“Our findings reveal the hidden dynamics of Medicare Advantage, uncovering a previously unnoticed issue of resource misallocation,” says Turgay Ayer of Georgia Institute of Technology, one of the study’s authors.
Findings Emphasize Need for Increased Transparency In Medicare Advantage Operations
“Our research highlights the pressing need for increased transparency in Medicare Advantage.
The practice of strategic cross-subsidization we’ve identified could deepen socioeconomic inequalities in healthcare access and outcomes, underscoring the critical need for strict oversight of capitation payment systems.”
Strategic cross-subsidization is expressly forbidden by law in the U.S. due to its significant impact on risk selection in capitation programs, where health plans use targeted benefit designs to attract more profitable enrollees.
The study, led by Turgay Ayer in collaboration with co-authors Zhaowei She from Singapore Management University, Bilal Gokpinar from University College London, and Danny Hughes from Arizona State University, analyzed a large commercial insurance database containing claims data from over 2 million Medicare Advantage (MA) enrollees.
This is what she further explained, “For each one-point increase in a patient’s risk score, the annual ‘spending-cost difference’ (the gap between what MA plans spend on a patient and the payments they receive) drops by more than $9,000,” she said.
The paper titled “Strategic Cross-Subsidization in Healthcare Capitation Programs: Evidence from Medicare Advantage” offers recommendations for policymakers.
It emphasizes the need for tighter oversight of Medicare Advantage (MA) plans, backing recent federal efforts to enhance transparency and ensure that taxpayer funds are used effectively and appropriately. Furthermore, it is vital to enforce regulations against cross-subsidization to address risk selection issues.
“This study not only identifies the problem but also provides substantial empirical evidence that this issue is widespread, potentially affecting millions of beneficiaries throughout the MA system,” Ayer remarked.
Check further:
Zhaowei She et al, Strategic Cross-Subsidization in Healthcare Capitation Programs: Evidence from Medicare Advantage, Manufacturing & Service Operations Management (2024). DOI: 10.1287/msom.2023.0637
Citation:
Findings call for transparency in Medicare Advantage operations (2024, October 8)
retrieved 8 October 2024
from https://medicalxpress.com/news/2024-10-transparency-medicare-advantage.html
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