Source Health Affairs. Adjusting payment by diagnosis offers substantial improvement. Reducing payment, a Clinton administration proposal, would recoup excess payments in the short run but not address the selection problem, which could reemerge.
Selection makes current payments vulnerable to upward spirals.
We propose not using traditional Medicare to update reimbursement. Basing some payment on enrollees' actual use addresses selection and stinting. Rather than reinsurance, we propose blending traditional Medicare and risk-adjusted capitation. Ceding some cases to traditional Medicare in advance appears to be useful for terminally ill patients. Copyright 2000 Department of Health Care Policy , Harvard Medical School.