TY - JOUR
T1 - Growing Reinsurance Payments Weaken Competitive Bidding in Medicare Part D
AU - Jung, Jeah
AU - Feldman, Roger
N1 - Funding Information:
Joint Acknowledgment/Disclosure Statement: This work is supported by NIH/NIA grant number 1R01AG047934-01. Disclosures: None. Disclaimer: None.
Publisher Copyright:
© Health Research and Educational Trust
PY - 2018/12
Y1 - 2018/12
N2 - Objectives: To examine variation in risk-adjusted reinsurance payments across Part D plans, analyze its implications for the program, and explore options to reduce reinsurance payments. Data/Study Design: 2007–2015 Part D Plan Payment and Premium data; 2010–2013 Part D Prescription Drug Event data; and 2013 Part D Plan Formulary Files. Principal Findings: Risk-adjusted reinsurance payments varied widely across plans at a given out-of-pocket (OOP) premium. The variance in risk-adjusted reinsurance in common OOP premium ranges increased between 2010 and 2015. High risk-adjusted reinsurance payments were negatively correlated with use of utilization management tools for high-cost drugs. Conclusions: Growing reinsurance payments shrink plans’ liability for managing drug spending for high-cost enrollees, creating plan moral hazard, and making OOP premiums a noisy signal of plans’ total costs.
AB - Objectives: To examine variation in risk-adjusted reinsurance payments across Part D plans, analyze its implications for the program, and explore options to reduce reinsurance payments. Data/Study Design: 2007–2015 Part D Plan Payment and Premium data; 2010–2013 Part D Prescription Drug Event data; and 2013 Part D Plan Formulary Files. Principal Findings: Risk-adjusted reinsurance payments varied widely across plans at a given out-of-pocket (OOP) premium. The variance in risk-adjusted reinsurance in common OOP premium ranges increased between 2010 and 2015. High risk-adjusted reinsurance payments were negatively correlated with use of utilization management tools for high-cost drugs. Conclusions: Growing reinsurance payments shrink plans’ liability for managing drug spending for high-cost enrollees, creating plan moral hazard, and making OOP premiums a noisy signal of plans’ total costs.
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U2 - 10.1111/1475-6773.12866
DO - 10.1111/1475-6773.12866
M3 - Article
C2 - 29736940
AN - SCOPUS:85046537756
SN - 0017-9124
VL - 53
SP - 4371
EP - 4380
JO - Health Services Research
JF - Health Services Research
IS - 6
ER -