Substantial Growth In Medicare Advantage And Implications For Reform.

Medicare Advantage (MA) enrollment increased by 22.2 million beneficiaries (337.0 percent) from 2006 through 2022, whereas traditional Medicare enrollment declined by 1.0 million (-2.9 percent) over that period. In 2022, adjusted MA penetration was 49.9 percent nationally, and 24.0 percent of Medicare beneficiaries with Parts A and B lived in a county with adjusted MA penetration equal to or exceeding 60 percent.

Reforming Medicare through 'version 2.0' of accountable care.

Medicare needs fundamental reform to achieve fiscal sustainability, improve value and quality, and preserve beneficiaries' access to physicians. Physician fees will fall by one-quarter in 2014 under current law, and the dire federal budget outlook virtually precludes increasing Medicare spending. There is a growing consensus among policy makers that reforming fee-for-service payment, which has long served as the backbone of Medicare, is unavoidable. Accountable care organizations (ACOs) provide a new payment alternative but currently have limited tools to control cost growth or engage and reward beneficiaries and providers. To fundamentally reform Medicare, this article proposes an enhanced version of ACOs that would eliminate the scheduled physician fee cuts, allow fees to increase with inflation, and enhance ACOs' ability to manage care. In exchange, the proposal would require modest reductions in overall Medicare spending and require ACOs to accept increased accountability and financial risk. It would cause per beneficiary Medicare spending by 2023 to fall 4.2 percent below current Congressional Budget Office projections and help the program achieve fiscal sustainability.

Building regulatory and operational flexibility into accountable care organizations and 'shared savings'.

The Affordable Care Act created accountable care organizations (ACOs), which will be a new part of Medicare as of January 2012, together with a "shared savings program" that will modify how these organizations will be paid to care for patients. Accountable care organizations have the potential to lower costs, improve the quality of care, facilitate delivery system reform, and promote innovation in health care. The federal government is set to create rules to regulate these organizations and has broad discretion to allow them to pursue a variety of approaches. Drawing on experience from some ACO pilot programs and the Medicare Part D prescription drug coverage program, we argue that regulations governing accountable care organizations should be flexible, encouraging of diversity and innovation and allowing for changes over time based on lessons learned. We recommend using regulations as a general framework, while relying on notices and other guidance below the regulatory level to spell out specific requirements.

Fostering accountable health care: moving forward in medicare.

To succeed, health care reform must slow spending growth while improving quality. We propose a new approach to help achieve more integrated and efficient care by fostering local organizational accountability for quality and costs through performance measurement and "shared savings" payment reform. The approach is practical and feasible: it is voluntary for providers, builds on current referral patterns, requires no change in benefits or lock-in for beneficiaries, and offers the possibility of sustained provider incomes even as total costs are constrained. We simulate the potential expenditure impact and show that significant Medicare savings are possible.

Reducing the growth of Medicare spending: geographic versus patient-based strategies.

This paper explores the potential of two alternative approaches for reducing the rate of growth in Medicare spending. One strategy would focus on reducing the expenditures of high-spending individuals. Given that a large share of Medicare spending is consumed by relatively few beneficiaries, this approach targets the small group responsible for most of the spending. The other strategy would focus on reducing expenditures in high-spending regions. Because either approach would have to overcome major hurdles before lowering Medicare spending, the likely payoff from the alternative strategies is far from clear. Viewed from a budgetary perspective, concentration in Medicare spending suggests the importance of focusing on high-spending patients.