ACA's guaranteed availability of insurance raise concerns of adverse selection, why? - ANSWERWith the guaranteed availability of insurance, consumers who are most in need of
health care may be more likely to purchase insurance. Such an outcome would create
an adverse selection problem. It could l...
ACA's guaranteed availability of insurance raise concerns of adverse selection, why? - ANSWERWith
the guaranteed availability of insurance, consumers who are most in need of
health care may be more likely to purchase insurance. Such an outcome would create
an adverse selection problem. It could lead to higher average premiums, thereby
disrupting the insurance market and undermining the goals of reform. Uncertainty
about the health status of enrollees could also make insurers cautious about offering
plans in a reformed individual market or cause them to be overly conservative in
setting premiums. To discourage behavior that could lead to adverse selection, the
ACA makes it difficult for people to wait until they are sick to purchase insurance
(i.e., by limiting open enrollment periods, requiring most people to have insurance
coverage or pay a penalty and providing subsidies to help with the cost of insurance).
Bidding process of Medicare Advantage plans - ANSWER2006, Medicare Advantage plans have bid to
offer Parts A and B
coverage (Part D coverage is handled separately) to Medicare beneficiaries. The bid
proffered is the bid to cover an average, or standard, beneficiary. The bid includes
plan administrative cost and profit. If this bid is below the CMS established
benchmark, the managed care plan keeps a portion of the difference to apply to
reduced cost sharing or expanded benefits for enrolled beneficiaries. If the bid is
above the benchmark, the plan charges enrollees an additional premium. However,
the CMS-HCC model is used in all cases to adjust the payments for beneficiaries
enrolled by the plan to reflect their demographics and health status. (The Affordable
Care Act (ACA) made changes to how the benchmarks are determined, and it
lowered the share that the plan keeps when its bid is below the benchmark; it also
made the share percentage a function of the plan's quality rating.)
, Centers for Medicare & Medicaid Services Hierarchical Condition Categories (CMS-HCC) Model -
ANSWERThe Balanced Budget Act of 1997 (BBA) required Medicare to phase in a new risk
adjustment methodology to better incorporate health status into their capitation
rates and to reimburse Medicare Advantage plans higher amounts for "sicker"
beneficiaries. In addition, because a risk-adjusted payment system is based on
patient health status measures, BBA requires Medicare HMOs and other providers to
supply encounter data to the Centers for Medicare & Medicaid Services (CMS). This
data is used to prospectively estimate predicted costs for Medicare Advantage
beneficiaries. These estimates are used to adjust the Medicare capitation payment,
and the model is known as the CMS Hierarchical Condition Categories (CMSHCC). The model assigns
diagnoses to hierarchical medical condition categories.
Measures of potential risk factors used in the RAND Health Insurance Experiment - ANSWER(a)
Demographic measures (AAPCC variables)
• Age
• Gender
• Location (indicator for each of the six sites in the study)
• Eligible for welfare at baseline
(b) Subjective health status measures
• Physical health (based on self-reported measures of role and personal
limitations)
• Mental health (based on self-reported measures of psychological distress,
behavioral and emotional control, and positive affect)
• General health (based on self-reported measures of general well-being)
• Disease count (based on the presence of any of 32 chronic conditions)
(c) Physiological health status measures
• Dichotomous measures
• Continuous measures (based on 27 measures, including such items as
active ulcer, anemia, dyspepsia, abnormal thyroid function and so on)
(d) Prior utilization
• Outpatient expense in prior year
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