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Fee-for-data: a strategy to open the HMO black box

W P Welch¹, H G Welch

¹Urban Institute, Washington, DC, USA.

Health Affairs (Project Hope)

|January 1, 1995

Summary

To maintain Medicare utilization data amid managed care growth, Health Maintenance Organizations (HMOs) would submit encounter data for a percentage of Medicare fee-for-service payments. This ensures crucial data collection for policy decisions.

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Area of Science:

Health Services Research
Health Policy Analysis
Medicare Program Evaluation

Background:

Managed care, particularly Health Maintenance Organizations (HMOs), is increasingly prevalent within the Medicare program.
The growth of managed care poses challenges to traditional methods of collecting utilization data.
Accurate utilization data is essential for effective Medicare policy development and impact assessment.

Purpose of the Study:

To propose a method for maintaining Medicare utilization data collection.
To address the data gaps created by the expansion of managed care in Medicare.
To ensure the availability of necessary data for informed Medicare policy and program evaluation.

Main Methods:

A proposal requiring HMOs to submit encounter-level claims data.
Implementing a capitation payment model adjusted to maintain budget neutrality.
Linking HMO reimbursement to a percentage of Medicare fee-for-service rates.

Main Results:

The proposed system would capture essential utilization data currently not available.
Encounter data would enable better monitoring of healthcare services provided to Medicare beneficiaries in managed care plans.
Budget neutrality would be maintained through adjustments in capitation rates.

Conclusions:

The proposal offers a feasible solution to capture vital Medicare utilization data.
Collecting encounter-level data from HMOs is a necessary investment for program integrity.
The primary implementation challenge lies in HMOs' capacity to generate data cost-effectively.

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