Policy implications of fixed-to-total-cost ratio variation across rural and urban hospitals.

PURPOSE: Hospitals with lower fixed-to-total-cost ratios may be better positioned to remain financially viable when reducing service volumes required by many value-based payment systems. We assessed whether hospitals in rural areas have higher fixed-to-total-cost ratios, which would tend to create a systematic disadvantage in such an environment. METHODS: Our observational study used a mixed-effects, repeated-measures model to analyze Medicare Hospital Cost Report Information System data for 2011-2020. We included all 4,953 nonfederal, short-term acute hospitals in the United States that are present in these years. After estimating the relationship between volume (measured in adjusted patient days) and patient-care costs in a model that controlled for a small number of hospital characteristics, we calculated fixed-to-total-cost ratios based on our model's estimates. FINDINGS: We found that nonmetropolitan hospitals tend to have higher average fixed-to-total-cost ratios (0.85-0.95) than metropolitan hospitals (0.73-0.78). Moreover, the degree of rurality matters; hospitals in micropolitan counties have lower ratios (0.85-0.87) than hospitals in noncore counties (0.91-0.95). While the Critical Access Hospital (CAH) designation is associated with higher average fixed-to-total-cost ratios, high fixed-to-total-cost ratios are not exclusive to CAHs. CONCLUSIONS: Overall, these results suggest that hospital payment policy and payment model development should consider hospital fixed-to-total-cost ratios particularly in settings where economies of scale are unattainable, and where the hospital provides a sense of security to the community it serves.

Medicare accountable care organization characteristics associated with participation in 2-sided risk.

PURPOSE: To examine the associations of accountable care organization (ACO) characteristics with the likelihood of participation in 2-sided risk tracks in the Medicare Shared Savings Program (SSP). METHODS: CMS ACO Public Use Files and Provider-Level Research Identifiable Files were used to trace Medicare ACOs' participation in the SSP between 2012 and 2020 and measure ACO characteristics, including size, rurality of the service area, affiliation with supporting organizations, program experience, and performance. Logistic regression and survival analysis were used to test the associations between ACO characteristics and the probability of ACOs initially participating in or subsequently switching to 2-sided risk tracks. FINDINGS: Among the 624 Medicare SSP ACOs that started between 2012 and 2017, 26 participated in 2-sided risk tracks in their initial contracts and 95 switched to 2-sided risk tracks subsequently. ACO characteristics were not significantly associated with the probability of participating in 2-sided risk tracks in initial contracts. ACO size, affiliation with supporting organizations, and performance were positively associated with the likelihood of switching to 2-sided risk. Rural ACOs were less likely to switch to 2-sided risk than their urban counterparts. CONCLUSIONS: Small and rural ACOs are less prepared to transition into 2-sided risk swiftly.

The impact of Medicare shared savings program participation on hospital financial performance: An event-study analysis.

OBJECTIVE: To evaluate the impact of hospitals' participation in the Medicare Shared Savings Program (MSSP) on their financial performance. DATA SOURCES: Centers for Medicare & Medicaid Services Hospital Cost Reports and MSSP Accountable Care Organizations (ACO) Provider-Level Research Identifiable File from 2011 to 2018. STUDY DESIGN: We used an event-study design to estimate the temporal effects of MSSP participation on hospital financial outcomes and compared within-hospital changes over time between MSSP and non-MSSP hospitals while controlling for hospital and year fixed effects and organizational and service-area characteristics. The following financial outcomes were evaluated: outpatient revenue, inpatient revenue, net patient revenue, Medicare revenue, operating margin, inpatient revenue share, Medicare revenue share, and allowance and discount rate. DATA COLLECTION/EXTRACTION METHODS: Secondary data linked at the hospital level. PRINCIPAL FINDINGS: Controlling for trends in non-MSSP hospitals, MSSP participation was associated with differential increases in net patient revenue by $3.28 million (p < 0.001), $3.20 million (p < 0.01), and $4.20 million (p < 0.01) in the second, third, and fourth year and beyond after joining MSSP, respectively. Medicare revenue differentially increased by $1.50 million (p < 0.05), $2.24 million (p < 0.05), and $4.47 million (p < 0.05) in the first, second, and fourth year and beyond. Inpatient revenue share differentially increased by 0.29% (p < 0.05) in the second year and 0.44% (p < 0.05) in the fourth year and beyond. Medicare revenue share differentially increased by 0.17% (p < 0.01), 0.25% (p < 0.01), 0.32% (p < 0.01), and 0.41% (p < 0.01) in consecutive years following MSSP participation. MSSP participation was associated with 0.33% (p < 0.05) and 0.39% (p < 0.05) differential reduction in allowance and discount rate in the second and third years. CONCLUSIONS: MSSP participation was associated with differential increases in net patient revenue, Medicare revenue, inpatient revenue share, and Medicare revenue share, and a differential reduction in allowance and discount rate.

