Prices for Physicians' Services in Medicare Advantage and Commercial Plans.

The prices that insurers pay physicians ultimately affect beneficiaries' health insurance premiums. Using 2014 claims data from three major insurers, we analyzed the prices insurers paid in their Medicare Advantage (MA) and commercial plans for 20 physician services, in and out of network, and compared those prices with estimated amounts that Medicare's fee-for-service (FFS) program would pay for the same service. MA prices paid by those insurers were close to Medicare FFS prices, varied minimally, and were similar in and out of network. In contrast, commercial prices paid by the same insurers were substantially higher than FFS, varied widely, and were up to three times higher out of network than in network. Those results suggest that insurers can use statutory limits on out-of-network charges in MA to negotiate lower in-network prices in those plans. In contrast, without those limits on out-of-network prices, in-network prices in commercial plans are much higher.

Physician Reimbursement in Medicare Advantage Compared With Traditional Medicare and Commercial Health Insurance.

Importance: Nearly one-third of Medicare beneficiaries are enrolled in a Medicare Advantage (MA) plan, yet little is known about the prices that MA plans pay for physician services. Medicare Advantage insurers typically also sell commercial plans, and the extent to which MA physician reimbursement reflects traditional Medicare (TM) rates vs negotiated commercial prices is unclear. Objective: To compare prices paid for physician and other health care services in MA, traditional Medicare, and commercial plans. Design, Setting, and Participants: Retrospective analysis of claims data evaluating MA prices paid to physicians and for laboratory services and durable medical equipment between 2007 and 2012 in 348 US core-based statistical areas. The study population included all MA and commercial enrollees with a large national health insurer operating in both markets, as well as a 20% sample of TM beneficiaries. Exposures: Enrollment in an MA plan. Main Outcomes and Measures: Mean reimbursement paid to physicians, laboratories, and durable medical equipment suppliers for MA and commercial enrollees relative to TM rates for 11 Healthcare Common Procedure Coding Systems (HCPCS) codes spanning 7 sites of care. Results: The sample consisted of 144 million claims. Physician reimbursement in MA was more strongly tied to TM rates than commercial prices, although MA plans tended to pay physicians less than TM. For a mid-level office visit with an established patient (Current Procedural Terminology [CPT] code 99213), the mean MA price was 96.9% (95% CI, 96.7%-97.2%) of TM. Across the common physician services we evaluated, mean MA reimbursement ranged from 91.3% of TM for cataract removal in an ambulatory surgery center (CPT 66984; 95% CI, 90.7%-91.9%) to 102.3% of TM for complex evaluation and management of a patient in the emergency department (CPT 99285; 95% CI, 102.1%-102.6%). However, for laboratory services and durable medical equipment, where commercial prices are lower than TM rates, MA plans take advantage of these lower commercial prices, ranging from 67.4% for a walker (HCPCS code E0143; 95% CI, 66.3%-68.5%) to 75.8% for a complete blood cell count (CPT 85025; 95% CI, 75.0%-76.6%). Conclusions and Relevance: Traditional Medicare's administratively set rates act as a strong anchor for physician reimbursement in the MA market, although MA plans succeed in negotiating lower prices for other health care services for which TM overpays. Reforms that transition the Medicare program toward some premium support models could substantially affect how physicians and other clinicians are paid.

Patients' preferences explain a small but significant share of regional variation in medicare spending.

This study assessed the extent to which differences in patients' preferences across geographic areas explained differences in traditional fee-for-service Medicare spending across Dartmouth Atlas of Health Care Hospital Referral Regions (HRRs). Preference measures were based on results of a survey that asked patients questions about their physicians, their own health status, and the care they would want in their last six months of life. We found that patients' preferences explained 5 percent of the variation across HRRs in total Medicare spending. In comparison, supply factors, such as the number of physicians, specialists, and hospital beds, explained 23 percent, and patients' health and income explained 12 percent. We also explored the relative importance of preferences in determining three components of total spending: spending at the end of life, inpatient spending, and spending on physician services. Relative to supply factors, health, and income, patients' preferences explained the largest share of variation in end-of-life spending and the smallest share of variation in spending on physician services. We conclude that variation in preferences contributes to differences across areas in Medicare spending. Medicare policy must consider both supply factors and patients' preferences in deciding how much to accommodate area variation in spending and the extent to which that variation should be subsidized by taxpayers.

