Moneyball in Medicare

Competition, quality and integrated health care

Integration of health care services has been promoted in several countries to improve the quality and coordination of care. We investigate the effects of such integration in a model where providers compete on quality to attract patients under regulated prices. We identify countervailing effects of integration on quality of care. While integration makes coordination of care more profitable for providers due to bundled payments, it also softens competition as patient choice is restricted. We also identify circumstances due to asymmetries across providers and/or services under which integration either increases or reduces the quality of services provided. In the absence of synergies, integration generally leads to increases in quality for some services and reductions for others. The corresponding effect on health benefits depends largely on whether integration leads to quality dispersion or convergence across services. If the softening of competition effect is weak, integration is likely to improve quality and patient outcomes.

Tiered network health plans and changes in physician practice intensity

OBJECTIVE

To examine whether physicians in tiered physician networks where tier assignments are based on "intensity" of care, which is the quantity of resources used per-episode of care, change their intensity after learning detailed information about how their intensity compares to their peers.

DATA SOURCES

Administrative data on intensity and quality at the physician-episode level for all physicians included in a tiered physician network offered through the Massachusetts Group Insurance Commission (GIC) in 2010-2015. Data on physicians' share of revenue from GIC patients from the 2012 Massachusetts All-Payer Claims Database.

STUDY DESIGN

For 21,086 physicians in seven specialties, we estimate the impact of the dissemination of detailed intensity performance information in 2014 on physician intensity per episode of care overall and decomposed into physician services, facility, and pharmaceutical subcomponents. Intensity outcomes were measured using a standardized price schedule. Using a difference-in-differences regression, we compared physicians with high exposure to the tiered network via a large share of their revenue coming from GIC patients ("GIC share") to physicians who were less exposed. Measures of intensity of care and GIC share were log-transformed, and models controlled for physician-episode type fixed effects.

DATA EXTRACTION METHODS

We linked GIC share to administrative data using National Provider Identifier.

PRINCIPAL FINDINGS

There were no statistically significant differences in total intensity of care with the informational intervention for physicians in procedure-based specialties (-0.12 elasticity of intensity per episode with respect to GIC patient share, 95% CI -0.30 to 0.06) or in relationship-based specialties (0.09, 95% CI -0.15 to 0.33). There were also no differences in intensity of subcomponents of care following the intervention.

CONCLUSIONS

Tiered network incentives had no detectable impact on intensity of care that physicians provided to patients.

The effect of patient quality measurements and HCAHPS patient satisfaction on hospital reimbursements

BACKGROUND: The Centers of Medicare & Medicaid Services (CMS) links hospital reimbursements to quality metrics. Likewise, the Hospital Value-Based Purchasing (VBP) program offers financial incentives to acute-care hospitals based on performance improvements on several quality measures included in the national Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey. A research gap exists with regard to assessing the effectiveness of VBP incentives on improving the patient’s quality of care. OBJECTIVE: This study is to determine whether hospitals which reported better patient quality metrics and lower frequency of pressure sores received higher reimbursements. METHODS: The data were retrieved from the CMS Care Compare website utilizing matched data from 2297 US hospitals. Information on HCAHPS, the VBP Program in Patient Safety Index, and Reimbursements was obtained for this study. Partial Least Square (PLS) was utilized thru SmartPLS 3.0 to test the hypotheses. RESULTS: The results did not reveal any financial penalties when hospitals reported lower patient quality outcomes and increased numbers of pressure sores. However, lower patient quality measures were associated with lower patient satisfaction. Controversially, lower patient satisfaction scores were associated with higher reimbursement rates overall. CONCLUSIONS: The main contribution of this study reveals that the effectiveness of value-based reimbursements and the concept of continuous improvement is constrained due to the lack of unified measurement objectives across US healthcare institutions.

Value-Based Payments in Health Care: Evidence from a Nationwide Randomized Experiment in the Home Health Sector

Value-based payment programs, also known as pay-for-performance, use financial incentives to motivate providers to invest in quality and are a critical part of Medicare health care reform. This study examines the first year of the Home Health Value-Based Purchasing program, a nationally representative cluster randomized experiment implemented by the Centers for Medicare & Medicaid Services in 2016. The goal of the program is to achieve better home health care quality. Home health agencies in treatment states were rewarded or penalized based on their performance on agency-reported and non-agency-reported quality measures. The program improved agency-reported measures by approximately one percentage point, and performance gains suggest a dose-response relationship with respect to incentive size. However, the performance gains in agency-reported measures did not reflect true quality improvement. I find evidence that agencies manipulated their coding of patients and inflated their performance. Coding manipulation explains the entirety of the program's impact on agency-reported measures.

