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Using survey measures to assess risk selection among Medicare managed care plans
Alan M Zaslavsky1, Melinda J Beeuwkes Buntin
1Department of Health Care Policy, Harvard Medical School, Boston, MA 02115, USA.
Summary
Medicare managed care plans show significant risk selection, where plans serving sicker beneficiaries face higher costs. This highlights the need for better risk adjustment for chronic conditions to ensure financial stability.
Area of Science:
- Health economics
- Healthcare management
- Public health policy
Background:
- Medicare managed care plans compete for beneficiaries.
- Beneficiary selection based on health status can create financial risk for plans.
- Existing risk adjustment mechanisms may not fully account for health-related selection.
Purpose of the Study:
- To quantify risk selection among Medicare managed care plans.
- To assess the drivers of selection, distinguishing plan attributes from geographic variations.
- To inform improvements in risk adjustment methodologies.
Main Methods:
- Utilized beneficiary survey data from the Consumer Assessments of Health Plans Survey.
- Measured selection by analyzing plan-level variation in health conditions and predicted costs.
- Differentiated selection attributable to plan characteristics versus geographic prevalence of conditions.
Main Results:
- Substantial risk selection was identified among competing Medicare plans.
- A moderate adverse selection increased predicted costs by 11.6% compared to an average plan.
- Geographic factors explained only a small portion of the observed selection variation.
Conclusions:
- Plan attributes, not just geographic differences, significantly drive risk selection in Medicare managed care.
- Improved risk adjustment for chronic conditions is warranted to mitigate financial risks for plans serving sicker enrollees.
- Survey measures offer a reliable method for assessing condition prevalence across plans.