Managed Medicaid cost savings: the Arizona experience.

This paper reports on estimated cost savings for acute care beneficiaries in the Arizona Health Care Cost Containment System (AHCCCS) over its first nine years of operation, fiscal years 1983-1991. AHCCCS has similar eligibility and service coverage as a traditional Medicaid program has but capitates health plans to provide medical services to beneficiaries. The results indicate that the program yielded $100 million in savings over estimates of what a traditional Medicaid program would have cost in Arizona. In addition, AHCCCS experienced a smaller rate of increase in program expenditures over time, so that cost savings have increased as the program has matured.

Who seeks HIV testing? The impact of risk, knowledge, and state regulatory policy on the testing decision.

This study examines the determinants of an individual's decision to be tested for HIV infection. Using data from the 1988 AIDS Knowledge and Attitudes Survey we develop and test a conceptual model of the factors that impact the testing decision. We estimate the impact that individuals' risk characteristics, sociodemographic characteristics, knowledge about HIV infection, and access to testing have on their decision to be tested. We also examine the impact of state confidentiality policies on the testing decision. Our results indicate that risk group membership, knowledge about HIV infection, and the sociodemographic characteristics of the individual exert a significant impact on the decision to receive an HIV test. In addition, state policies that preserve confidentiality also have a significant effect on an individual's decision to be tested.

Evaluation of Arizona Health Care Cost Containment System, 1984-85.

In this article, we describe the evaluation of the Arizona Health Care Cost Containment System (AHCCCS), Arizona's alternative to the acute care portion of Medicaid. We provide an assessment of implementation of the program's innovative features during its second 18 months of operation, from April 1984 through September 1985. Included in the evaluation are assessments of the administration of the program, provider relations, eligibility, enrollment and marketing, information systems, quality assurance and member satisfaction activities, the relationship of the county governments to AHCCCS, the competitive bidding process, and the plans and their financial status.

Medicare assignment rates of physicians: their responses to changes in reimbursement policy.

A physician's Medicare assignment rate is one measure of his or her willingness to participate in the Medicare program. The assignment rate reflects the proportion of services provided to Medicare beneficiaries for which the physician accepts the Medicare reasonable fee as payment in full. Generally, Medicare reasonable fees are lower than the payment which a physician receives from providing the same service to a private patient or to a Medicare patient who is not treated on assignment. Because Medicare eligibles not treated on an assigned basis are financially liable for the difference between the physician's charge and the Medicare reasonable fee, the assignment rate is an indication of the out-of-pocket costs borne by Medicare eligibles. One factor which may affect the willingness of physicians to accept patients on assignment is the difference between the reimbursement which he or she may receive in the private market and the fee received from treating Medicare eligibles on assignment; Throughout this paper we assume that the physician's private price or billed charge is equivalent to the level of reimbursement received from treating privately insured patients and Medicare non-assigned patients. Since the level of reimbursement is generally no greater than the billed charge and may be less, this assumption may overstate the actual reimbursement received by the physician. In all instances, reimbursement refers to the aggregate amount received by the physician from all sources for a given service. The lower a physician's Medicare reasonable fee relative to the private market fee the less willing he/she may be to participate in Medicare assignment. This paper examines the effect of changes in Medicare reimbursement on the assignment rates of physicians. It also predicts Medicare assignment rates under a policy option which would increase Medicare reasonable fees to the level of prevailing fees.

The effect of economic incentives on the education and distribution of physicians: a review.

This paper examines the available evidence on the impact of economic factors on the specialty and locational choices of physicians. Economic variables which influence the "rate of return" to the physician (profitability in relation to training costs) to alternative specialties and locational decisions include average yearly income, hours of work, price for each health service and training costs. The findings of the review indicate that the rate of return to specialty training varies substantially among specialties. Rates of return to training in surgery and radiology are nearly three times that of other medical specialties. These rates of return differences are shown to have a small, albeit significant, effect on a physician's specialty as well as location choices. Furthermore, there is a positive relationship between the mean fees of physicians and the physician population ratio in an area, i.e., areas with more physicians have higher fees. Confounding the relationship between economic variables and specialty and locational choice is the fact that physicians may have substantial amounts of market power and can themselves influence the price of their services. Thus, the influence of reimbursement policies to alter the distribution of physicians may be less effective because physicians may have the ability to influence and alter the level of income and rate of return to training.

A review of the economic evidence on prevention.

This study examines the economic evidence on preventive health care. A discussion of benefit-cost analysis and cost-effectiveness analysis, their applications to preventive strategies, and the problems inherent in implementing these approaches precedes a review of the empirical evidence. Prevention strategies are grouped into three categories: lifestyle changes, public health measures and screening programs. Lifestyle changes include altering behavior patterns as they relate to alcohol and drug abuse, smoking and automobile safety regulations. Included in public health measures are immunizations against communicable diseases, water fluoridation and food inspection. Screening includes programs for the detection of PKU and congenital hypothyroidism in newborn infants, for spina bifida cystica in the unborn fetus, and hypertension. The paper concludes that many of the preventive health measures examined represent an efficient use of resources. Because only quantifiable changes in health status or costs are included in the benefit-cost and cost-effectiveness analyses, the actual value of prevention strategies may be understated since reductions in pain and suffering usually are omitted.

The economic cost of illness: fiscal 1975.

In 1963, Rice estimated the costs of illness and then allocated these costs by disease. She and Cooper in 1972 updated the original estimates and developed a more sophisticated methodological approach. This paper updates further the costs of illness to 1975 and presents further methodological changes. Analysis of the direct and indirect costs of illness for 1975 reveals that the upward trend into total costs continued, reaching $264 billion. The indirect costs are loss of earnings due to morbidity or premature mortality estimated at various discount rates allocated into 18 categories by disease. The direct costs include such payments as those made for hospital care, physician services, and drugs which are allocated by disease and unallocated costs such as construction and research. The proportion of total costs due to premature mortality were found to drop slightly from 1972 to 1975, while the morbidity share increased slightly. Direct costs account for approximately the same share of total illness in 1975 as in 1972. The proportion of total costs accounted for by direct costs varies directly with the discount rate selected, with the direct costs accounting for 50 per cent of the total at the 10 per cent discount rates and 37 per cent at 2.5 per cent rate. The proportion due to morbidity costs also varies directly with the discount rate, although the changes are small. There is an inverse relationship between the share for premature mortality costs and discount rate.