Organizational Attributes Associated With Medicare ACO Quality Performance.

PURPOSE: To evaluate associations between geographic, structural, and service-provision attributes of Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP) and the ACOs' quality performance. METHODOLOGY: We conducted cross-sectional and longitudinal analyses of ACO quality performance using data from the Centers for Medicare and Medicaid Services and additional sources. The sample included 322 and 385 MSSP ACOs that had successfully reported quality measures in 2014 and 2015, respectively. RESULTS: Results show that after adjusting for other organizational factors, rural ACOs' average quality score was comparable to that of ACOs serving other geographic categories. ACOs with hospital-system sponsorship, larger beneficiary panels, and higher posthospitalization follow-up rates achieved better quality performance. CONCLUSION: There is no significant difference in average quality performance between rural ACOs and other ACOs after adjusting for structural and service-provision factors. MSSP ACO quality performance is positively associated with hospital-system sponsorship, beneficiary panel size, and posthospitalization follow-up rate.

Changes to the Merit-based Incentive Payment System Pertinent to Small and Rural Practices, 2018.

This brief highlights key regulatory changes to the Merit-based Incentive Payment System (MIPS) in 2018. We discuss the importance of these changes, particularly as they affect small and rural practices.

Using tele-emergency to avoid patient transfers in rural emergency departments: An assessment of costs and benefits.

Introduction Tele-emergency can address several challenges facing emergency departments in rural areas. The purpose of this paper is to (a) examine the rates of avoided transfers in rural emergency departments that adopted tele-emergency applications; and (b) estimate the costs and benefits of using tele-emergency to avoid transfers. Methods Analysis is based on 9048 tele-emergency encounters generated by the Avera eEmergency programme (Sioux Falls, South Dakota) in 85 rural hospitals across seven states between October 2009-February 2014. For each non-transfer patient, physicians indicated whether the transfer was avoided because of tele-emergency activation. The cost-benefit analysis is conducted from the hospital, patient and societal perspectives, and includes technology costs, local hospital revenues and patient-associated savings. All monetary values are expressed in US$. Sensitivity analysis is conducted by examining the worst and best case scenarios of costs, revenues and savings. Results In these analyses, 1175 avoided transfers were attributed to tele-emergency. From a rural hospital perspective, tele-emergency costs around US$1739 to avoid a single transfer. However, tele-emergency saves around US$5563 in avoided transportation and indirect patient costs. Combining these, from a societal perspective, tele-emergency has the potential to result in a net savings of US$3823 per avoided transfer while accounting for tele-emergency technology costs, hospital revenues, and patient-associated savings. Conclusion This study highlights various stakeholder perspectives on the financial impact of tele-emergency in avoiding patient transfers in rural emergency departments. Telemedicine has the potential to reduce the number of transfers of emergency department patients and generate some revenue for rural hospitals despite associated technology costs, while incurring substantial patient savings.

Medicare Accountable Care Organizations: Beneficiary Assignment Update.

This brief updates Brief No. 2014-3 and explains changes in the Centers for Medicare & Medicaid Services (CMS) Accountable Care Organization (ACO) regulations issued in June 2015 pertaining to beneficiary assignment for Medicare Shared Savings Program ACOs. Overall, the regulatory changes are intended to (1) encourage ACOs to participate in two-sided risk contracts, (2) increase the likelihood that beneficiaries are assigned to the physician (and ACO) from whom they receive most of their primary care services, and (3) make it easier for Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) to participate in ACOs. Understanding ACO beneficiary assignment policies is critical for ACO in managing their panel of ACO providers and beneficiaries.

Developmental Strategies and Challenges of Rural Accountable Care Organizations.

This policy brief shares insights gained from site visits in 2013 to four Accountable Care Organizations (ACOs) serving rural Medicare beneficiaries. Initial strategic decisions made and challenges faced as the ACOs were being developed can inform development of other rural ACOs. Key Findings. (1) The rural ACOs we studied were formed as a step toward a value-driven rural delivery system, recognizing that ACO participation may or may not have a short term return on investment. (2) Common rural ACO strategies to increase health care value include care management, post-acute care redesign, medication management, and end-of-life care planning. (3) Access to data is an important enabler of population health management, care management, and provider participation.

The Business Case for Tele-emergency.

