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Favorable Selection, Risk Adjustment, and the Medicare Advantage Program
Author(s) -
Morrisey Michael A.,
Kilgore Meredith L.,
Becker David J.,
Smith Wilson,
Delzell Elizabeth
Publication year - 2013
Publication title -
health services research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.706
H-Index - 121
eISSN - 1475-6773
pISSN - 0017-9124
DOI - 10.1111/1475-6773.12006
Subject(s) - generosity , payment , actuarial science , regression analysis , demography , selection (genetic algorithm) , medicine , demographic economics , economics , statistics , finance , political science , mathematics , sociology , law , artificial intelligence , computer science
Objectives To examine the effects of changes in payment and risk adjustment on (1) the annual enrollment and switching behavior of M edicare A dvantage ( MA ) beneficiaries, and (2) the relative costliness of MA enrollees and disenrollees. Data From 1999 through 2008 national M edicare claims data from the 5 percent longitudinal sample of Parts A and B expenditures. Study Design Retrospective, fixed effects regression analysis of J uly enrollment and year‐long switching into and out of MA . Similar regression analysis of the costliness of those switching into (out of) MA in the 6 months prior to enrollment (after disenrollment) relative to nonswitchers in the same county over the same period. Findings Payment generosity and more sophisticated risk adjustment were associated with substantial increases in MA enrollment and decreases in disenrollment. Claims experience of those newly switching into MA was not affected by any of the policy reforms, but disenrollment became increasingly concentrated among high‐cost beneficiaries. Conclusions Enrollment is very sensitive to payment levels. The use of more sophisticated risk adjustment did not alter favorable selection into MA , but it did affect the costliness of disenrollees.