Beginning in 2014, individuals and small businesses are able to purchase private health insurance through competitive Marketplaces. The Affordable Care Act (ACA) provides for a program of risk adjustment in the individual and small group markets in 2014 as Marketplaces are implemented and new market reforms take effect. The purpose of risk adjustment is to lessen or eliminate the influence of risk selection on the premiums that plans charge. The risk adjustment methodology includes the risk adjustment model and the risk transfer formula.This article is the second of three in this issue of the Review that describe the Department of Health and Human Services (HHS) risk adjustment methodology and focuses on the risk adjustment model. In our first companion article, we discuss the key issues and choices in developing the methodology. In this article, we present the risk adjustment model, which is named the HHSHierarchical Condition Categories (HHS-HCC) risk adjustment model. We first summarize the HHS-HCC diagnostic classification, which is the key element of the risk adjustment model. Then the data and methods, results, and evaluation of the risk adjustment model are presented. Fifteen separate models are developed. For each age group (adult, child, and infant), a model is developed for each cost sharing level (platinum, gold, silver, and bronze metal levels, as well as catastrophic plans). Evaluation of the risk adjustment models shows good predictive accuracy, both for individuals and for groups. Lastly, this article provides examples of how the model output is used to calculate risk scores, which are an input into the risk transfer formula. Our third companion paper describes the risk transfer formula.

BackgroundTumor testing for mutations in the epidermal growth factor receptor (EGFR) gene is indicated for all newly diagnosed, metastatic lung cancer patients, who may be candidates for first-line treatment with an EGFR tyrosine kinase inhibitor. Few studies have analyzed population-level testing.MethodsWe identified clinical, demographic, and regional predictors of EGFR & KRAS testing among Medicare beneficiaries with a new diagnosis of lung cancer in 2011–2013 claims. The outcome variable was whether the patient underwent molecular, EGFR and KRAS testing. Independent variables included: patient demographics, Medicaid status, clinical characteristics, and region where the patient lived. We performed multivariate logistic regression to identify factors that predicted testing.ResultsFrom 2011 to 2013, there was a 19.7% increase in the rate of EGFR testing. Patient zip code had the greatest impact on odds to undergo testing; for example, patients who lived in the Boston, Massachusetts hospital referral region were the most likely to be tested (odds ratio (OR) of 4.94, with a 95% confidence interval (CI) of 1.67–14.62). Patient demographics also impacted odds to be tested. Asian/Pacific Islanders were most likely to be tested (OR 1.63, CI 1.53–1.79). Minorities and Medicaid patients were less likely to be tested. Medicaid recipients had an OR of 0.74 (CI 0.72–0.77). Hispanics and Blacks were also less likely to be tested (OR 0.97, CI 0.78–0.99 and 0.95, CI 0.92–0.99), respectively. Clinical procedures were also correlated with testing. Patients who underwent transcatheter biopsies were 2.54 times more likely to be tested (CI 2.49–2.60) than those who did not undergo this type of biopsy.ConclusionsDespite an overall increase in EGFR testing, there is widespread underutilization of guideline-recommended testing. We observed racial, income, and regional disparities in testing. Precision medicine has increased the complexity of cancer diagnosis and treatment. Targeted interventions and clinical decision support tools are needed to ensure that all patients are benefitting from advances in precision medicine. Without such interventions, precision medicine may exacerbate racial disparities in cancer care and health outcomes.Electronic supplementary materialThe online version of this article (10.1186/s12885-018-4190-3) contains supplementary material, which is available to authorized users.

Objectives. To assess the impact of multitiered copayments on the cost and use of prescription drugs among Medicare beneficiaries. Data Sources. Marketscan 2002 Medicare Supplemental and Coordination of Benefits database and Plan Benefit Design database. Study Design. The study uses cross-sectional variation in copayment structures among firms with a self-insured retiree health plan to measure the impact of number of copayment tiers on total and enrollee drug payments, number of prescriptions filled, and generic substitution. The study also assesses the effect of enrollee cost sharing on the cost and use of prescription medications for the long-term treatment of chronic conditions. Data Collection Methods. We linked plan enrollment and benefit data with medical and drug claims for 352,760 Medicare beneficiaries with employer-sponsored retiree drug coverage. Primary Findings. Medicare beneficiaries in three-tiered plans had 14.3 percent lower total drug expenditures, 14.6 percent fewer prescriptions filled, and 57.6 percent higher out-of-pocket costs than individuals in lower tiered plans. They also had fewer brand name and generic prescriptions filled, and a higher percentage of generics. The estimated price elasticity of demand for prescription drug expenditures was À 0.23. Finally, for maintenance medications used for the long-term treatment of chronic conditions, members in three-tiered plans had 11.5 percent fewer prescriptions filled. Conclusions. Higher tiered drug plans reduce overall expenditures and the number of prescriptions purchased by Medicare beneficiaries. Beneficiaries are less responsive to cost sharing incentives when using drugs to treat chronic conditions.

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The PGP demonstration, which used a payment model similar to the Medicare Accountable Care Organization (ACO) program, resulted in small reductions in Medicare expenditures and inpatient utilization, and improvements in process quality indicators. Judging from this demonstration experience, it is unlikely that Medicare ACOs will initially achieve large savings. Nevertheless, ACOs paid through shared savings may be an important first step toward greater efficiency and quality in the Medicare fee-for-service program.