Value-based purchasing for physician services.

Growth in Medicare expenditures has forced legislators and policymakers to look for ways to slow spending and get more value for their money. This article reviews previous federal efforts to control Medicare costs as well as current ones required by the Patient Protection and Affordable Care Act. It also describes a proposal for value-based purchasing that the authors developed under contract to the Centers for Medicare and Medicaid Services. This approach uses two measurement systems-one for physicians who practice primarily in outpatient settings and one for physicians who practice primarily in the hospital.

Physician reimbursement for critical care services integrating palliative care for patients who are critically ill.

Patients with advanced illness often spend time in an ICU, while nearly one-third of patients with advanced cancer who receive Medicare die in hospitals, often with failed ICU care. For most, death occurs following the withdrawal or withholding of life-sustaining treatments. The integration of palliative care is essential for high-quality critical care. Although palliative care specialists are becoming increasingly available, intensivists and other physicians are also expected to provide basic palliative care, including symptom treatment and communication about goals of care. Patients who are critically ill are often unable to make decisions about their care. In these situations, physicians must meet with family members or other surrogates to determine appropriate medical treatments. These meetings require clinical expertise to ensure that patient values are explored for medical decision making about therapeutic options, including palliative care. Meetings with families take time. Issues related to the disease process, prognosis, and treatment plan are complex, and decisions about the use or limitation of intensive care therapies have life-or-death implications. Inadequate reimbursement for physician services may be a barrier to the optimal delivery of high-quality palliative care, including effective communication. Appropriate documentation of time spent integrating palliative and critical care for patients who are critically ill can be consistent with the Current Procedural Terminology codes (99291 and 99292) for critical care services. The purpose of this article is to help intensivists and other providers understand the circumstances in which integration of palliative and critical care meets the definition of critical care services for billing purposes.

Hospital quality and the cost of inpatient surgery in the United States.

CONTEXT: Payers, policy makers, and professional organizations have launched a variety of initiatives aimed at improving hospital quality with inpatient surgery. Despite their obvious benefits for patients, the likely impact of these efforts on health care costs is uncertain. In this context, we examined relationships between hospital outcomes and expenditures in the US Medicare population. METHODS: Using the 100% national claims files, we identified all US hospitals performing coronary artery bypass graft, total hip replacement, abdominal aortic aneurysm repair, or colectomy procedures between 2005 and 2007. For each procedure, we ranked hospitals by their risk- and reliability-adjusted outcomes (complication and mortality rates, respectively) and sorted them into quintiles. We then examined relationships between hospital outcomes and risk-adjusted, 30-day episode payments. RESULTS: There was a strong, positive correlation between hospital complication rates and episode payments for all procedures. With coronary artery bypass graft, for example, hospitals in the highest complication quintile had average payments that were $5353 per patient higher than at hospitals in the lowest quintile ($46,024 vs $40,671, P < 0.001). Payments to hospitals with high complication rates were also higher for colectomy ($2719 per patient), abdominal aortic aneurysm repair ($5279), and hip replacement ($2436). Higher episode payments at lower-quality hospitals were attributable in large part to higher payments for the index hospitalization, although 30-day readmissions, physician services, and postdischarge ancillary care also contributed. Despite the strong association between hospital complication rates and payments, hospital mortality was not associated with expenditures. CONCLUSIONS: Medicare payments around episodes of inpatient surgery are substantially higher at hospitals with high complications. These findings suggest that local, regional, and national efforts aimed at improving surgical quality may ultimately reduce costs and improve outcomes.

