Payment to health maintenance organizations and the geographic factor - adjusted average per capita cost payment system for Medicare risk-based plans

Health Care Financing Review, Fall, 1990 by Louis F. Rossiter, Killard W. Adamache

Among the 725 counties in MSAs, the distribution of changes from a reconfiguration of the AAPCC is as follows:

* 325 counties, or 44.8 percent, incrased.

* 192 counties, or 26.6 percent, had no change.

* 208 counties, or 28.6 percent, decreased.

Increases and decreases are defined as a change of $1 or more. Only 121 counties (16.7 percent) had an increase of $20 or more, and 29 counties (4.0 percent) had a decrease of $20 or more. MSA counties were winners than losers from reconfiguration.

In Figure 1, year-to-year changes in the AAPCC were illustrated for eight selected CMSAs. By definition, reconfiguration eleminates differences across counties in the change in the AAPCC for those areas. (Additional information of the rconfigured AAPCC, the actual AAPCC and their projected difference for the 10 most populated CMSAs and 18 other MSAs with risk-based enrollment is available from the authors upon request.)

Impact on individual non-rural counties

Non-MSA counties with large AAPCC changes from reconfiguration are shown in Table 6. The five counties with the largest increase and the five counties with the largest decreases are shown. Franklin and Bernstable, the two lowest-paid areas in Massachusetts before reconfiguration, received the largest increase. This increase is the result of combining non-MSA counties in the same State and treating them as one geographic area for the purposes of computing the geographic adjustment factor. Franklin, in western Massachusetts, had an AAPCC of $176.05. Barnstable, in the eastern part of theState of Cape Cod, had an AAPCC of $182.98. Each increased about $100 to $281.03. As with the MSA counties, differences are sharp with the next three counties: Elko, Nevada, Holmes, Ohio, and LAnder, Nevada. Each increased for $69 to $86. In percentage terms, however, Homes, is the big winner with about a 75-percent increase in its AAPCC.

The non-MSA counties with decreases in the AAPCC after reconfiguration changed more markedly than counties that had an increase in the AAPCC. the county with the largest decrease is loving, Texas. For unknown reasons, Loving had among the highest AAPCC's, even when companred with MSA counties. As a result, its AAPC C falls the most from reconfiguration. Jackson, South Dakota is similar, with a high AAPCC for either a MSA or non-MSA county. Both Loving and Jackson may be oddities, in part exemplifying the problem associated with small population sizes. they both have a small population of 65 years of age or over. the next three counties fall by just $100 or by roughly 40 percent.

Among the 2,349 non-MSA counties, the distribution of changes from a reconfiguration of teh AAPCC was as follows:

* 1,100 counties, or 46.8 percent, incrased.

* 80 counties, or 3.5 percent, had no change.

* 1,167 counties, or 49.7 percent, decreased.

Increases and decreases are defined as a change of $1 or more. Only 323 counties (13.8 percent) had an increase of $20 or more, and 462 counties (19.7 percent) had a decrease of $20 or more. there are more loser non-MSA counties than winner counties from reconfiguration.