title: Defective design: regional competition in Medicare.
abstract: The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 creates several new types of private insurance plans in Medicare. The most familiar of these is the preferred provider organization (PPO). Uneven application of regional bidding requirements will place new PPOs at a competitive disadvantage relative to established health maintenance organizations (HMOs). A little-noticed section of the regulations implementing MMA offsets this disadvantage and gives PPOs a strong incentive to bid in some regions, but costs to the taxpayer will be high: up to dollar 60 billion over ten years.
authors.affiliation: Health Care Financing and Economics, Veterans Affairs (VA) Boston Health Care System, USA. pizer@bu.edu
authors.forename: Steven D
authors.initials: SD
authors.lastname: Pizer
authors.forename: Roger
authors.initials: R
authors.lastname: Feldman
authors.forename: Austin B
authors.initials: AB
authors.lastname: Frakt
mesh_terms: D014487:Centers for Medicare and Medicaid Services, U.S.; D004465:Economic Competition; D006279:Health Maintenance Organizations; D007356:Insurance, Pharmaceutical Services / Q000331:legislation & jurisprudence; D017149:Private Sector; D011445:Prospective Payment System; D014481:United States