Forgone Medical Care Associated With Increased Health Care Costs Among the U.S. Heart Failure Population

OBJECTIVES

The objective of this study was to describe the prevalence of patients with forgone/delayed care for heart failure (HF) and examine the associated demographic characteristics, health care utilization, and costs.

BACKGROUND

HF is a leading cause of morbidity and mortality, with health care expenditures projected to increase 3-fold from 2012 to 2030. The proportion of HF patients with forgone/delayed medical care and the association with health care expenditures and utilization remain unknown.

METHODS

Data on patients with HF were obtained from the Medical Expenditure Panel Survey to assess expenditures and health care utilization in the United States from 2004 to 2015. Patients with HF who reported forgone/delayed care, any missed or delayed medical treatment, were compared with those without care lapses.

RESULTS

Overall, 16% of patients with HF reported forgone/delayed care, including 10% among the elderly (aged ≥65 years) and 27% among the nonelderly (age <65 years). Patients with HF who reported forgone/delayed care had annual health care expenses $8,027 (95% CI: $1,181-$14,872) higher than those who did not. Among the elderly, those reporting forgone/delayed care had more emergency department visits (43% vs 58%; P < 0.05), and had higher annual inpatient costs (+$7,548; 95% CI: $1,109-$13,988) and total health care costs (+$10,581; 95% CI: $1,754-$19,409). Sixty percent of nonelderly and 46% of elderly patients with HF reported deferring care due to financial barriers.

CONCLUSIONS

Nearly 1 in 6 patients with HF in the United States reported forgone/delayed medical care, with one-half attributing it to financial reasons, and this was associated with higher overall health care spending.

The effects of structure, process and outcome incentives on primary care referrals to a national prevention programme

Despite widespread use, evidence is sparse on whether financial incentives in healthcare should be linked to structure, process or outcome. We examine the impact of different incentive types on the quantity and effectiveness of referrals made by general practices to a new national prevention programme in England. We measured effectiveness by the number of referrals resulting in programme attendance. We surveyed local commissioners about their use of financial incentives and linked this information to numbers of programme referrals and attendances from 5170 general practices between April 2016 and March 2018. We used multivariate probit regressions to identify commissioner characteristics associated with the use of different incentive types and negative binomial regressions to estimate their effect on practice rates of referral and attendance. Financial incentives were offered by commissioners in the majority of areas (89%), with 38% using structure incentives, 69% using process incentives and 22% using outcome incentives. Compared to practices without financial incentives, neither structure nor process incentives were associated with statistically significant increases in referrals or attendances, but outcome incentives were associated with 84% more referrals and 93% more attendances. Outcome incentives were the only form of pay-for-performance to stimulate more participation in this national disease prevention programme.

Medicare's Hospital Value-Based Purchasing Program Values Quality over QALYs

Medicare's Hospital Value-Based Purchasing Program (HVBP) is the first national pay-for-performance program to combine measures of quality of care with a measure of episode spending. We estimated the implicit tradeoffs between mortality reduction and spending reduction. To earn points in HVBP, a hospital can either lower mortality or reduce spending, creating a tradeoff between the 2 measures. We analyzed the quality performance and earned points of 2814 hospitals using publicly available data. We then quantified the tradeoffs between spending and mortality in terms of quality-adjusted life-years (QALYs). If incentives in the program were balanced, then the tradeoff between spending and QALYs should be comparable with those of high-value health interventions, roughly $50,000 to $200,000 per QALY. Instead, the tradeoff in HVBP was about $1.2 million per QALY. HVBP overvalues improvements in quality of care relative to spending reductions. We propose 2 possible policy adjustments that could improve incentives for hospitals to deliver high-value care.

Overpriced? Are Hospital Prices Associated with the Quality of Care?

