Market Watch: Distributing $800 billion: An early assessment of medicare part D risk adjustment

Health Affairs

Volumn 28, Issue 1, 2009, Pages 215-225

  Hsu, John ^a   Huang, Jie ^a   Fung, Vicki ^a   Price, Mary ^a   Brand, Richard ^b   Hui, Rita ^c   Fireman, Bruce ^a   Dow, William ^d   Bertko, John ^e,f   Newhouse, Joseph P ^g,h,i  

^a DIVISION OF RESEARCH   (United States)

^b UNIVERSITY OF CALIFORNIA   (United States)

^c KAISER PERMANENTE   (United States)

^d UNIVERSITY OF CALIFORNIA   (United States)

^e BROOKINGS INSTITUTION   (United States)

^f RAND CORPORATION   (United States)

^g HARVARD MEDICAL SCHOOL   (United States)

^h HARVARD SCHOOL OF PUBLIC HEALTH   (United States)

ⁱ HARVARD UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; COST BENEFIT ANALYSIS; DEMOGRAPHY; DRUG COST; HEALTH CARE COST; HUMAN; LOWEST INCOME GROUP; MEDICARE; PRESCRIPTION; RISK ASSESSMENT; RISK BENEFIT ANALYSIS; AGED; ECONOMICS; FEMALE; MALE; UNITED STATES;

AGED; AGED, 80 AND OVER; DRUG COSTS; FEMALE; HUMANS; MALE; MEDICARE PART D; RISK ADJUSTMENT; UNITED STATES;

EID: 59449107133     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.28.1.215     Document Type: Article

References (20)

1. D.M. Cutler and S. Reber, "Paying for Health Insurance: The Tradeoff between Competition and Adverse Selection," Quarterly Journal of Economics 113, no. 2 (1998): 433-466;
2. H.A. Huskamp et al., "The Medicare Prescription Drug Benefit: How Will the Game Be Played?" Health Affairs 19, no. 2 (2000): 8-23;
3. J.P. Newhouse, M.B. Buntin, and J.D. Chapman, "Risk Adjustment and Medicare: Taking a Closer Look," Health Affairs 16, no. 5 (1997): 26-43;
4. J.P. Newhouse, "Risk Adjustment: Where Are We Now?" Inquiry 35, no. 2 (1998): 122-131;
5. and M.V. Pauly and Y. Zeng, "Adverse Selection and the Challenges to Stand-Alone Prescription Drug Insurance," Frontiers in Health Policy Research 7 (2004): 55-74.
6. L.I. Iezzoni et al., "Paying More Fairly for Medicare Capitated Care," New England Journal of Medicine 339, no. 26 (1998): 1933-1938;
7. and G.C. Pope et al., "Risk Adjustment of Medicare Capitation Payments Using the CMS-HCC Model," Health Care Financing Review 25, no. 4 (2004): 119-141.
8. J. Robst, J.M. Levy, and M.J. Ingber, "Diagnosis-Based Risk Adjustment for Medicare Prescription Drug Plan Payments," Health Care Financing Review 28, no. 4 (2007): 15-30.
9. Medicare Payment Advisory Commission, Report to the Congress: Increasing the Value of Medicare (Washington: MedPAC, 2006).
10. Robst et al., "Diagnosis-Based Risk Adjustment."
11. See Exhibit 1 in the online Appendix at http://content.healthaffairs.org/ cgi/content/full/28/1/215/DC1.
12. Robst et al., "Diagnosis-Based Risk Adjustment.
13. Pope et al., "Risk Adjustment."
14. For information on RxGroups, see the Verisk HealthCare home page, http://www.veriskhealthcare.com.
15. We also classified all individuals into five-percentile groups based on predicted expenditures from each of the three models and calculated the mean predicted and observed expenditures, the mean prediction error (MPE), and the predictive ratio (PR) for each five-percentile group (these results are available in the online Appendix, as in Note 6). The MPE is the mean of predicted expenditure minus observed expenditure for each five-percentile group. The PR is the predicted expenditure divided by the observed expenditure.
16. See the online Appendix, as in Note 6.
17. R.P. Ellis and T.G. McGuire, "Predictability and Predictiveness in Health Care Spending," Journal of Health Economics 26, no. 1 (2007): 25-48.
18. H.S. Luft and R.A. Dudley, "Assessing Risk-Adjustment Approaches under Non-Random Selection," Inquiry 41, no. 2 (2004): 203-217;
19. and Y. Shen and R.P. Ellis, "How Profitable Is Risk Selection? A Comparison of Four Risk Adjustment Models," Health Economics 11, no. 2 (2002): 165-174.
20. J.P. Newhouse, Pricing the Priceless: A Health Care Conundrum (Cambridge: MIT Press, 2002).