The Medicare Advantage Success Story — Looking beyond the Cost Difference

Guram, Jeet S.; Moffit, Robert E.

doi:10.1056/nejmp1114019

Cited by 7 publications

(1 citation statement)

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“…In the last decade, MA enrollment has more than doubled from 4.5 million in 2003 to 11.4 million in 2010 (MedPAC 2011), its highest level since the inception of the program (Figure 1). During this time, MA has commanded increasing policy interest, with growing implications for the trajectory of Medicare spending as well as beneficiary access and quality of care (Gold, 2012; Guram and Moffit, 2012). …”

Section: Introductionmentioning

confidence: 99%

Competitive bidding in Medicare Advantage: Effect of benchmark changes on plan bids

Song

Landrum

Chernew

2013

Journal of Health Economics

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Bidding has been proposed to replace or complement the administered prices in Medicare pays to hospitals and health plans. In 2006, the Medicare Advantage program implemented a competitive bidding system to determine plan payments. In perfectly competitive models, plans bid their costs and thus bids are insensitive to the benchmark. Under many other models of competition, bids respond to changes in the benchmark. We conceptualize the bidding system and use an instrumental variable approach to study the effect of benchmark changes on bids. We use 2006–2010 plan payment data from the Centers for Medicare and Medicaid Services, published county benchmarks, actual realized fee-for-service costs, and Medicare Advantage enrollment. We find that a $1 increase in the benchmark leads to about a $0.53 increase in bids, suggesting that plans in the Medicare Advantage market have meaningful market power.

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Section: Introductionmentioning

confidence: 99%