Effect of physician remuneration fees on glaucoma procedure rates in Canada.

PURPOSE: Earlier studies have reported wide regional variability in glaucoma procedure rates, suggesting nonclinical factors influencing procedure rates. This study was designed to investigate the possible influence of fees on procedure rates. METHODS: Databases were accessed to obtain yearly provincial population, procedure and ophthalmologist numbers, and physician fees for trabeculoplasties, trabeculectomies, and glaucoma drainage device (GDD) implantations from 1992 to 2007. Regression models using generalized estimating equation methods were used to evaluate the influence of fees on procedure rates after adjusting for temporal trends and the number of ophthalmologists per 1000 persons with glaucoma. RESULTS: Trends in glaucoma procedure rates and fees varied widely among provinces: decrease of 98% to an increase of 380% for trabeculoplasties, decrease of 72% to an increase of 42% for trabeculectomies, and decrease of 32% to an increase of 1292% for GDD. In 2007, provincial remuneration varied from $125 to $553 for trabeculoplasties, $370 to $748 for trabeculectomies, and $426 to $956 for GDD. The regression models found for every 1000 persons with glaucoma, a $100 increase in fee was associated with 0.68 more trabeculoplasties (P=0.94), 1.2 fewer trabeculectomies (P=0.17), and 0.18 more GDD implantations (P=0.18); and for every additional ophthalmologist per 1000 persons with glaucoma, 53.8 more trabeculoplasties (P=0.24), 0.34 more trabeculectomies (P=0.86), and 0.79 more GDD implantations (P=0.0004). A regression model examining procedure substitution effect did not find any association between relative remuneration and procedure rate. CONCLUSION: Our analysis did not show an influence of physician remuneration fee on procedure rates in Canada during the study period.

Empirical models of demand for out-patient physician services and their relevance to the assessment of patient payment policies: a critical review of the literature.

This paper reviews the existing empirical micro-level models of demand for out-patient physician services where the size of patient payment is included either directly as an independent variable (when a flat-rate co-payment fee) or indirectly as a level of deductibles and/or co-insurance defined by the insurance coverage. The paper also discusses the relevance of these models for the assessment of patient payment policies. For this purpose, a systematic literature review is carried out. In total, 46 relevant publications were identified. These publications are classified into categories based on their general approach to demand modeling, specifications of data collection, data analysis, and main empirical findings. The analysis indicates a rising research interest in the empirical micro-level models of demand for out-patient physician services that incorporate the size of patient payment. Overall, the size of patient payments, consumer socio-economic and demographic features, and quality of services provided emerge as important determinants of demand for out-patient physician services. However, there is a great variety in the modeling approaches and inconsistencies in the findings regarding the impact of price on demand for out-patient physician services. Hitherto, the empirical research fails to offer policy-makers a clear strategy on how to develop a country-specific model of demand for out-patient physician services suitable for the assessment of patient payment policies in their countries. In particular, theoretically important factors, such as provider behavior, consumer attitudes, experience and culture, and informal patient payments, are not considered. Although we recognize that it is difficult to measure these factors and to incorporate them in the demand models, it is apparent that there is a gap in research for the construction of effective patient payment schemes.

Costs associated with changes in antidepressant treatment in a managed care population with major depressive disorder.