BACKGROUND: Tele-emergency is an expanding telehealth service that provides real-time audio/visual consultation delivered by an emergency medicine team to a remote, often rural, emergency department (ED). Financial analyses of tele-emergency in the literature are limited. This article expands the tele-emergency literature to describe the business case for tele-emergency. "Business case" is defined as a reasoned argument, supported by objective data and/or qualitative judgment, to implement or continue a service or product. MATERIALS AND METHODS: To evaluate tele-emergency financing from the perspective of a critical access hospital (CAH), 10 financial analysis categories were defined. Telephone interviews, site visits, and financial data from the eEmergency program of Avera Health (Sioux Falls, SD) were used to populate the categories. Avera Health information was augmented with national data where available. Three financial scenarios were then analyzed for CAH profit/loss associated with tele-emergency. RESULTS: Tele-emergency financial analysis demonstrated an $187,614 profit in a high revenue/low expense scenario, $49,841 profit in a midrange scenario, and $69,588 loss in a low revenue/high expense scenario. CONCLUSIONS: Tele-emergency may be a profitable rural hospital service line if the participating hospital adjusts ED processes to take advantage of increased revenue/savings opportunities afforded by tele-emergency. Savings due to tele-emergency primarily accrue when physician ED backup and physician ED staffing costs are substituted.

Characteristics of Rural Accountable Care Organizations (ACOs) ­ A Survey of Medicare ACOs with Rural Presence.

Accountable Care Organizations (ACOs) are groups of health care providers, principally physicians and hospitals, who develop a new entity that contracts to provide coordinated care to assigned patients with the goal of improving quality of care while controlling costs. Section 3022 of the Patient Protection and Affordable Care Act of 2010 created the Medicare Shared Savings Program (SSP). The Centers for Medicare & Medicaid Services (CMS) implements this program and has approved SSP contracts in five cycles since 2011, including some that participated in a special demonstration project that provided advance payment (as a forgivable loan). A new ACO Investment Model (AIM) program starts in 2015 that provides initial investment capital and variable monthly payments to ACO participants in rural and underserved areas who may not have access to the capital needed for successful ACO formation and operation. CMS also contracted with 32 organizations under a special demonstration project, "Pioneer ACOs" (as of November 16, 2014, there were 19 remaining).8 At the time of the research reported in this brief, there were 455 Medicare ACOs (Pioneer and SSP). While there is growing literature about ACOs, much remains to be learned about ACO development in rural areas. A previous RUPRI Center policy brief 2 examined the formation of four rural ACOs. The authors found that prior experience with risk sharing and provider integration facilitated ACO formation. This brief expands on the earlier brief by describing the findings of a survey of 27 rural ACOs, focusing on characteristics important to their formation and operation. Prospective rural ACO participants can draw from the experiences of predecessors, and the survey findings can inform policy discussions about ACO formation and operation. Key Findings from 27 Respondents. (1) Sixteen rural ACOs were formed by pre-existing integrated delivery networks. (2) Physician groups played a more prominent role than other participant types (including solo-practice physicians) in the formation and management of these rural ACOs. (3) Thirteen rural ACOs included hospitals with quality-based payment experience, and 11 rural ACOs included hospitals with risk-sharing experience. Twelve rural ACOs included physician groups with both quality-based payment and risk-sharing experience. (4) Managing care across the continuum and meeting quality standards were most frequently considered by respondents to be "very important" to the success of rural ACOs.

Medicare Accountable Care Organizations: program eligibility, beneficiary assignment, and quality measures.

Accountable Care Organizations (ACOs) are groups of providers (generally physicians and/or hospitals) that may receive financial rewards by maintaining or improving care quality for a group of patients while reducing the cost of care for those patients. The Patient Protection and Affordable Care Act of 2010 (ACA) established a Medicare Shared Savings Program (MSSP) and accompanying Medicare ACOs to "facilitate coordination and cooperation among providers to improve the quality of care for Medicare fee-for-service (FFS) beneficiaries and reduce unnecessary costs." The MSSP now includes 343 ACOs; an additional 23 ACOs participate in the Medicare Pioneer ACO demonstration program, and there are approximately 240 private ACOs. Based on our analysis, among the Medicare ACOs 119 operate in both rural and urban counties and seven operate exclusively in rural counties. A little over 24 percent of non-metropolitan counties are included in Medicare ACOs. To assist rural providers considering ACO formation, this policy brief describes MSSP eligibility and participation requirements, beneficiary assignment processes, and quality measures.

The effect of Medicare payment policy changes on rural primary care practice revenue.

In this policy brief we analyze the effect of Medicare payment adjustments on Medicare-derived revenues to rural primary care providers. Building on prior work in this area, we look at the effect of changes in the Geographic Practice Cost Indices (GPCIs) from 2013 to 2014 as implemented in the Pathway for SGR Reform Act of 2013 and the Protecting Access to Medicare Act. Key Findings. (1) Changes to the GPCIs made between January 1, 2013, and March 31, 2014, resulted in an average 0.12% (median 0.18%) Medicare-derived revenue increase in rural primary care practices. (2) Without the GPCI work floor reinstatement, primary care practices in rural areas would have been disproportionately impacted through lower Medicare-related revenues.

