Trends in Special Medicare Payments and Service Utilization for Rural Areas in the 1990s

By Donna O. Farley; Lisa R. Shugarman et al. | Go to book overview

7.
1990–1997 TRENDS IN AAPCC CAPITATION RATES
The AAPCC rates that CMS published each year through 1997 were set at 95 percent of the adjusted average per capita costs for Medicare fee-for-service beneficiaries. These rates were the basis for capitation payments to Medicare health plans, which were risk-adjusted using demographic factors. Medicare AAPCCs were calculated for more than 3,100 counties and similar geographic areas within the continental United States.22 The AAPCC rates were replaced in 1998 by the new capitation rates established by the DBA of 1997. The 1997 AAPCCs were the baseline capitation rates for calculation of these new capitation rates. The BBA also mandated an improved risk-adjustment methodology, which began being used in 2000.The research reported here is designed to document trends in Medicare base capitation rates from 1990 through 1997 for rural and urban counties and to examine factors that may have contributed to observed payment trends. Relationships between AAPCCs and managed care participation also are examined. The analysis includes consideration of AAPCCs for urban areas to provide a reference point for assessing the levels and volatility of the rural AAPCC rates. These analyses address the following specific research questions:
How do the levels and volatility of Medicare AAPCC rates differ among rural underserved areas, other rural counties, and urban counties?
How do these differences change over time?
What are the relationships between capitation rates and Medicare health plan enrollments in rural areas, with comparisons to urban area relationships?

Our analyses of the AAPCC rates provide a historical summary of trends in the rates that were in use before the current capitation policy was put in place. Furthermore, by anchoring the analyses on the 1997 AAPCC rates, we will be able to contribute to a more detailed understanding of the factors that influenced the baseline rates that will drive Medicare capitation rates for some time to come.


DISTRIBUTIONS OF AAPCC RATES

Trends in AAPCC rates were compared across the defined county categories for each of our three AAPCC measures: average AAPCC rates, the Part A share of the AAPCCs, and the volatility of the AAPCCs over time. Relationships between AAPCC rates and several measures of county demographics and provider supply were examined, estimating multivariate models of determinants of AAPCCs. We also examined 1997 enrollment rates for Medicare health plans, with comparisons to 1993 enrollments, to assess the extent to which Medicare managed care had a presence in non-metropolitan locations. We present the results of this research below.

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22
AAPCC rates also are calculated for geographic areas outside the United States, including Guam, Puerto Rico, the Virgin Islands, and several other areas. These areas are not included in our analyses.

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