Oregon's Hospital Payment Cap and Enrollee Out-of-Pocket Spending and Service Use.

Importance: Enrollee cost-sharing and health insurance premiums have grown alongside rising hospital prices. To control prices and price growth, the Oregon State Employee plan instituted a cap on hospital facility payments in October 2019 that was found to reduce hospital prices. Yet the program's association with out-of-pocket spending and use among enrollees is unknown. Objective: To assess the association of the Oregon State Employee Plan's hospital payment cap with out-of-pocket spending and changes in service use among state employees enrolled in higher cost-sharing plans. Design, Setting, and Participants: Using data from the Oregon All Payer All Claims database (January 2014 to December 2021), a difference-in-differences analysis was conducted to examine the association of Oregon's hospital payment cap with enrollee out-of-pocket spending and service use. The main analysis focused on the outpatient setting, where there were significant declines in hospital prices. Changes in a subpopulation of employees enrolled in higher cost-sharing plans were also examined. Main Outcomes and Measures: The primary outcome was outpatient out-of-pocket spending per procedure, which included the copayment, coinsurance, and/or deductible paid at the point of service. Changes in service use were also examined by counting the number of outpatient procedures received per enrollee per year. Results: The outpatient sample included 1 094 083 procedures from 92 523 Oregon educators and 4 510 342 procedures from 473 621 control enrollees. During the period before implementation, Oregon educators had higher out-of-pocket spending per outpatient procedure than the control group ($69.26 vs $41.87). The hospital payment cap was associated with a $6.60, or 9.5%, reduction in out-of-pocket spending per procedure (95% CI, -12.7 to -0.5) and a 0.24, or 4.8%, increase in the number of outpatient procedures received per enrollee per year (95% CI, 0.09-0.39) among those in higher cost-sharing plans. Enrollees receiving outpatient services from October 2019 through December 2021 saved an estimated $1.8 million. However, savings for the state were $10.3 million less than they would have been absent increases in service use. Conclusions and Relevance: The study findings suggest that enrollees may benefit from reduced out-of-pocket spending due to hospital price regulations, but states should be mindful that price regulations may inadvertently increase health care service use.

Association of Hospital System Affiliation with Spending and Postoperative Outcomes: A Longitudinal Study of Hospital Mergers And Acquisitions From 2010 To 2018.

OBJECTIVE: To determine whether hospital system affiliation was associated with changes in surgical episode spending or postoperative outcomes. BACKGROUND: Over 70% of US hospitals are now part of a hospital system. The presumed benefits of hospital consolidation include concentrating volume and expertise, care integration, and investment in quality improvement. However, there is conflicting evidence as to whether expanding hospital systems are actually reducing health spending or improving quality. These observations call into question whether systems are leveraging their collective volume and experience to standardize care and maximize efficiencies. METHODS: The American Hospital Association Annual Survey was used to identify whether a hospital was part of a system and in which year a hospital joined the respective system. Using 100% Medicare claims data, we identified fee-for-service Medicare patients undergoing elective inpatient coronary artery bypass graft colon resection, lung resection, hip replacement, or knee replacement from 2010 to 2018. We used a difference-in-differences framework to evaluate hospital spending and outcomes before and after joining a system. The primary outcome was Medicare 30-day episode spending, with specific attention to the total episode payment, index hospitalization, and post-acute care components. Secondary outcomes included serious complications, 30-day mortality, and 30-day readmission. RESULTS: The cohort included 3,395,565 Medicare beneficiaries who underwent surgery between 2010 and 2018. Patients were treated at 3961 hospitals, of which 1097 (27.7%) were never in a system, 2262 (57.1%) were always in a system, and 602 (15.2%) joined a system during the study period. By 1 year after system affiliation, 30-day episode spending had decreased by $303 (95% CI: 63, 454, P=0.01), and after 5 years, 30-day episode spending decreased by $429 (95% CI: 5, 853, P=0.04). One year after system association, index hospitalization spending was not statistically different from before system affiliation ($-30, 95% CI: -160, 100, P=0.65). Conversely, 1 year after system association, postacute care spending decreased by $268 (95% CI: 107, 429, P<0.01) and remained lower for ≥5 years. There was no significant change in hospitals serious complications (-0.14, 95% CI: -0.40, 0.11, P=0.27), 30-day readmission (-0.14, 95% CI:-0.52, 0.25, P=0.48), or 30-day mortality (-0.08, 95% CI: -0.18, 0.03, P=0.17), 1 year after joining a system; similar patterns were observed at three and ≥5 years. CONCLUSIONS: system affiliation was associated with a small decrease in 30-day episode spending, driven by decreased spending in postacute care services. Notably, there was no difference in postoperative outcomes after system affiliation.

