Does Competition Among Medicare Advantage Plans Matter?: An Empirical Analysis of the Effects of Local Competition in a Regulated Environment

The regulatory oversight of the private Medicare Advantage (MA) program makes the role of competition in this market unclear. This paper empirically examines the impact of competition by measuring the effects of changes in market structure on enrollment. The study examines competition in local geographic markets using county-level enrollment data from 2001-07. I find that an increase in the number of competitors results in an increase in the number of enrollees served ­ consistent with competition motivating firms to provide more generous benefits. Competition also results in an increase in product proliferation, which highlights a dimension of competition not previously examined. Overall, the results are similar to what one might expect in an unregulated environment, suggesting that there are benefits from competition that are not realized by regulation alone.

Competition Among Medicare's Private Health Plans: Does It Really Exist?

Competition among private Medicare Advantage (MA) plans is seen by some as leading to lower premiums and expanded benefits. But how much competition exists in MA markets? Using a standard measure of market competition, our analysis finds that 97 percent of markets in U.S. counties are highly concentrated and therefore lacking in significant MA plan competition. Competition is considerably lower in rural counties than in urban ones. Even among the 100 counties with the greatest numbers of Medicare beneficiaries, 81 percent do not have competitive MA markets. Market power is concentrated among three nationwide insurance organizations in nearly two-thirds of those 100 counties

A Competitive Bidding Approach to Medicare Reform

Medicare reform is a critical issue for the public agenda. The most promising option for addressing Medicare reform is competitive bidding -- using health plans' bids to determine the government's contribution to a basic set of benefits in every market area. This paper begins with a review of the history of competitive bidding in Medicare. It then moves to a definition of terms, which is crucial in any discussion of competitive pricing because the often-heated public debate around these issues frequently distorts positions and confuses issues by conflating different terms and making some arguments appear other than they are. Following this terminological exercise, the report includes a series of sections discussing competitive bidding in Medicare, with special focus on the challenges to introducing it

HMO Participation in Medicare+Choice

Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/75542/1/j.1530-9134.2005.00073.x.pd

Financial Incentives in Health Care Reform: Evaluating Payment Reform in Accountable Care Organizations and Competitive Bidding in Medicare

Amidst mounting federal debt, slowing the growth of health care spending is one of the nation’s top domestic priorities. This dissertation evaluates three current policy ideas: (1) global payment within an accountable care contracting model, (2) physician fee cuts, and (3) expanding the role of competitive bidding in Medicare. Chapter one studies the effect of global payment and pay-for-performance on health care spending and quality in accountable care organizations. I evaluate the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract (AQC), which was implemented in 2009 with seven provider organizations comprising 380,000 enrollees. Using claims and quality data in a quasi-experimental difference-in-differences design, I find that the AQC was associated with a 1.9 percent reduction in medical spending and modest improvements in quality of chronic care management and pediatric care in year one. Chapter two studies Medicare’s elimination of payments for consultations in the 2010 Medicare Physician Fee Schedule. This targeted fee cut (largely to specialists) was accompanied by a fee increase for office visits (billed more often by primary care physicians). Using claims data for 2.2 million Medicare beneficiaries, I test for discontinuities in spending, volume, and coding of outpatient physician encounters with an interrupted time series design. I find that spending on physician encounters increased 6 percent after the policy, largely due to a coding effect and higher office visit fees. Slightly more than half of the increase was accounted for by primary care physician visits, with the rest by specialist visits. Chapter three examines competitive bidding, which is at the center of several proposals to reform Medicare into a premium support program. In competitive bidding, private plans submit prices (bids) they are willing to accept to insure a Medicare beneficiary. In perfect competition, plans bid costs and thus bids are insensitive to the benchmark. Under imperfect competition, bids may move with the benchmark. I study the effect of benchmark changes on plan bids using Medicare Advantage data in a longitudinal market-level model. I find that a $1 increase in the benchmark leads to about a$0.50 increase in bids among Medicare managed care plans

Medicare advantage: provider networks, payment, and value

Medicare Advantage (MA), a private alternative to Traditional Medicare (TM), covers over 50 percent of Medicare beneficiaries and accounts for a similar share of spending (in 2023). The government pays private insurers a monthly amount to offer coverage to beneficiaries. The plans covering most MA enrollees – preferred provider organizations (PPOs), health maintenance organizations (HMOs), and point of service (POS) plans – are also required to maintain provider networks that restrict access to certain providers and meet government adequacy requirements. In paper one, we develop a method for measuring the restrictiveness of provider networks in MA without relying on provider directories. This approach relies on prescription drug event (PDE) data for MA enrollees to identify providers seen by enrollees. Focusing on primary care providers (PCPs) as a high-prescribing specialty, we use a prediction model trained on stand-alone prescription drug plans (PDPs) to estimate the number of providers that would have been seen absent network restrictions, allowing estimation of a measure of network restrictiveness for MA plans. Our findings suggest that MA plans reduced access to PCPs to 60.6% of what we would expect it to be absent network restrictions. HMOs tended to have the most restrictive networks, and rural areas were most affected by network restrictions. When developing provider networks, MA insurers seek to maximize profit while meeting regulatory standards. To make networks attractive to patients, insurers might have to include providers that are differentiated by quality, brand-name, or other characteristics. These so-called “star providers” are those that are difficult to exclude from networks due to market power, potentially driven by product differentiation or other behavior. In the second paper, we build on prior work identifying star providers in other markets, and using claims data, we develop a measure of demand for provider groups among TM beneficiaries. Using this measure, we identify star provider groups, of which 81.04% are in-network for at least one MA plan, compared to 26.3% for others (SMD: 1.31). While these groups had a larger share of beneficiaries than others (5.69% vs 1.14%, SMD: 0.57) (indicating market power), they tended to have a similar number of providers. These findings suggest that there exist provider groups that limit the ability of MA insurers to flexibly modify networks, which may affect how regulators view proposed mergers. Insurers participating in MA must offer benefits at least as valuable as TM, but typically expand benefits beyond what TM offers, and they are required to have an out-of-pocket limit on beneficiary costs. Payment changes might affect the value of these benefits. Reductions in payment might lead to narrower networks or less expansive benefits, for instance. In the third and final paper, we use a one-time reduction in government payments in 2015 to identify the extent to which payments change network breadth, benefits, and/or advertising effort. We find that less than 100% of the reduction is passed through to beneficiaries. 40.6% of the reductions are passed through as less generous benefits while 27.6% are passed through as higher premiums. We find a reduction in zero-premium plans but no effect on advertising effort or network restrictiveness. A major contribution of our analyses is the development of a novel method for measuring provider network restrictiveness, allowing regulators and researchers to evaluate the role of provider networks in affecting access without relying on provider director data. Our results are consistent with prior work suggesting that the MA market is generally non-competitive and that a less than competitive provider market may make it difficult for insurers to modify provide networks

