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.

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.

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.

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.

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.

Comprehensive Primary Care Plus Did Not Improve Quality Or Lower Spending For The Privately Insured.

Comprehensive Primary Care Plus (CPC+) was a multipayer payment reform model that provided incentives for primary care practices to lower spending and improve quality performance. Although CPC+ has been evaluated in Medicare, little is known about its impact in the private sector. Using claims and enrollment data from the period 2013-20 from two large insurers in Michigan, we performed difference-in-differences analyses and found that CPC+ was not associated with changes in total spending (-$44.70 per year) or overall quality performance (-0.1 percentage point). These changes did not vary systematically across CPC+ cohorts, tracks, regions, or participation in prior primary care innovations. We conclude that CPC+ did not improve spending or quality for private-plan enrollees in Michigan, even before accounting for payouts to providers. This analysis adds to existing evidence that CPC+ may cost payers money in the short term, without concomitant improvements to care quality.

Value-Based Payment Models In The Commercial Insurance Sector: A Systematic Review.

Value-based payment models are a prominent strategy in health reform. Although Medicare payment models have been extensively evaluated, much less is known about value-based payment models in the commercial insurance sector. We performed the first systematic review of the quality, spending, and utilization effects of commercial models, extracting results from fifty-nine studies. Forty-one of these studies evaluated outcomes. More studies had positive results for quality outcomes (81 percent of studies) than for spending (56 percent) and utilization (58 percent). Less rigorous studies were more likely to find positive results. Given the mixed nature of the findings, commercial insurers should identify ways to strengthen value-based payment programs or leverage other strategies to improve health care value.