Legislative responses to managed care pressures

Changes brought about by the increasing presence of managed care have sparked responses in a number of states. While proponents of managed care contend that it fosters competition and allows the market to influence its nature and functioning, the legislators' responses call into question the notion that managed care will bring greater freedom to insurers and providers and, at the same time, will benefit health care consumers.     

Applying competitive bidding to health care

This paper reviews the empirical literature on competitive bidding for health services under public programs and, in this context, discusses the major issues that must be confronted in designing bidding systems. These issues include the specification of units of service, the selection of winning bidders, the determination of reimbursement for winning bidders, the treatment of losing bidders, and contract enforcement. The paper then illustrates these issues in practice by outlining one possible competitive bidding system for purchases and rentals of durable medical equipment under the Medicare program.     

From clinical integration to accountable care

Four key challenges to reforming health care organizations can be addressed by a clinical integration model patterned after Advocate Physician Partners (APP). These challenges are: predominance of small group practices, dominant fee-for-service reimbursement methods, weaknesses of the traditional hospital medical staff structure and a need to partner with commercial insurance companies. APP has demonstrated teamwork between 3800 physicians and hospitals to improve quality, patient safety and cost-effectiveness. Building on this model, an innovative contract with Blue Cross Blue Shield of Illinois serves as a prototype for a commercial Accountable Care Organization. For this contract to succeed, APP must outperform the market competition. To accomplish this, APP has implemented strategies to reduce readmissions, avoid unnecessary admissions and emergency room visits, expand primary care access, and enhance quality and patient safety.     

Using home equity to finance long-term care

A majority of elderly Americans have the bulk of their assets tied up in the houses they own. Reverse mortgages could tap this home equity, providing loan disbursements without requiring older homeowners to make monthly payments on principal and interest. In this paper we analyze the potential of using home equity to finance long-term care of the elderly, including payments for home care and for long-term care insurance. We first estimate each homeowner's risk of need for care (and risk of institutionalization) and then calculate the degree to which home equity could be used to cover the costs of home care (or of insurance premiums). Special emphasis is placed on those in the highest risk group and on those with the lowest incomes, who often turn out to be the same people.