Developing Medicare and Medicaid Substance Abuse Treatment Spending Estimates. C. Part C: Medicare Advantage


Because encounter data reporting is not mature for MA enrolled beneficiaries, we propose initially estimating SA treatment expenditures for the MA population based on the average level of expenditures for non-MA enrolled Medicare beneficiaries with similar characteristics. As complete encounter data become available for MA enrollees, the second approach, described below, entailing an estimation of the value of the utilization represented in the encounter data, could be used.

1. Imputation Based on FFS Experience

The following steps can be used to impute SA treatment expenditures for the MA enrolled population:

  • Step 1: Develop homogenous tiers--The Beneficiary Summary File can be used to divide Medicare enrollees into two groups based on whether they were enrolled in an MA plan at any point in the year. Within each of these two groups beneficiaries then should be divided into tiers based on their personal characteristics, including age, gender, state of resident, Medicare status code (aged, disabled, End Stage Renal Disease), and dual-eligible status.

  • Step 2: Calculate mean FFS expenditures per enrolled month--Calculate mean SA treatment expenditure per enrolled month among Medicare beneficiaries never enrolled in MA during the year for each tier created in Step 1 for each of the six SA treatment service types listed in Section B above.

  • Step 3: Calculate total MA enrolled months--For each tier in Step 1, calculate the total number of MA enrolled months.

  • Step 4: Calculate total imputed MA SA expenditures--For each SA service type, multiply the estimated mean FFS expenditure per enrolled month from Step 2 times the total number of MA enrolled months in Step 3 for each tier and sum across the tiers to obtain the total imputed MA SA expenditures for the service type.

This approach adjusts for differences in cost related to beneficiary characteristics observable in the administrative data. However, unobservable characteristics of MA enrollees may influence their treatment use. For example, wellness benefits offered by MA plans may appeal to healthier Medicare beneficiaries. Meanwhile, sicker beneficiaries may be less likely to make the effort to sign up for MA and may desire the broader choice of providers obtainable under traditional Medicare. Adjustment differences in these two groups of beneficiaries not linked to characteristics observable in the administrative data could be assessed by using multiple years of Medicare data and assessing whether MA enrollees had a lower SA treatment use rate prior to enrollment in MA relative to their counterparts who chose to remain in traditional FFS Medicare.

2. Imputation Based on Encounter Data

Once encounter data reporting is mature, encounter claims for SA treatment can be identified based on diagnosis codes in a manner similar to the identification of FFS SA treatment claims, as described in Section B. The encounter claims may not include accurate information on payment amount. If accurate information on the payment amount is not available from the encounter claims, we recommend estimating the price per unit of service based on mean expenditures per unit of service among traditional Medicare beneficiaries receiving the same service types. We also recommend that inpatient and other institutional care be priced per treatment day. Table A.5 can be used to classify outpatient treatment visits into homogeneous service types. The units of service observed in the encounter data then would be multiplied by the unit prices from traditional FFS Medicare and the total expenditures summed across the services types to determine total expenditures.

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