Alternative geographic adjustments in Medicare payment to health maintenance organizations.
Welch, W Pete
Date of Pub
The payment received by a health maintenance organization (HMO) for its Medicare enrollees is proportionate to the average
cost of Medicare beneficiaries in that county. However, HMO market share in an area appears to decrease costs in the fee-for-service
sector, so that HMOs are paid less. For this and other reasons, alternative payment formulas may be desirable and several
are developed in this article. The conceptually simplest location factor would be an input price index. An alternative strategy
would also recognize systematic variation in utilization. Utilization rate is regressed on variables such as county population
density and physicians per 1,000 persons. The predicted utilization rate times an input price index could serve as a location
factor. The value of alternative location factors are presented for specific counties.
Catchment Area (Health)/economics : Cost Savings/methods : Geography : Health Maintenance Organizations/economics/utilization
: Human : Medicare/economics/statistics & numerical data : Models, Statistical : Rate Setting and Review/methods/statistics
& numerical data : Regression Analysis : Reimbursement Mechanisms/economics/statistics & numerical data : Support, U.S. Gov't,
Non-P.H.S. : United States