Bundled payments lead to quality improvements in hospitals' skilled nursing facility referral networks.

OBJECTIVES: To assess whether hospitals participating in Medicare's Bundled Payments for Care Improvement (BPCI) program for joint replacement changed their referral patterns to favor higher-quality skilled nursing facilities (SNFs). STUDY DESIGN: Retrospective observational study using 2009-2015 inpatient and outpatient claims from a 20% sample of Medicare beneficiaries undergoing joint replacement in US hospitals (N = 146,074) linked with data from Medicare's BPCI program and Nursing Home Compare. METHODS: We ran fixed effect regression models regressing BPCI participation on hospital-SNF referral patterns (number of SNF discharges, number of SNF partners, and SNF referral concentration) and SNF quality (facility inspection survey rating, patient outcome rating, staffing rating, and registered nurse staffing rating). RESULTS: We found that BPCI participation was associated with a decrease in the number of SNF referrals and no significant change in the number of SNF partners or concentration of SNF partners. BPCI participation was associated with discharge to SNFs with a higher patient outcome rating by 0.04 stars (95% CI, 0.04-0.26). BPCI participation was not associated with improvements in discharge to SNFs with a higher facility survey rating (95% CI, -0.03 to 0.11), staffing rating (95% CI, -0.07 to 0.04), or registered nurse staffing rating (95% CI, -0.09 to 0.02). CONCLUSIONS: BPCI participation was associated with lower volume of SNF referrals and small increases in the quality of SNFs to which patients were discharged, without narrowing hospital-SNF referral networks.

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.

Identifying Sources of Inter-Hospital Variation in Episode Spending for Sepsis Care.

OBJECTIVE: To evaluate inter-hospital variation in 90-day total episode spending for sepsis, estimate the relative contributions of each component of spending, and identify drivers of spending across the distribution of episode spending on sepsis care. DATA SOURCES/STUDY SETTING: Medicare fee-for-service claims for beneficiaries (n=324,694) discharged from acute care hospitals for sepsis, defined by MS-DRG, between October 2014 and September 2018. RESEARCH DESIGN: Multiple linear regression with hospital-level fixed effects was used to identify average hospital differences in 90-day episode spending. Separate multiple linear regression and quantile regression models were used to evaluate drivers of spending across the episode spending distribution. RESULTS: The mean total episode spending among hospitals in the most expensive quartile was $30,500 compared with $23,150 for the least expensive hospitals ( P <0.001). Postacute care spending among the most expensive hospitals was almost double that of least expensive hospitals ($7,045 vs. $3,742), accounting for 51% of the total difference in episode spending between the most expensive and least expensive hospitals. Female patients, patients with more comorbidities, urban hospitals, and BPCI-A-participating hospitals were associated with significantly increased episode spending, with the effect increasing at the right tail of the spending distribution. CONCLUSION: Inter-hospital variation in 90-day episode spending on sepsis care is driven primarily by differences in post-acute care spending.

Hospital Facility Prices Declined As A Result Of Oregon's Hospital Payment Cap.