In most consumer markets, higher prices generally imply increased quality. For example, in the automobile, restaurant, hospitality, and airline industries, higher pricing generally conveys a signal of complexity and superiority of a service or product. However, in the healthcare industry, there is room to challenge the price-quality connection as both health prices and health quality can be difficult to interpret. In the best of circumstances, health care costs, prices, and quality can often be difficult to isolate and measure. Recent efforts by the Trump Administration and the Center for Medicare and Medicaid Services (CMS) have required the pricing of hospital services to be more transparent. Specifically, hospital chargemaster (retail) prices must now be available to the public. However, many continue to question if the pricing of health care services reflects the quality of service delivery. This research focuses on investigating the prices hospitals charge for their services in relation to the costs incurred and the association with the quality of care provided. By analyzing data from a nationwide sample of U.S. hospitals, this study considers the relationship between hospital pricing (as measured by the charge-to-cost ratio) and hospital quality performance as measured by the Value Based Purchasing Total Performance Score (TPS) and its associated sub-domains. Results of the study indicate that hospital prices, as measured by our primary independent variable of interest, the charge-to-cost ratio, are significantly and negatively associated with Total Performance Score, Patient Experience, and the Efficiency and Cost Reduction domains. A marginal statistically significant positive association is shown in the Clinical Care domain. The findings indicate that unlike most other industries, in medicine, higher pricing compared to cost does not necessarily associate with higher quality and, in fact, might indicate the opposite. The results of this study suggest that purchasers of healthcare, at all levels, have justification in challenging the pricing of healthcare services considering the quality scores available in the public domain.

Association Between Financial Incentives in Medicare's Hospital Readmissions Reduction Program and Hospital Readmission Performance

IMPORTANCE

The strongest evidence for the effectiveness of Medicare's Hospital Readmissions Reduction Program (HRRP) involves greater reductions in readmissions for hospitals receiving penalties compared with those not receiving penalties. However, the HRRP penalty is an imperfect measure of hospitals' marginal incentive to avoid a readmission for HRRP-targeted diagnoses.

OBJECTIVES

To assess the association between hospitals' condition-specific incentives and readmission performance and to examine the responsiveness of hospitals to condition-specific incentives compared with aggregate penalty amounts.

DESIGN, SETTING, AND PARTICIPANTS

This retrospective cohort analysis used Medicare readmissions data from 2823 US short-term acute care hospitals participating in HRRP to compare 3-year (fiscal years 2016-2019) follow-up readmission performance according to tertiles of hospitals' baseline (2016) marginal incentives for each of 5 HRRP-targeted conditions (acute myocardial infarction, heart failure, chronic obstructive pulmonary disease, pneumonia, and hip and/or knee surgery).

MAIN OUTCOMES AND MEASURES

Linear regression models were used to estimate mean change in follow-up readmission performance, measured using the excess readmissions ratio, with baseline condition-specific incentives and aggregate penalty amounts.

RESULTS

Of 2823 hospitals that participated in the HRRP from baseline to follow-up, 2280 (81%) had more than 1 excess readmission for 1 or more applicable condition and 543 (19%) did not have any excess readmissions. The mean (SD) financial incentive to reduce readmissions for incentivized hospitals ranged from $8762 ($3699) to $58 158 ($26 198) per 1 avoided readmission. Hospitals with greater incentives for readmission avoidance had greater decreases in readmissions compared with hospitals with smaller incentives (45% greater for pneumonia, 172% greater for acute myocardial infarction, 40% greater for hip and/or knee surgery, 32% greater for chronic obstructive pulmonary disease, and 13% greater for heart failure), whereas hospitals with no incentives had increases in excess readmissions of 4% to 7% (median, 4% [percentage change for nonincentivized hospitals was 3.7% for pneumonia, 4.2% for acute myocardial infarction, 7.1% for hip and/or knee surgery, 3.7% for chronic obstructive pulmonary disease, and 3.7% for heart failure]; P < .001). During the study period, each additional $5000 in the incentive amount was associated with a 0.6- to 1.3-percentage point decrease, or up to a 26% decrease, in excess readmissions (P < .001). Regression to the mean explained approximately one-third of the results depending on the condition examined.

