Hmocapitation providers bear risk as a group problems

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HMO/capitation: Providers bear risk as a group Problems: impacting physician behavior; pricing, risk, and insolvencies,: limits on choice unpopular; concerns with quality; adverse publicity and political responses Medicare ACOs
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Provider group “willing to become responsible for the quality, cost, and overall care of the Medicare FFS beneficiaries assigned to it” At least 5,000 beneficiaries (15,000 for Pioneer ACOs) Reporting and processes, quality performance standards (increasing over time) Beneficiaries have choice of physicians/specialists Models Shared Savings ACOs (Several hundreds) One sided (savings only) and Two sided (savings and losses) risk models Spending benchmark based on previous spending Minimum percentage for reduction required for shared savings (1-2%) Sharing percentage for reduction in average spending below threshold (or increases above threshold) (e.g. 50% depending on meeting quality targets) Pioneer ACOs (32, share more risk with path towards full capitation) HMO-type financial incentives with Extra quality incentives Free choice by patients Less role for traditional insurance intermediaries Bundled Fixed dollar (bundled) payment for professional and facility charges for a discrete episode of care can provide better incentives for care coordination and cost control Bundled may facilitate price transparency and payer/patient shopping Episode contracting: health plan bears probability risk (case volume), provider bears technical risk (cost per case) Providers focus on managing patient within the defined payment Complex Implementation Defining bundle: Conditions and services; time window; patient inclusion/exclusion criteria Risk adjusted payment or flat fee Dividing the risk: shared savings; shared risk; full risk Allocating the payment Medicaid Safety Nets Cash assistance In-kind transfers (e.g. food stamps, subsidies for housing) Tax refunds if income too low Moral Hazard: o Ex-post- Get assistance once fallen on hard times, dulles incentive to get out of hard times o Ex-ante- Know you’ll be eligible for programs if you fall on hard times so don’t try hard to prevent self from falling on hard times History of Medicaid 1965 Medicaid Bill signed Welfare families with dependent children low income elderly, blind, and disabled
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Late 1980s: Expansion to pregnant women and infants Pregnant women and children under age of 6 (<= 133% FPL) Children 6-18 <= 100% FPL 1997: BBA creates expanded access for children (CHIP) 2010: ACA expands coverage to all <= 133% FPL, effective 2014 Administered by State within national guideline States have flexibility in terms of: Eligibiltiy standards; type, amount duration, and scope of services; Provider payment for services 60 million/310 million people on Medicaid for a year $450 billion spent on Medicaid; average for eligible $7,000 Average growth rate will be 8% a year Financing 15-35% of State budgets Fed matching of 50-76%
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