Hospital prices for commercially insured people are high and vary widely, prompting states to seek ways to control hospital price growth. In October 2019, the Oregon state employee health insurance plan instituted a cap on hospital payments. Using 2014-21 data from the Oregon All Payer All Claims Reporting Program database, we performed a difference-in-differences analysis to test the impact of the cap on hospital facility prices for Oregon's state employee plan enrollees. We found that the cap was not associated with a significant reduction in inpatient facility prices across the post period (-$901.9 per admission) but was associated with a significant reduction in the second year after implementation (-$2,774.20). The cap was associated with a significant reduction in outpatient facility prices over the course of the first twenty-seven months of the policy (-$130.50 per procedure). We estimated $107.5 million (or 4 percent of total plan spending) in savings to the state employee plan during the first two years. The hospital payment cap successfully reduced hospital prices for enrollees in that plan.

The Rise and Risks of Medicare Advantage "Affinity Plans".

This Viewpoint discusses the proliferation of Medicare Advantage plans targeting specific groups of individuals and whether these plans will improve quality of care for beneficiaries.

Heterogeneity within the Oregon Health Insurance Experiment: An application of causal forests.

Existing evidence regarding the effects of Medicaid expansion, largely focused on aggregate effects, suggests health insurance impacts some health, healthcare utilization, and financial hardship outcomes. In this study we apply causal forest and instrumental forest methods to data from the Oregon Health Insurance Experiment (OHIE), to explore heterogeneity in the uptake of health insurance, and in the effects of (a) lottery selection and (b) health insurance on a range of health-related outcomes. The findings of this study suggest that the impact of winning the lottery on the health insurance uptake varies among different subgroups based on age and race. In addition, the results generally coincide with findings in the literature regarding the overall effects: lottery selection (and insurance) reduces out-of-pocket spending, increases physician visits and drug prescriptions, with little (short-term) impact on the number of emergency department visits and hospital admissions. Despite this, we detect quite weak evidence of heterogeneity in the effects of the lottery and of health insurance across the outcomes considered.

Association Between the Medicare Advantage Quartile Adjustment System and Plan Behavior and Enrollment.

Importance: Medicare Advantage (MA) has grown in popularity, but critics believe that insurers are overpaid, partially due to the quartile adjustment system that determines plan benchmarks. However, elimination of the quartile adjustments may be associated with less generous benefits and fewer plan offerings, which could slow MA enrollment growth. Objective: To examine whether the quartile adjustment system is associated with differences in county-level benefits, insurer offerings, and MA enrollment. Design, Setting, and Participants: The quartile adjustments create discontinuous jumps in county-level base payments based on historical traditional Medicare spending. Data from January 2017 to December 2021 and a regression discontinuity design were used to examine changes in insurer behavior and MA enrollment between quartiles. The analytic sample included 1557 county observations. Main Outcomes and Measures: Study outcomes included monthly premiums, the share of plans charging premiums, primary care copayments, the share of plans using rebates to reduce Part B premiums, supplemental benefits, plan and contract availability, and MA enrollment. Results: Discontinuities were found in the quartile adjustments and benchmarks. A 1-percentage point (pp) increase in the quartile adjustment was associated with a $6.36 increase in monthly benchmarks (95% CI, 5.10-7.62), a $0.51 decrease in monthly premiums (95% CI, -0.96 to -0.07), and a 0.68 pp decrease in the share of plans charging premiums (95% CI, -1.25 to -0.10). Significant changes were not found in primary care copayments (-$0.04; 95% CI, -0.17 to 0.09), the share of plans using rebates to reduce Part B premiums (-0.17 pp; 95% CI, -0.34 to 0.01), supplemental benefits (eg, preventive dental coverage; 0.17 pp; 95% CI, -0.25 to 0.0), the number of plans (1.06; 95% CI, -3.44 to 5.57) or contracts (0.31; 95% CI, -0.18 to 0.81), or the MA enrollment rate (0.16 pp; 95% CI, -0.61 to 0.94). Conclusions and Relevance: The study results suggest that MA plans are not very sensitive to modest changes in payment rates. Modifications to the quartile adjustment system may generate savings without substantially affecting MA beneficiaries.

