What is horizontal integration.

(a) (2 points) Describe contracting considerations for the following types of physicians: Primary and specialty care (ii) Hospital-based (ili) Non-physician practitioners of primary care (b) (/ point) Compare and contrast financial considerations of salaried versus self- employed physicians. You are given the following contract terms for an independent specialty care physician: Reimbursement rate 102% of original Medicare fee schedule: placement on tier 2 of 3 for member cost sharing Managed care fee $10 per patient per year for access to medical records Access Referrals from PCP required for in-network access New patient bonus $100 per patient bonus if the patient is new to both the insurer and the physician Renewal Review for renewal every 3 years (c) (2 points) Critique the contract terms from the perspective of the: Physician Insurer(a) (/ point) Describe four risk classification schemes and the circumstances when each is used. You are evaluating an additive risk adjustment model in a market with two insurers. The insurer with a lower average risk profile will have to pay out money to the other insurer to compensate it for enrolling higher risk members. Each insurer has been given the choice of using one of two methods to determine the payout: Method I uses only the risk score model Method 2 uses the expected claims costs by risk category, where the risk classification is assigned using the risk score model Risk Score Model Risk Weight Variable Female Male 0 - 34 Years 0.500 0.550 35 - 44 Years 0.590 0.620 45 - 54 Years 0.650 0.680 55 - 64 Years 0.700 0.720 65 Years or Over 0.750 0.800 Diabetes 0.950 Congestive Heart Failure 0.430 Immune Disorders 0.610 Hypertension 0.200 Insurer Demographics Insurer A Insurer B 100 females aged between 35 and 100 females aged between 46 39 years with no conditions and 50 years with no conditions 200 males between 46 and 52 years 50 males between 31 and 33 with diabetes and hypertension years with congestive heart failure 100 females aged 56 to 63 years 50 males aged 66 to 71 years with diabetes and immune disorders with diabetes and congestive heart failureExpected Claims Costs by Risk Category Risk Classification Risk Weight Expected Claim Costs Per Member Per Month Low Equal to or less than 0.500 $200 Greater than 0.500 but Average $500 less than 1.500 High Greater than or equal to 1.500 $1.000 (b) (3 points) Calculate the relative risk factor for each insurer using: (i) Method 1 (ii) Method 2 Show your work. (c) (/ point) Evaluate the challenges of allowing each insurer to choose its own approach. Justify your response