Fee-For-Data: A Strategy to Open the HMO Black Box

This paper outlines a simple proposal to maintain utilization data in the face of managed care growth. Health maintenance organizations (HMOs) would be required to submit claims (encounter-level data) and in return would be paid a percentage of what Medicare would pay fee-for-service providers. The capitation payment rate would be lowered to maintain budget-neutrality. This proposal would enable the collection of key data that might not otherwise be captured in a Medicare program dominated by HMOs and other forms of managed care. The data are necessary to drive Medicare policies and to gauge the impact of changes to the program. The program would be well advised to make the small additional investment to make the data system complete. The key issue in implementing such a proposal will be HMOs' ability to generate those data at reasonable cost.