Mortality and Severe Complications Among Newly Graduated Surgeons in the United States.

OBJECTIVE: To evaluate severe complications and mortality over years of independent practice among general surgeons. BACKGROUND: Despite concerns that newly graduated general surgeons may be unprepared for independent practice, it is unclear whether patient outcomes differ between early and later career surgeons. METHODS: We used Medicare claims for patients discharged between July 1, 2007 and December 31, 2019 to evaluate 30-day severe complications and mortality for 26 operations defined as core procedures by the American Board of Surgery. Generalized additive mixed models were used to assess the association between surgeon years in practice and 30-day outcomes while adjusting for differences in patient, hospital, and surgeon characteristics. RESULTS: The cohort included 1,329,358 operations performed by 14,399 surgeons. In generalized mixed models, the relative risk (RR) of mortality was higher among surgeons in their first year of practice compared with surgeons in their 15th year of practice [5.5% (95% CI: 4.1%-7.3%) vs 4.7% (95% CI: 3.5%-6.3%), RR: 1.17 (95% CI: 1.11-1.22)]. Similarly, the RR of severe complications was higher among surgeons in their first year of practice compared with surgeons in their 15th year of practice [7.5% (95% CI: 6.6%-8.5%) versus 6.9% (95% CI: 6.1%-7.9%), RR: 1.08 (95% CI: 1.03-1.14)]. When stratified by individual operation, 21 operations had a significantly higher RR of mortality and all 26 operations had a significantly higher RR of severe complications in the first compared with the 15th year of practice. CONCLUSIONS: Among general surgeons performing common operations, rates of mortality and severe complications were higher among newly graduated surgeons compared with later career surgeons.

Hospital-physician integration and clinical volume in traditional Medicare.

OBJECTIVE: To test the effect of hospital-physician integration on primary care physicians' (PCP) clinical volume in traditional Medicare. DATA SOURCES AND STUDY SETTING: Nationwide retrospective longitudinal study using Medicare claims and other data sources from 2010 to 2016. STUDY DESIGN: We identified 70,000 PCPs, some of whom remained non-integrated and some who became hospital-integrated during this study period. We used an event study design to identify the effect of integration on key measures of physicians' clinical volume, including the number of claims, work-relative value units (RVUs), professional revenue generated, number of patients treated, and facility fee revenue generated. PRINCIPAL FINDINGS: Per-physician clinical volume declined by statistically and economically significant margins. Relative to the comparison group who remained non-integrated, work RVUs fell by 7% (95% confidence interval [CI]: -8.6% to -5.5%); the number of patients treated fell by 4% (95% CI: -5.8% to -2.6%); and claims volume among PCPs who became hospital-integrated fell by over 15% (95% CI: -16.8% to -13.5%). Though professional revenue declined by $29,165 (95% CI: -$32,286 to -$26,044), this loss was almost entirely offset by increased facility fee revenue of $28,556 (95% CI: 26,909 to 30,203). CONCLUSIONS: Hospital-physician integration may affect the quantity of clinical services delivered by PCPs to traditional Medicare beneficiaries. Reductions in clinical volume associated with integration may have long-term consequences for the supply of physician services and patient access to primary care. Future research on physician time use and patient access following hospital integration would further add to the evidence base.

Estimated Fiscal Effects of Medicare Advantage's Quartile Payment System.

This economic analysis estimates fiscal effects of the quartile adjustments made to Medicare Advantage payments as part of the Patient Protection and Affordable Care Act.

Estimated Savings From the Medicare Shared Savings Program.

