VOLUNTARY REGULATION: EVIDENCE FROM MEDICARE PAYMENT REFORM

Hospital-Skilled Nursing Facility Integration and Participation in a Bundled Payment Initiative

Importance

Reduced institutional postacute care has been associated with savings in alternative payment models. However, organizations may avoid voluntary participation if participation could threaten their own revenues.

Objective

To characterize the association between hospital-skilled nursing facility (SNF) integration and participation in Medicare's Bundled Payments for Care Improvement Advanced (BPCI-A) program.

Design, Setting, and Participants

This is a cross-sectional analysis of hospital participation in BPCI-A beginning with its launch in 2018. Each SNF-integrated hospital was matched with 2 nonintegrated hospitals for each of 4 episode-specific analyses. Fifteen hospital-level variables were used for matching: beds, case mix index, days, area SNF beds, metropolitan location, ownership, region, system membership, and teaching status. Hospitals were also matched on episode-specific volume, target price, and the interaction of target price and case mix. Episode-specific logistic models were estimated regressing hospital participation on integration and the previously listed variables. The marginal effect of integration on participation was then calculated. Analysis took place from August 2022 to May 2024.

Exposure

Hospital-SNF integration, as defined by common ownership and referral patterns and identified using cost reports, Medicare claims, and Provider Enrollment, Chain, and Ownership System records. Additional sources included records of target prices and participation, the Area Health Resources File, and the Compendium of US Health Systems.

Main Outcomes and Measures

Participation in BPCI-A.

Results

In total, 1524 hospitals met criteria for inclusion in the hip and femur (HFP) analysis, 1825 were included in the major joint replacement of the lower extremity (MJRLE) analysis, 2018 were included in the sepsis analysis, and 1564, were included in the stroke-specific analysis. Across episodes, 191 HFP-eligible hospitals (12.5% of HFP-eligible hospitals), 302 MJRLE-eligible hospitals (16.5%), 327 sepsis-eligible hospitals (16.2%), and 185 sepsis-eligible hospitals (11.8%) were SNF integrated. In total, 79 hospitals (5.2%) participated in the HFP episode, 128 (7.0%) participated in the MJRLE episode, 204 (10.1%) participated in the sepsis episode, and 141 (9.0%) participated in the stroke episode. Integration was associated with a 4.7-percentage point decrease (95% CI, 2.4 to 6.9 percentage points) in participation in the MJRLE episode. There was no association between integration and participation for HFP (0.5-percentage point increase in participation moving from nonintegrated to integrated; 95% CI, -2.9 to 3.8 percentage points), sepsis (1.0-percentage point increase; 95% CI, -2.2 to 4.2 percentage points), and stroke (0.3-percentage point decrease; 95% CI, -3.1 to 3.8 percentage points).

Conclusions and Relevance

In this cross-sectional study, there was an uneven association between hospital-SNF integration and participation in Medicare's BPCI-A program. Other factors may be more consistent determinants of selection into voluntary payment reform.

Physician Group Practices Accrued Large Bonuses Under Medicare's Bundled Payment Model, 2018-20

The Bundled Payments for Care Improvement Advanced Model (BPCI-A), a voluntary Alternative Payment Model for Medicare, incentivizes hospitals and physician group practices to reduce spending for patient care episodes below preset target prices. The experience of physician groups in BPCI-A is not well understood. We found that physician groups earned $421 million in incentive payments during BPCI-A's first four performance periods (2018-20). Target prices were positively associated with bonuses, with a mean reconciliation payment of $139 per episode in the lowest decile of target prices and $2,775 in the highest decile. In the first year of the COVID-19 pandemic, mean bonuses increased from $815 per episode to $2,736 per episode. These findings suggest that further policy changes, such as improving target price accuracy and refining participation rules, will be important as the Centers for Medicare and Medicaid Services continues to expand BPCI-A and develop other bundled payment models.

The end of an era? Activity-based funding based on diagnosis-related groups: A review of payment reforms in the inpatient sector in 10 high-income countries

CONTEXT

Across the member countries of the Organisation for Economic Co-Operation and Development, policy makers are searching for new ways to pay hospitals for inpatient care to move from volume to value. This paper offers an overview of the latest reforms and their evidence to date.

