Improving Medicare in an Era of Change

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PROJECT SUMMARY/ABSTRACT Successfully integrating the financing and delivery of care remains a primary goal of the Medicare program after years of expanding efforts, including a recent period of unprecedented experimentation. The resulting changes in Medicare have created opportunities to understand how payment systems affect patient care and outcomes. The Medicare Advantage (MA) program is Medicare's most significant attempt to integrate financing and care. Currently 36% of beneficiaries are enrolled in capitated private plans that can influence patient care and outcomes through multiple mechanisms, including selective contracting, benefit design, and care management. Given that the majority of beneficiaries remain in Traditional Medicare (TM), Medicare has implemented efforts to integrate financing and care in that program as well, including alternative payment models (APMs) in which Medicare risk-contracts with providers directly. The evidence on the merits of MA is largely observational, and little is known about the relative performance of APMs. Moreover, the implications of integrated financing and delivery for patients remain unclear and understudied. Until recently, data on the MA program were insufficient to support detailed empirical exploration of differences in care patterns and the potential mechanisms driving them. Potential lessons abound from state Medicaid programs, which typically use narrower provider networks than MA plans and have increasingly delegated care management to private plans, but the relative impact on patient care of approaches taken in Medicaid and Medicare have not been quantified. There is recognition across the various integration initiatives that one size does not fit all; payments that are prospective, or incorporate prospective elements, give plans and providers greater flexibility in selecting inputs of care to support patients' health and well-being. But the implications for patients with special needs are poorly understood. Many challenges remain in payment system design and performance monitoring, particularly in methods of risk adjustment. Thus, as Medicare innovates and evolves, sound analysis is needed to generate an evidence base for understanding how payment systems affect patients. This Program Project, “Improving Medicare in an Era of Change,” focuses on the consequences of a changing Medicare program for patient care and outcomes. It intends to supply foundational insights for designing payment systems in health care. Our research agenda encompasses four key areas: 1) comparative performance of MA and TM and variants of each; 2) strategies employed by MA plans; 3) learning from state Medicaid programs; and 4) experiences of Medicare patients with dementia and their implications for payment system refinements for patients with special needs. Our proposal builds on our current Program Project by leveraging new data sources and empirical approaches to: examine previously unanswerable questions; support rigorous system comparisons; and identify potential directions for improvement by exploring variation in payment and delivery system features in the increasingly heterogeneous Medicare and Medicaid programs.