Medicare Advantage and Long-Term Care: Impact of Medicare Coverage Type on Utilization and Quality of Postacute and Nursing Home Services

Medicare, the federal health insurance program, plays an important role in providing health and financial security to older Americans. The role of private plans has become increasingly important now that nearly one third of beneficiaries in Medicare is enrolled in these private, risk-bearing, capitated health plans, currently known as Medicare Part C or Medicare Advantage (MA). In this set of thesis papers, we use several approaches to examine the care received by Medicare beneficiaries, with a particular focus on Medicare Advantage enrollees, in postacute and nursing home settings. The first study explores the relationship between geriatric risk factors, defined as factors pertinent to frail older adults, and postacute utilization and quality among hospitalized Medicare beneficiaries in Florida from 2010-2014. The paper also describes the differences in postacute utilization and quality between traditional fee-for-service (FFS) Medicare and Medicare Advantage patients. The paper concludes that geriatric risk factors, independent of traditional measures of comorbidity and patient demographics, are highly predictive of postacute utilization and quality. Current administrative claims data can be used to identify additional high-risk patients and predict their healthcare utilization. The paper also finds that there are differences in postacute utilization and quality between FFS and MA hospitalized patients, after accounting for patient characteristics and geriatric risk. As payment reform continue to change toward risk-bearing models, monitoring access, cost, and quality of care among this group of high geriatric risk will become increasingly important. The second study examines the effect of Medicare Advantage enrollment on postacute utilization in a geographic market. Using Florida 2010-2014, the paper describes county-level effects of MA enrollment on the postacute experiences of fee-for-service Medicare hospitalized patients. Analogous research done in the inpatient and outpatient setting describe significant positive spillover effects of MA into FFS, finding that increased MA enrollment decreased rates of inpatient and outpatient spending and utilization. This paper concludes that MA enrollment has little effect on postacute utilization and quality both within the overall Medicare market and separately within FFS and MA. Further payment policy changes to the MA program should not only monitor inpatient and outpatient utilization and outcomes but also other types of healthcare utilization and quality. The third study shifts the focus to analyze the care received by Medicare Advantage enrollees in nursing homes. The paper explores the association between quality and staffing levels and the percentage of MA patients in a nursing home facility. Using national data on nursing homes, the paper finds that high percentage of MA facilities are more likely to have greater registered nurse hours on staff but worse clinical quality. Even when national policies required the public reporting of quality measures in nursing homes to help patients select providers, there were minimal associations with changes in percentage of MA patients and quality metrics. The paper concludes that MA patients in nursing homes may be receiving differential care compared to other Medicare beneficiaries and that public reporting of quality may not have great influence on where MA patients receive their care. As MA plans continue to attract a larger share of the Medicare population, understanding how MA enrollees and plans decide providers and the implications of those choices will improve the MA program and other risk-bearing programs

The Impact of Health Care Market Concentration on Consumers' Experiences

Competition and choice in health care are viewed as solutions to some of the most pressing issues in health care in United States. In this set of thesis papers, we use several approaches to defining health insurance market structure to examine whether consumers in more competitive markets report having better experiences with their health plan than consumers in less competitive markets. The first paper describes methods for developing measures of competition in the hospital and health insurance industries, presenting an empirical analysis of several approaches. The paper also describes trends in hospital and health insurance concentration and the relative concentration of insurance to hospital markets from 2003-2009. The paper concludes that both hospital and health insurance markets on average have remained highly concentrated from 2003-2009. On average, there was no significant change in the average HHI though some markets experienced greater change. The paper also finds that in the average metropolitan statistical area (MSA), the health insurance market is more concentrated than the hospital market. The second paper examines the relationship between market competition and consumers’ experiences with their plans, access to care, and the percentage of spending for selected medical services paid out-of-pocket. The paper explores this relationship in two different settings, private group insurance and Medicaid managed care. This paper finds that in general, there is little to no significant association between the level of insurance concentration and consumers’ access to care or experience with their health plan. The third paper builds upon the second paper by focusing on whether a consumer directly has a choice of health plans. The paper concludes that individuals who have a choice in health plans at their current main job do report slightly better access to care on most measures and higher satisfaction and fewer administrative problems with their health plan than those without a choice in plans