Importance: The Medicare Shared Savings Program (MSSP) is the largest and most important alternative payment model that has been implemented by the Centers for Medicare & Medicaid Services (CMS). Its budgetary impact to CMS is not well understood. Objective: To evaluate the association between the MSSP and net savings to CMS for performance years 2013 to 2021. Design, Setting, and Participants: The economic evaluation used publicly reported data on the MSSP from April 1, 2012, to December 31, 2021, and estimates extracted from 2 prior studies. Main Outcomes and Measures: Net savings to CMS, calculated as the difference between incentive payments to MSSP accountable care organizations and gross spending reductions. Incentive payments were calculated using the publicly reported data. The association of the MSSP with gross medical spending in traditional Medicare was extracted from 2 prior studies. Spillovers of the MSSP to Medicare Advantage (MA) were estimated by evaluating how gross spending reductions from the MSSP impacted benchmark payments to MA plans. Savings from traditional Medicare and MA were then combined. Results: The MSSP was associated with net losses to traditional Medicare of between $584 million and $1.423 billion over the study period. Savings from MSSP-related reductions to MA benchmarks totaled between $4.480 billion and $4.923 billion. Across traditional Medicare and MA, the MSSP was associated with savings of between $3.057 billion and $4.339 billion. This represents approximately 0.075% of combined spending for traditional Medicare and MA over the study period. Conclusions and Relevance: This economic evaluation found that the MSSP was associated with net losses to traditional Medicare, net savings to MA, and overall net savings to CMS. The total budget impact of the MSSP to CMS was small and continues to be uncertain due to challenges in estimating the effects of the MSSP on gross spending, particularly in recent years.

Evaluating Educational Outcomes Using Patient Outcomes of New Surgeons Performing Partial Colectomy Compared to Cholecystectomy.

PURPOSE: Despite ongoing efforts to improve surgical education, surgical residents face gaps in their training. However, it is unknown if differences in the training of surgeons are reflected in the patient outcomes of those surgeons once they enter practice. This study aimed to compare the patient outcomes among new surgeons performing partial colectomy-a common procedure for which training is limited-and cholecystectomy-a common procedure for which training is robust. METHOD: The authors retrospectively analyzed all adult Medicare claims data for patients undergoing inpatient partial colectomy and inpatient cholecystectomy between 2007 and 2018. Generalized additive mixed models were used to investigate the associations between surgeon years in practice and risk-adjusted rates of 30-day serious complications and death for patients undergoing partial colectomy and cholecystectomy. RESULTS: A total of 14,449 surgeons at 4,011 hospitals performed 340,114 partial colectomy and 355,923 cholecystectomy inpatient operations during the study period. Patients undergoing a partial colectomy by a surgeon in their 1st vs 15th year of practice had higher rates of serious complications (5.22% [95% CI, 4.85%-5.60%] vs 4.37% [95% CI, 4.22%-4.52%]; P < .01) and death (3.05% [95% CI, 2.92%-3.17%] vs 2.83% [95% CI, 2.75%-2.91%]; P < .01). Patients undergoing a cholecystectomy by a surgeon in their 1st vs 15th year of practice had similar rates of 30-day serious complications (4.11% vs 3.89%; P = .11) and death (1.71% vs 1.70%; P = .93). CONCLUSIONS: Patients undergoing partial colectomy faced a higher risk of serious complications and death when the operation was performed by a new surgeon compared to an experienced surgeon. Conversely, patient outcomes following cholecystectomy were similar for new and experienced surgeons. More attention to partial colectomy during residency training may benefit patients.

Favorable Selection In Medicare Advantage Is Linked To Inflated Benchmarks And Billions In Overpayments To Plans.

