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Medicare FFS and Inefficient Health Care Delivery. Markets Not Madness: Medicare Reform That Works American Enterprise Institute April 16, 2013. James C. Capretta Visiting Fellow. Medicare’s Size and Influence. Size and payment systems Percentage of total health spend Regulatory influence.

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Medicare ffs and inefficient health care delivery

Medicare FFS and InefficientHealth Care Delivery

Markets Not Madness: Medicare Reform That Works

American Enterprise InstituteApril 16, 2013

James C. CaprettaVisiting Fellow


Medicare s size and influence
Medicare’s Size and Influence

  • Size and payment systems

  • Percentage of total health spend

  • Regulatory influence



Personal health expenditures by payer 2010
Personal Health Expenditures by Payer, 2010

Out-of-Pocket

Medicare

Medicaid

Private Health Insurance

Source: Medicare Payment Advisory Commission and NHE Accounts, 2010


Personal health expenditures by age 2004
Personal Health Expenditures by Age, 2004

65+

3% of 19-64 Year Olds Claims Were Paid by Medicare

Approximately 37% of all personal health expenditures were associated with elderly patients or younger patients with Medicare coverage.

Source: National Health Expenditure Accounts, 2004 Gender and Age Tables, http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/2004GenderandAgeTables.pdf


Medicare ffs and volume driven care
Medicare FFS and Volume-Driven Care

  • FFS insurance with ineffective cost-sharing

  • History of steady volume and intensity increases


Secondary insurance arrangements
Secondary Insurance Arrangements

Other Public Coverage

None

Medigap

Medicaid

Medigap + Retiree Wrap-Around

Retiree Wrap-Around

Source: Medicare Payment Advisory Commission analysis of MCBS, Cost and Use Files, 2005


Volume in the medicare physician setting
Volume in the Medicare Physician Setting

Source: “Factors Underlying the Growth in Medicare Spending on Physician Services,” Congressional Budget Office, Background Paper, June 2007, p. 15


Implications of ffs and ma comparisons
Implications of FFS and MA Comparisons

  • Comparison of costs

  • Recent comparison studies

  • Spillover and its inverse


Ma hmos vs ffs bids and payments
MA HMOs vs. FFS: Bids and Payments

FFS Costs

Source: “A Data Book: Healthcare Spending and the Medicare Program,” Medicare Payment Advisory Commission, June 2012, p. 146


What would happen w competitive bidding
What Would Happen w/Competitive Bidding?

All MA Plans Bidding Above FFS Costs

Source: “Transforming Medicare Into a Premium Support System: Implications for Beneficiary Premiums,” Gretchen Jacobson, Tricia Neuman, and Anthony Damico, Kaiser Family Foundation, October 2012


Managed Care Spillover

+1.0%

Medicare HMO penetration rate

Annual Spending Per FFS Enrollee

-0.9%

Source: “Managed Care and Medical Expenditures of Medicare Beneficiaries,” Michael Chernew, Philip DeCicca, and Robert Town, August 2007.


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