title: Using prior utilization to determine payments for Medicare enrollees in health maintenance organizations.
abstract: The Tax Equity and Fiscal Responsibility Act of 1982 is expected to make it more attractive for health maintenance organizations (HMO's) to participate in the Medicare program on an at-risk basis. Currently, payments to at-risk HMO's are based on a formula known as the adjusted average per capita cost (AAPCC). This article describes the current formula and discusses a modification, based on prior use of Medicare services, that endeavors to more accurately predict risk. Using statistical simulations, formulas incorporating prior use performed better for some types of biased groups than a formula similar to the one currently employed. Major concerns involve the ability to "game the system." The prior-use model is now being tested in an HMO demonstration. This article also outlines the limitations of a prior-use model and areas for future research.
mesh_terms: D005544:Forecasting / Q000379:methods; D006279:Health Maintenance Organizations / Q000191:economics*; D006278:Medicare / Q000706:statistics & numerical data*; D008962:Models, Theoretical; D011907:Rate Setting and Review / Q000379:methods*; D012044:Regression Analysis; D012051:Reimbursement Mechanisms; D013659:Tax Equity and Fiscal Responsibility Act; D014481:United States