Increases in Medicare Advantage (MA) enrollment, coupled with concerns about overpayment to plans, have prompted calls for change. Benchmark setting in MA, which determines plan payment, has received relatively little attention as an avenue for reform. In this study we used national data from the period 2010-20 to examine the relationships among unobserved favorable selection, benchmark setting, and payments to plans in MA. We found that unobserved favorable selection in MA led to underpayment to counties with lower MA penetration and overpayment to counties with higher MA penetration. Because the distribution of MA beneficiaries has shifted over time toward counties that were overpaid, we estimate that plans were overpaid by an average of $9.3 billion per year between 2017 and 2020. Changes to risk adjustment in benchmark setting could likely mitigate the impact of favorable selection in MA.

Trends in Cumulative Disenrollment in the Medicare Advantage Program, 2011-2020.

Importance: The Medicare Advantage (MA) program is rapidly growing. While previous work has found that beneficiaries with substantial health needs disenroll from plans at higher rates, the long-term frequency of disenrollment is not well understood. Objective: To compare cumulative disenrollment trends in the MA program by beneficiary and plan characteristics. Design, Setting, and Participants: This retrospective, serial cross-sectional study included beneficiaries with any MA enrollment from January 1, 2011, to December 31, 2020. Data analysis took place from September 2022 to March 2023. Exposures: Beneficiary characteristics, including race and ethnicity, length of Medicare enrollment, dual eligibility, and comorbidity burden, and contract characteristics, including vertical integration status, premium, and MA star rating. Main Outcomes and Measures: The main outcome was disenrollment from an MA contract within 5 years. Rates of cumulative disenrollment by beneficiary and contract characteristics were compared. Pearson correlation coefficients were calculated to assess the correlation between a contract's 1-year disenrollment and the contract's disenrollment over a longer period. Results: The sample included 82 377 917 beneficiaries (524 442 225 beneficiary-year observations; 56.7% female; mean [SD] age, 71.9 [10.3] years). After 1 year, 13.2% of nondually enrolled and 15.9% of dually enrolled beneficiaries had left their contract, increasing to 48.3% and 53.4%, respectively, after 5 years. Black enrollees disenrolled at the highest rates among race and ethnicity categories, with 14.8% disenrolling after 1 year and 52.6% disenrolling after 5 years. Contracts had a median disenrollment rate of 9.8% (IQR, 4.5%-19.0%) after 1 year and 56.1% (IQR, 23.1%-79.0%) after 5 years. Contracts rated 5 stars had substantially lower 5-year disenrollment rates (23.0% after 5 years compared with 41.2% for 4- to 4.5-star contracts and 67.2% for 3- to 3.5-star contracts). Disenrollment from a contract after 1 year was not well correlated with disenrollment after 5 years (r, 0.46). Conclusions and Relevance: This cross-sectional study found substantial cumulative rates of disenrollment from MA plans within 5 years between 2011 and 2020, with wide variation in 5-year disenrollment by contract. The findings suggest that evaluating long-term disenrollment rates in MA performance measures may capture different outcomes than single-year disenrollment alone.

Legislative and Regulatory Options for Improving Medicare Advantage.

The Medicare Advantage program was created to expand beneficiary choice and to reduce spending through capitated payment to private insurers. However, many stakeholders now argue that Medicare Advantage is failing to deliver on its promise to reduce spending. Three problematic design features in Medicare Advantage payment policy have received particular scrutiny: (1) how baseline payments to insurers are determined, (2) how variation in patient risk affects insurer payment, and (3) how payments to insurers are adjusted for quality performance. The authors analyze the statute underlying these three design features and explore legislative and regulatory strategies for improving Medicare Advantage. They conclude that regulatory approaches for improving risk adjustment and for recouping overpayments from risk-score gaming have the highest potential impact and are the most feasible improvement measures to implement.

Reconciliation Payments in the Bundled Payments for Care Improvement Advanced Program and Reductions in Clinical Spending Needed for CMS to Avoid Financial Losses.

This study examines the magnitude of reconciliation payments and clinical spending reductions necessary for the Centers for Medicare & Medicaid Services to break even in the first 4 performance periods of the BPCI-A (Bundled Payments for Care Improvement Advanced) program.