Medicare in a Restructured Delivery System

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DESCRIPTION (provided by applicant): Successful integration of financing and care in the Medicare program is the single most important objective of health policy, and arguably, with its powerful budgetary implications, of social and fiscal policy in the US today. Currently, Medicare promotes integrated care through the Medicare Advantage (MA) program, presently at an historic high in beneficiary enrollment of 29%. Past growth came at the cost of high payment rates, which largely transferred any gains from integration away from the Medicare program and taxpayers. Payment rates have recently been reduced, however, handicapping further expansion of MA enrollment. The 2012 Medicare Trustees Report, for example, projects MA enrollment will fall to 17% by 2020. Furthermore, the most costly Medicare beneficiaries, and the ones for whom integration has the most to offer, the so-called "dual eligibles," have joined integrated plans much less frequently, though that is beginning to change. As currently constituted, the MA program has not solved the riddle of moving large numbers of beneficiaries to integrated care plans, improving the quality of their care, and at the same time saving program funds. Medicare needs innovation, and it needs sound economic analysis to evaluate current initiatives and provide the scientific basis for modifications or new approaches. Medicare is innovating in provider payment with programs such as the Accountable Care Organization (ACO) programs, designed to feel like Traditional Medicare (TM) to beneficiaries. ACO participation is voluntary for provider groups with financial rewards for achieving efficiencies through integration. Whether ACOs can improve on the current Medicare alternatives of TM and MA with respect to either cost or quality with a light touch on beneficiaries and rewards for providers is an open question to which an immediate valid answer is needed. Importantly, however, new ideas about integration in Medicare in addition to ACOs must be considered. This Program Project application lays out a forward-looking research agenda encompassing three areas: 1) innovative and comprehensive analyses of current initiatives, 2) rigorous research on the current form of integration, the MA program which, as our research has shown, has demonstrated improved performance in recent years, and, 3) research on innovative beneficiary as well as provider payment policy.