Managed Care and Medicare Expenditures

How do Medicare+Choice (M+C) payment rates affect M+C and FFS utilization and expenditures? The researchers: 1) assessed the impact of changes in payment rates to Medicare HMOs on enrollment in HMOs by Medicare beneficiaries; 2) assessed the aggregate impact of Medicare HMO enrollment on FFS Medicare utilization and expenditure; and 3) disaggregated the impact of Medicare HMO enrollment on FFS Medicare utilization and expenditure into a spillover effect and a selection effect. This study revised the assumptions surrounding the impact of managed care on Medicare expenditures in order to assist policymakers in assessing the financial health of the Medicare Trust Funds.