Recent debates on Medicare reform focus on prescription drug coverage, expanding managed-care choices, or technical issues of payment policy. Despite all the heat generated by these issues, Edward F. Lawlor's new book, Redesigning the Medicare Contract, demonstrates that fundamental questions of purpose and policy design for Medicare have been largely ignored. Challenging conventional ideas, Lawlor suggests that we look at Medicare as a contract between the federal government, the program's beneficiaries, and health care providers. Medicare reform, then, would involve rewriting this contract so that it more successfully serves the interests of both beneficiaries and taxpayers. To do this, Lawlor argues that we must improve the agency of the program—the informational, organizational, and incentive elements that assure Medicare program carries out beneficiary and taxpayer interests in providing the most appropriate, high-quality care possible. The book includes a chapter devoted solely to concepts and applications that give definition to this brand of agency theory. Lawlor's innovative agency approach is matched with lucid explanation of the more comprehensive groundwork in the history and politics of the Medicare program. Lawlor's important and timely book reframes the Medicare debate in a productive manner and effectively analyzes alternatives for reform. Lawlor argues that effective policy design for Medicare requires greater appreciation of the vulnerability of beneficiaries, the complexity of the program itself, its wide geographical variations in services and financing, and the realistic possibilities for government and private sector roles. Tackling difficult problems like end-of-life and high-tech care—and offering sensible solutions—Redesigning the Medicare Contract will interest political scientists, economists, policy analysts, and health care professionals alike.

Medicare's Quality Improvement Organization Program is the second book in the new Pathways to Quality Health Care series. Focusing on performance improvement, it considers the history, role, and effectiveness of the Quality Improvement Organization (QIO) program and its potential to promote quality improvement within a changing health care delivery environment that includes standardized performance measures and new data collection and reporting requirements. This book carefully examines the QIOs that serve every state as well as the national program that guides and supports them. In addition, it highlights the important roles that a national program with private organizations in each state can play in promoting higher quality care. Medicare's Quality Improvement Organization Program looks closely at the technical assistance role of the QIO program and the need to encourage and support providers to improve their performance. By providing an in-depth assessment of the federal experience with quality improvement and recommendations for program improvement, this book helps point the way for those who strive to create higher quality and better value in health care. Intended for multiple audiences, Medicare's Quality Improvement Organization Program is essential reading for members of Congress, the federal executive branch, the QIOs, health care providers and clinicians, and stakeholder groups.

And introduction -- Traditional Medicare and private health plans -- Issues in designing a premium support system for Medicare -- Health care systems that are similar to premium support -- Potential effects of selected approaches to premium support -- Technical aspects of the analysis -- Supplementary tables.

The Medicare Shared Savings Program (MSSP) was created under the Patient Protection and Affordable Care Act to control escalating Medicare spending by incentivizing providers to deliver healthcare more efficiently. Medicare providers that enroll in the MSSP earn bonus payments for reducing spending to below a risk-adjusted financial benchmark that depends on the provider's historical spending. To generate savings, a provider must invest to improve efficiency, which is a cost that is absorbed entirely by the provider under the current contract. This has proven to be challenging for the MSSP, with a majority of participating providers unable to generate savings due to the associated costs. In this paper, we propose a predictive analytics approach to redesigning the MSSP contract with the goal of better aligning incentives and improving financial outcomes from the MSSP. We formulate the MSSP as a principal-agent model and propose an alternate contract that includes a performance-based subsidy to partially reimburse the provider's investment. We prove the existence of a subsidy-based contract that dominates the current MSSP contract by producing a strictly higher expected payoff for both Medicare and the provider. We then propose an estimator based on inverse optimization for estimating the parameters of our model. We use a dataset containing the financial performance of providers enrolled in the MSSP, which together accounts for 7 million beneficiaries and over $70 billion in Medicare spending. We estimate that introducing performance-based subsidies to the MSSP can boost Medicare savings by up to 40% without compromising provider participation in the MSSP. We also find that the subsidy-based contract performs well in comparison to a fully flexible, non-parametric contract.