Facilitating the formation of accountable care organizations in rural areas.

This Policy Brief presents characteristics contributing to the formation of four accountable care organizations (ACOs) that serve rural Medicare beneficiaries. Doing so provides considerations for provider organizations contemplating creating rural-based ACOs. Key Findings. (1) Previous organizational integration and risk-sharing experience facilitated ACO formation. (2) Use of an electronic health record system fostered core ACO capabilities, including care coordination and population health management. (3) Partnerships across the care continuum supported utilization of local health care resources.

Lessons from tele-emergency: improving care quality and health outcomes by expanding support for rural care systems.

Tele-emergency services provide immediate and synchronous audio/video connections, most commonly between rural low-volume hospitals and an urban "hub" emergency department. We performed a systematic literature review to identify tele-emergency models and outcomes. We then studied a large tele-emergency service in the upper Midwest. We sent a user survey to all seventy-one hospitals that used the service and received 292 replies. We also conducted telephone interviews and site visits with ninety clinicians and administrators at twenty-nine of these hospitals. Participants reported that tele-emergency improves clinical quality, expands the care team, increases resources during critical events, shortens time to care, improves care coordination, promotes patient-centered care, improves the recruitment of family physicians, and stabilizes the rural hospital patient base. However, inconsistent reimbursement policy, cross-state licensing barriers, and other regulations hinder tele-emergency implementation. New value-based payment systems have the potential to reduce these barriers and accelerate tele-emergency expansion.

Are primary care practices ready to become patient-centered medical homes?

PURPOSE: To measure the readiness of rural primary care practices to qualify as patient-centered medical homes (PCMHs), one step toward participating in changes underway in health care finance and delivery. METHODS: We used the 2008 Health Tracking Physician Survey to compare PCMH readiness scores among metropolitan and nonmetropolitan primary care practices. The National Committee on Quality Assurance (NCQA) assessment system served as a framework to assess the PCMH capabilities of primary care practices based on their services, processes, and policies. FINDINGS: We found little difference between urban and rural practices. Approximately 41% of all primary care practices offer minimal or no PCMH services. We also found that large practices score higher on standards primarily related to information technology and care management. CONCLUSIONS: Achieving the benefits of the PCMH model in small rural practices may require additional national promotion, technical assistance, and financial incentives.

Accountable care organizations in rural America.

Key Findings. (1) Medicare Accountable Care Organizations (ACOs) operate in non-metropolitan counties in every U.S. Census Region. (2) 79 Medicare ACOs operate in both metropolitan and non-metropolitan counties. (3) Medicare ACOs operate in 16.7% of non-metropolitan counties. (4) 9 ACOs operate exclusively in non-metropolitan counties, including at least 1 in every U.S. Census Region.

Assessing the impact of rural provider services mix on the Primary Care Incentive Payment Program.

Key Findings. (1) Based on analysis of 2009 Medicare claims data, more than 70% of rural primary care physicians (PCP) and non-physician practitioners (NPP) qualify for payments under the Primary Care Incentive Payment Program (PCIP) threshold (i.e., meet the > 60% of allowable Medicare charges). (2) The average incentive payment for qualifying rural PCPs would result in an additional $8,000 in Medicare patient revenue per year. For qualifying NPPs, the result is an additional $3,000 in Medicare patient revenue per year. (3) Only 9% of non-qualifying rural primary care providers were within 10 percentage points of the minimum threshold (60%) of Medicare allowed charges to qualify for PCIP payments.

Rural implications of the Primary Care incentive Payment Program.

Key Findings. (1) Both the number and proportion of providers eligible to receive Primary Care Incentive Payments in 2011, 2012, and 2013 increased during the years used to determine eligibility (2009, 2010, and 2011). (2) For most practice types, rural providers were more likely to be eligible for Primary Care Incentive Payments. However, rates of eligibility varied between provider types. (3) Rural Family Practice physicians were less likely to be eligible for Primary Care Incentive Payments than their urban counterparts.

Medicare beneficiary access to primary care physicians--better in rural, but still worrisome.

Primary care is the foundation of the rural U.S. health care system. Thus, the willingness of rural primary care physicians to accept new Medicare patients is critically important to the Medicare program and to rural America's elderly. But universally consistent access to primary care physicians for Medicare beneficiaries may be in jeopardy. The American Academy of Family Physicians (AAFP) reports that the percentage of family physicians accepting new Medicare patients declined from 84% in 2000 to 73% in 2008. Urban family physicians accepted new Medicare patients at a lower rate (70%) than did rural family physicians (83%). In this policy brief, we use results from a large national physician survey to assess U.S. primary care physician and general surgeon willingness to accept Medicare patients. We also assess physician-reported reasons for not accepting Medicare patients.