Welfare gains from user charges for government health services. (1/97)

The World Bank's Financing health services in developing countries emphasizes demand-side issues--highlighting user fees, insurance, and the private sector as tools for strengthening the health sector. That approach is a major departure from the focus on the supply side--public sector spending, costs, management, and efficiency--that has dominated the international health finance agenda for many years. An important set of empirical papers by Paul Gertler and his co-authors coincided with the release of the policy paper. Gertler's work has questioned a policy of greater dependence on user fees by emphasizing the potential welfare costs to consumers of higher fees for medical services. Many health professionals have adopted the jargon of this new approach without understanding the underlying analysis. This article attempts to demystify the debate that has ensued by illustrating economists' idiosyncratic approach to welfare, explaining how the policy paper and Gertler differ, and suggesting alternative approaches to testing the feasibility of the policy paper's prescriptions.  (+info)

The political economy of capitated managed care. (2/97)

Despite the fact that billions of dollars are being invested in capitated managed care, it has yet to be subjected to the rigors of robust microeconomic modeling; hence, the seemingly intuitive assumptions driving managed care orthodoxy continue to gain acceptance with almost no theoretical examination or debate. The research in this paper finds the standard unidimensional model of risk generally used to analyze capitation--i.e., that risk is homogenous in nature, organizationally fungible, and linear in amplitude--to be inadequate. Therefore, the paper proposes to introduce a multidimensional model based on the assumption that phenomenologically unrelated species of risk result from non-homogenous types of socioeconomic activity in the medical marketplace. The multidimensional analysis proceeds to concentrate on two species of risk: probability risk and technical risk. A two-dimensional risk matrix reveals that capitation, far from being a market-oriented solution, actually prevents the formation of a dynamic price system necessary to optimize marketplace trades of medical goods and services. The analysis concludes that a universal attempt to purchase healthcare through capitation or any other insurance mechanism would render the reasonable attainment of social efficiency highly problematic. While in reality there are other identifiable species of risk (such as cost-utility risk), the analysis proceeds to hypothesize what a market-oriented managed care approach might look like within a two-dimensional risk matrix.  (+info)

Medicaid managed care payment rates in 1998. (3/97)

This paper reports on a new survey of state Medicaid managed care payment rates. We collected rate data for Medicaid's Aid to Families with Dependent Children (AFDC)/Temporary Assistance for Needy Families (TANF) and poverty-related populations and made adjustments to make the data comparable across states. The results show a slightly more than twofold variation in capitation rates among states, caused primarily by fee-for-service spending levels and demographics. There is a very low correlation between the variation in Medicaid capitation rates among states and the variations in Medicare's adjusted average per capita cost. The data are not sufficient to answer questions about the adequacy of rates but should help to further policy discussions and research.  (+info)

Setting rates for Medicaid managed behavioral health care: lessons learned. (4/97)

This paper reviews Tennessee's experience setting, monitoring, and updating capitation rates for Medicaid managed behavioral health care, and draws lessons from those experiences for other states. Our review of assumptions about four components of Tennessee's rate-setting process--data, benefit design, savings expectations, and processes for monitoring and updating rates--suggests that the initial rate established by Tennessee was inadequate, and its inadequacy resulted primarily from the way available information was used to set the rate, rather than from the method of rate setting selected. Tennessee's experiences illustrate how difficult rate setting is and illuminate several key lessons about the rate-setting process.  (+info)

Medicare program; prospective payment system and consolidated billing for skilled nursing facilities--update. Health Care Financing Administration (HCFA), HHS. Final rule. (5/97)

This final rule sets forth updates to the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs), for fiscal year 2001. Annual updates to the PPS rates are required by section 1888(e) of the Social Security Act, as amended by the Medicare, Medicaid and State Child Health Insurance Program Balanced Budget Refinement Act of 1999, related to Medicare payments and consolidated billing for SNFs. In addition, this rule sets forth certain conforming revisions to the regulations that are necessary in order to implement amendments made to the Act by section 103 of the Medicare, Medicaid and State Child Health Insurance Program Balanced Budget Refinement Act of 1999.  (+info)

Oil and water? Lessons from Maryland's effort to protect safety net providers in moving to Medicaid managed care. (6/97)

Studies have highlighted the tensions that can arise between Medicaid managed care organizations and safety net providers. This article seeks to identify what other states can learn from Maryland's effort to include protections for safety net providers in its Medicaid managed care program--HealthChoice. Under HealthChoice, traditional provider systems can sponsor managed care organizations, historical providers are assured of having a role, patients can self-refer and have open access to certain public health providers, and capitation rates are risk adjusted through the use of adjusted clinical groups and claims data. The article is based on a week-long site visit to Maryland in fall 1998 that was one part of a seven-state study. Maryland's experience suggests that states have much to gain in the way of "good" public policy by considering the impact of their Medicaid managed care programs on the safety net, but states should not underestimate the challenges involved in balancing the need to protect the safety net with the need to contain costs and minimize the administrative burden on providers. No amount of protection can compensate for a poorly designed or implemented program. As the health care environment continues to change, so may the need for and the types of protections change. It also may be most difficult to guarantee adequate protections to those who need it most--among relatively financially insecure providers that have a limited management infrastructure and that depend heavily on Medicaid and the state for funds to care for the uninsured.  (+info)

Prescription drug prices: why do some pay more than others do? (7/97)

The fact that sick elderly people without prescription drug coverage pay far more for drugs than do people with private health insurance has created a call for state and federal governments to take action. Antitrust cases have been launched, state price control legislation has been enacted, and proposals for expansion of Medicare have been offered in response to price and spending levels for prescription drugs. This paper offers an analysis aimed at understanding pricing patterns of brand-name prescription drugs. I focus on the basic economic forces that enable differential pricing of products to exist and show how features of the prescription drug market promote such phenomena. The analysis directs policy attention toward how purchasing practices can be changed to better represent groups that pay the most and are most disadvantaged.  (+info)

Physician organization in California: crisis and opportunity. (8/97)

Many of the 250 physician organizations that provide care to California's sixteen million health maintenance organization enrollees are in a state of crisis, squeezed between constrained revenues, rising practice costs, and consumer sentiment that favors unconstrained choice over integrated delivery. Medical groups and independent practice associations are retrenching to their core geographic areas, reducing capitation for drug benefits and hospital services, and abandoning dreams of displacing health plans. Consolidation is accelerating in some areas, as medical groups join with hospitals to extract higher payment rates from insurers and employers. The conjunction of consumerism and premium inflation creates new opportunities for organizations that truly can manage health care, but the challenges roiling California's medical groups may preclude meaningful efforts to seize the initiative.  (+info)