(Continue my last post, http://health-vip.cn/archives/articals/99.htm… … )
4. How would moral hazard4 be minimized?
If reimbursement is based on actual amounts paid by insurers and self-funded plans, the payers probablywould alter certain behaviors (e.g. provider contracts, cost-saving measures) as they will no longer beresponsible for the catastrophic costs associated with individuals or groups covered by reinsurance.
Options to mitigate this effect (known as moral hazard), to varying degrees, include:
Ø Reimbursing payers based on government-defined nominal costs per service (e.g. Medicare feefor service payable amount)
Ø Requiring a coinsurance amount from payers, thereby keeping a portion of the catastrophic claimsas the payers’ responsibility
Ø Reimbursing payers based on a risk adjuster or other predictive model, similar to the CMS-HCC (Hierarchical Condition Category) model Requiring payers to have in place cost-containment measures, such as disease management, inorder to participate in the pool.
5. Addressing geographic cost factors, such as Medicare geographic cost factors.
If a reinsurance program is created on a federal level, geographic cost differentials may result in different
"subsidies" for different geographic areas of the country. Because health care costs are high in some partsof the country (due to both cost per unit differences and utilization differences), a fixed attachment pointcould result in insurers in low-cost areas subsidizing insurers in high-cost areas. Ways to mitigate thispotential problem include:
Ø Adjusting the "national-average" attachment point based on Medicare geographic cost factors
Ø To the extent that the program is financed by assessing participating insurers, calculating theassessment on a statewide or regional basis, rather than across the entire federal program.
6. How should the accumulation period be defined?
Most reinsurance arrangements are based on one year's claims, but it must be determined how this isdefined. Options include:
Ø Reimbursing payers on a “paid-claims” basis, that is, based on all claims paid by the insurerduring the year
Ø Reimbursing payers on an “incurred-claims” basis, that is, all claims for services received by theinsured (and thus incurred by the payer) during the year.
7. What types of services are eligible for reimbursement?
Different insurance plans will have different benefit packages, covering different services. In addition,some benefit packages will be more generous than others. As a result, it is important to define whatservices are eligible for reimbursement under the reinsurance program. Options include:
Ø Medicare/CMS reimbursement policy
Ø Reimbursement based on the underlying insurance plan.
8. Other considerations:
Ø How would the reinsurance program be administered? Through a government agency? Throughthe states? Through private reinsurers? Through a partnership or combination of public andprivate entities?
Ø Would premiums from insurers and self-funded plans be required for participation in thereinsurance program? If so, how should these premiums be determined?
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