Checkpoint 5 due 4/18
• Will be returned by end of week
• Checkpoint 4 revision due 4/25
• Checkpoint 5 revision due by noon, 5/3 (middle
  of exam week)

8
Checkpoint 5Capstone Exercise

• How/why different types of consumers choose
  different types of plans
• Mix of risks enters into averages that determine
• premiums
• utilization rates (--gtplan costs)
• capitation
• But what if patients are not average ??

9
MedicareChoice

• What is MedicareChoice?
• Why MedicareChoice?
• Plan alternatives
• Information Sources Important Aspects of Plans
• Whos likely to choose which plans?
• Potential problems with MC

10
What is MedicareChoice?

• Created by the Balanced Budget Act of 1997
• effective January 1999
• Expanded beneficiaries plan choices
• provide beneficiaries with more alternatives to
• traditional Medicare

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Why MedicareChoice?

• Competition on Cost, Benefits Quality
• Competition Efficiency Save Medicare
  

12
Medicare Beneficiaries Alternatives

• Prior to MedicareChoice
• Medigap, HMO or POS
• New alternatives under MC
• 1. Preferred Provider Organizations (PPO)
• 2. Provider Sponsored Organizations (PSO)
• 3. Private Fee-for-Service (FFS)
• 4. Medical Savings Accounts (MSA)

13
Medicare Beneficiaries Information Sources

• Information sources
• 1. Prefer unbiased sources
• 2. Get most of their information from marketing
• materials

What Do Beneficiaries Care About?

• Physician-related factors
• choice
• communication
• technical quality

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Potential Problems With MC

• Risk selection problems
• Favorable Selection MSAs, PSOs, HMOs
• Adverse Selection Traditional Medicare, FFS
• Educating/Informing beneficiaries on plan
  choices
• 1-800-MEDICARE
• Medicare Compare (www.medicare.gov)
• HEDIS
• CAHPS
• Beneficiaries ability to use quality indicators