. "7 The Information Trading Process: The Case of Medicare Payment Equity." Information Trading: How Information Influences the Health Policy Process. Washington, DC: The National Academies Press, 1997.
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convert policy research into policy results. In the most proactive sense, these players are agents of change.
I have played all three roles in the policymaking process: as a producer of information in academia from 1980 to 1990, as a consumer during my tenure as a Robert Wood Johnson Fellow (1990 to 1991), and as a senior legislative assistant for a U.S. Senator (1991 to 1994). I am now a legislative analyst and lobbyist in the private sector. The case study presented here illustrates how an information agent can shape the policymaking process.
SUMMARY OF THE POLICY ISSUE
In 1965, Congress guaranteed health insurance coverage for retirees and disabled people. Medicare was modeled on the prevailing fee-for-service insurance programs, reflecting the way that health care was delivered at that time. Medicare paid hospitals and providers on a cost-based reimbursement system. Hospitals were paid under the Medicare Trust Fund, called Part A, and physicians were paid under Part B, which was financed through general revenues (42 U.S.C. 401-433).
In the mid 1970s, health maintenance organizations (HMOs) began to thrive in some communities as an alternative to fee-for-service. HMOs offer a comprehensive set of benefits through an organized network of providers for a single prepaid premium. In 1982, Congress gave senior citizens an opportunity to choose an alternative to fee-for-service Medicare. The HMO option, called a risk contract, allowed beneficiaries to select a comprehensive, integrated health plan that offered less paperwork, no deductibles, low co-payments, and in many cases, more benefits than the traditional Medicare coverage (42 U.S.C. 401—433).
Congress designed a payment formula for the risk contract that was tied to fee-for-service spending. The formula requires that the Health Care Financing Administration (HCFA) total up all the fee-for-service spending in the program and calculate annually the average per capita spending (United States Per Capita Cost) and then, using the same formula, determine separate rates for each of the 3,080 counties in the nation.