CONCLUSIONS AND RELEVANCE

The findings suggest that improvements in readmission avoidance are more strongly associated with incentives from the HRRP than with aggregate penalty amounts, suggesting that the program has elicited sizeable changes. Worsened performance among hospitals with small or no incentives may indicate the need for reconsideration of the program's lack of financial rewards for high-performing hospitals.

Association between degree of exposure to the Hospital Value Based Purchasing Program and 30-day mortality: experience from the first four years of Medicare's pay-for-performance program

Background

The Hospital Value Based Purchasing Program (HVBP) in the United States, announced in 2010 and implemented since 2013 by the Centers for Medicare and Medicaid Services (CMS), introduced payment penalties and bonuses based on hospital performance on patient 30-day mortality and other indicators. Evidence on the impact of this program is limited and reliant on the choice of program-exempt hospitals as controls. As program-exempt hospitals may have systematic differences with program-participating hospitals, in this study we used an alternative approach wherein program-participating hospitals are stratified by their financial exposure to penalty, and examined changes in hospital performance on 30-day mortality between hospitals with high vs. low financial exposure to penalty.

Methods

Our study examined all hospitals reimbursed through the Medicare Inpatient Prospective Payment System (IPPS) – which include most community and tertiary acute care hospitals – from 2009 to 2016. A hospital’s financial exposure to HVBP penalties was measured by the share of its annual aggregate inpatient days provided to Medicare patients (“Medicare bed share”). The main outcome measures were annual hospital-level 30-day risk-adjusted mortality rates for acute myocardial infarction (AMI), heart failure (HF) and pneumonia patients. Using difference-in-differences models we estimated the change in the outcomes in high vs. low Medicare bed share hospitals following HVBP.

Results

In the study cohort of 1902 US hospitals, average Medicare bed share was 61 and 41% in high (n = 540) and low (n = 1362) Medicare bed share hospitals, respectively. High Medicare bed share hospitals were more likely to have smaller bed size and less likely to be teaching hospitals, but ownership type was similar among both Medicare bed share groups.. Among low Medicare bed share (control) hospitals, baseline (pre-HVBP) 30-day mortality was 16.0% (AMI), 10.9% (HF) and 11.4% (pneumonia). In both high and low Medicare bed share hospitals 30-day mortality experienced a secular decrease for AMI, increase for HF and pneumonia; differences in the pre-post change between the two hospital groups were small (< 0.12%) and not significant across all three conditions.

Conclusions

HVBP was not associated with a meaningful change in 30-day mortality across hospitals with differential exposure to the program penalty.

Do report cards predict future quality? The case of skilled nursing facilities

Report cards on provider performance are intended to improve consumer decision-making and address information gaps in the market for quality. However, inadequate risk adjustment of report-card measures often biases comparisons across providers. We test whether going to a skilled nursing facility (SNF) with a higher star rating leads to better quality outcomes for a patient. We exploit variation over time in the distance from a patient's residential ZIP code to SNFs with different ratings to estimate the causal effect of admission to a higher-rated SNF on health care outcomes, including mortality. We found that patients who go to higher-rated SNFs achieved better outcomes, supporting the validity of the SNF report card ratings.

The Financial Impact of an Avoided Readmission for Teaching and Safety-Net Hospitals Under Medicare's Hospital Readmission Reduction Program

We examined the financial incentives to avoid readmissions under Medicare's Hospital Readmission Reduction Program for safety-net hospitals (SNHs) and teaching hospitals (THs) compared with other hospitals. Using Medicare's FY2016 Hospital Compare and readmissions data for 2,465 hospitals, we tested for differential revenue gains for SNHs (n = 658) relative to non-SNHs (n = 1,807), and for major (n = 231) and minor (n = 591) THs relative to non-THs (n = 1,643). We examined hospital-level factors predicting differences in revenue gains by hospital type. The revenue gains of an avoided readmission were 10% to 15% greater for major THs compared with non-THs ($18,047 vs. $15,478 for acute myocardial infarction) but no different for SNHs compared with non-SNHs. The greater revenue gains for THs were strongly positively predicted by hospitals' poor initial readmission performance. We found little evidence that the Hospital Readmission Reduction Program creates disincentives for SNHs and THs to invest in readmission reduction efforts, and THs have greater returns from readmissions avoidance than non-THs.