OBJECTIVE: This study determined whether persons with major depressive disorder who switch or augment antidepressant therapy have higher health care costs and productivity losses than those who do not. METHODS: Data from July 1, 2002, through June 30, 2006, were taken from a national employment-based medical and pharmacy claims database. Participants were required to have filled an antidepressant prescription, be treatment naïve six months before the index prescription, be continuously enrolled in the benefits plan at least six months before and 12 months after the index prescription, and have at least one outpatient-based medical claim for major depressive disorder. Participants were categorized according to whether they switched, augmented, or maintained (that is, neither switched nor augmented) their antidepressant therapy in the 12 months after the index prescription. Productivity losses were defined as days absent from work for medical visits multiplied by average daily wage. Multivariate analyses (generalized linear models) were used to compare costs per person in the year after the index prescription, and univariate analyses (Wilcoxon tests) were used to compare productivity losses per person. RESULTS: Of the 7,273 individuals who met study criteria, 40.3% switched, 1.5% augmented, and 58.2% maintained the index antidepressant therapy. After the analyses controlled for baseline characteristics, mean total and depression-related health care costs, respectively, in the year after the index prescription were significantly greater for switchers ($9,288 and $1,388 per person) and for augmenters ($9,350 and $1,027) than for maintainers ($6,151 and $723). Mean total and depression-related productivity losses, respectively, were significantly greater for switchers ($2,081 and $680) and augmenters ($2,010 and $587) than for maintainers ($1,424 and $437). CONCLUSIONS: Persons with major depressive disorder who switched or augmented antidepressant therapy within 12 months of treatment initiation had higher resource costs and productivity losses than those who did not.

Baseline utilization of breast radiotherapy before institution of the Medicare practice quality reporting initiative.

PURPOSE: In 2007, Medicare implemented the Physician Quality Reporting Initiative (PQRI), which provides financial incentives to physicians who report their performance on certain quality measures. PQRI measure #74 recommends radiotherapy for patients treated with conservative surgery (CS) for invasive breast cancer. As a first step in evaluating the potential impact of this measure, we assessed baseline use of radiotherapy among women diagnosed with invasive breast cancer before implementation of PQRI. METHODS AND MATERIALS: Using the SEER-Medicare data set, we identified women aged 66-70 diagnosed with invasive breast cancer and treated with CS between 2000 and 2002. Treatment with radiotherapy was determined using SEER and claims data. Multivariate logistic regression tested whether receipt of radiotherapy varied significantly across clinical, pathologic, and treatment covariates. RESULTS: Of 3,674 patients, 94% (3,445) received radiotherapy. In adjusted analysis, the presence of comorbid illness (odds ratio [OR] 1.69; 95% confidence interval [CI], 1.19-2.42) and unmarried marital status were associated with omission of radiotherapy (OR 1.65; 95% CI, 1.22-2.20). In contrast, receipt of chemotherapy was protective against omission of radiotherapy (OR 0.25; 95% CI, 0.16-0.38). Race and geographic region did not correlate with radiotherapy utilization. CONCLUSIONS: Utilization of radiotherapy following CS was high for patients treated before institution of PQRI, suggesting that at most 6% of patients could benefit from measure #74. Further research is needed to determine whether institution of PQRI will affect radiotherapy utilization.

Impact of managed care on physicians' decisions to manipulate reimbursement rules: an explanatory model.

OBJECTIVE: To develop and test an explanatory model of the impact of managed care on physicians' decisions to manipulate reimbursement rules for patients. METHODS: A self-administered mailed questionnaire of a national random sample of 1124 practicing physicians in the USA. Structural equation modelling was used. The main outcome measure assessed whether or not physicians had manipulated reimbursement rules (such as exaggerated the severity of patients conditions, changed billing diagnoses, or reported signs or symptoms that the patients did not have) to help patients secure coverage for needed treatment or services. RESULTS: The response rate was 64% (n = 720). Physicians' decisions to manipulate reimbursement rules for patients are directly driven not only by ethical beliefs about gaming the system but also by requests from patients, the perception of insufficient time to deliver care, and the proportion of Medicaid patients. Covert advocacy is also the indirect result of utilization review hassles, primary care specialty, and practice environment. CONCLUSIONS: Managed care is not just a set of rules that physicians choose to follow or disobey, but an environment of competing pressures from patients, purchasers, and high workload. Reimbursement manipulation is a response to that environment, rather than simply a reflection of individual physicians' values.