METHODS

We reviewed reforms to DRG payment systems in 10 high-income countries: Australia, Austria, Canada (Ontario), Denmark, France, Germany, Norway, Poland, the United Kingdom (England), and the United States.

FINDINGS

We identified four reform trends among the observed countries, them being (1) reductions in the overall share of inpatient payments based on DRGs, (2) add-on payments for rural hospitals or their exclusion from the DRG system, (3) episode-based payments, which use one joint price to pay providers for all services delivered along a patient pathway, and (4) financial incentives to shift the delivery of care to less costly settings. Some countries have combined some or all of these measures with financial adjustments for quality of care. These reforms demonstrate a shift away from activity and efficiency towards a diversified set of targets, and mirror efforts to slow the rise in health expenditures while improving quality of care. Where evaluations are available, the evidence indicates mixed success in improving quality of care and reducing costs and expenditures.

Benchmarking Changes And Selective Participation In The Medicare Shared Savings Program

In 2017 the Medicare Shared Savings Program (MSSP) began incorporating regional spending into accountable care organization (ACO) benchmarks, thus favoring the participation of ACOs and practices with lower baseline spending than their region. To characterize providers' responses to these incentives, we isolated changes in spending due to changes in the mix of ACOs and practices participating in the MSSP. In contrast to earlier participation patterns, the composition of the MSSP after 2017 increasingly shifted to providers with lower preexisting levels of spending relative to their region, consistent with a selection response. Changes occurred through the entry of new ACOs with lower baseline spending, the exit of higher-spending ACOs, and the reconfiguration of participant lists favoring lower-spending practices within continuing ACOs. These participation patterns varied meaningfully by ACO type. Although compositional changes could not be definitively tied to benchmarking changes, the disproportionate participation of providers with lower baseline spending implies substantial costs and the need for ACO benchmarking reforms.

Customer-centric product presentations for monoclonal antibodies

Delivering customer-centric product presentations for biotherapeutics, such as monoclonal antibodies (mAbs), represents a long-standing and paramount area of engagement for pharmaceutical scientists. Activities include improving experience with the dosing procedure, reducing drug administration-related expenditures, and ultimately shifting parenteral treatments outside of a controlled healthcare institutional setting. In times of increasingly cost-constrained markets and reinforced with the coronavirus pandemic, this discipline of "Product Optimization" in healthcare has gained momentum and changed from a nice-to-have into a must. This review summarizes latest trends in the healthcare ecosystem that inform key strategies for developing customer-centric products, including the availability of a wider array of sustainable drug delivery options and treatment management plans that support dosing in a flexible care setting. Three disease area archetypes with varying degree of implementation of customer-centric concepts are introduced to highlight relevant market differences and similarities. Namely, rheumatoid arthritis and inflammatory bowel disease, multiple sclerosis, and oncology have been chosen due to differences in the availability of subcutaneously dosed and ready-to-use self-administration products for mAb medicines and their follow-on biologics. Different launch scenarios are described from a manufacturer's perspective highlighting the necessity of platform approaches. To unfold the full potential of customer-centric care, value-based healthcare provider reimbursement schemes that incentivize the efficiency of care need to be broadly implemented.

VOLUNTARY REGULATION: EVIDENCE FROM MEDICARE PAYMENT REFORM

Government programs are often offered on an optional basis to market participants. We explore the economics of such voluntary regulation in the context of a Medicare payment reform, in which one medical provider receives a single, predetermined payment for a sequence of related healthcare services, instead of separate service-specific payments. This "bundled payment" program was originally implemented as a 5-year randomized trial, with mandatory participation by hospitals assigned to the new payment model; however, after two years, participation was made voluntary for half of these hospitals. Using detailed claim-level data, we document that voluntary participation is more likely for hospitals that can increase revenue without changing behavior ("selection on levels") and for hospitals that had large changes in behavior when participation was mandatory ("selection on slopes"). To assess outcomes under counterfactual regimes, we estimate a stylized model of responsiveness to and selection into the program. We find that the current voluntary regime generates inefficient transfers to hospitals, and that alternative (feasible) designs could reduce these inefficient transfers and raise welfare. Our analysis highlights key design elements to consider under voluntary regulation.