The essential scan: Top findings in health policy research

What’s the latest in health policy research? The Essential Scan, produced by the USC-Brookings Schaeffer Initiative for Health Policy, aims to help keep you informed on the latest research and what it means for policymakers. If you’d like to receive the biweekly Essential Scan by email, you can sign up here.

Physician-Led ACOs Decrease Per-Beneficiary Medicare Spending 

Study by: J. Michael McWilliams, Laura A. Hatfield, Bruce E Landon, Pasha Hamed, and
Michael E. Chernew

Since 2012, 561 Accountable Care Organizations (ACOs) have volunteered to participate in the Medicare Shared Savings Program (MSSP). Proponents of ACOs believe that their emphasis on population health and care coordination will lead to significantly lower per-beneficiary spending, but in 2015 per-beneficiary spending for the average ACO was only $59 lower than the benchmarks set by CMS. If one assumes that the ACO benchmarks set by CMS are a suitable counterfactual, analysis of the program shows that ACOs cost Medicare $216 million in 2015. In an attempt to more accurately quantify the effects of ACOs on Medicare spending, the authors of a new study compare per-beneficiary spending for Medicare enrollees attributed to ACOs with per-beneficiary spending on Medicare enrollees in traditional fee-for-service (FFS) plans. The authors found that in 2015, ACOs organized and operated by physician groups that entered into the MSSP program in 2012 lowered per-beneficiary spending by $474 relative to traditional FFS beneficiaries, $342 if the ACO entered in 2013, and $156 for those that entered in 2014. These levels of per-beneficiary savings translate to $256.4 million in savings for Medicare in 2015 alone. Savings for ACOs organized and operated by hospitals, on the other hand, were much lower and were ultimately offset by shared savings payments made to the ACOs. These results show that ACOs continue to realize larger savings as they refine their business models over time, physician led ACOs have stronger incentives to decrease spending than ACOs run by hospitals, and that MSSP contracts with only one-sided risk can still help lower spending levels. Full study here.

“Policymakers need to understand that the models most suitable for determining rewards or penalties for individual ACOs are not the same as the best models for evaluating the MSSP program as a whole.”

-Paul Ginsburg, PhD , Director, USC-Brookings Schaeffer Initiative for Health Policy

Removing Financial Incentives for Quality of Care Leads to Lower Quality of Care 

Study by: Mark Minchin, Martin Roland, Judith Richardson, Shaun Rowark, and Bruce Guthrie

Pay-for-performance schemes are increasingly deployed by healthcare payers to support improved quality of care. However, there is a lack of information on the effect of removing financial incentives from existing schemes. A new study uses electronic medical record (EMR) data from the United Kingdom’s Quality and Outcomes Framework to estimate the effects of a 2014 policy that eliminated financial incentives for performance on 12 quality-of-care measures. Researchers found that the removal of financial incentives was associated with an immediate decline of quality-of-care measures for care provided after the incentives were removed. The most dramatic reductions were observed for indicators related to health advice. For example, documentation of lifestyle counseling for patients diagnosed with hypertension was reduced by 62.3 percentage points. Indicators involving clinical actions that automatically update in the EMR, such as laboratory tests had much smaller reductions. These results are probably partially explained by changes in EMR documentation following the policy change, but they also highlight the impact that the incentive structures created by billing systems can have on patient care. Full study here.

Patient Neuropsychological and Functional Risk Factors Significantly Impact Medicare Patients’ Total Annual Cost of Care Measure

Study by: Kenton J. Johnston, Hefei Wen, Jason M. Hockenberry, and Karen E. Joynt Maddox

Medicare implemented the Merit-Based Incentive Payment System (MIPS) program as part of a suite of reforms aimed at better aligning payment with quality of care provided. MIPS assesses outpatient clinicians’ performance through a measure of annual Medicare spending, defined as the patients’ total annual cost of care (TACC). Though the TACC measure adjusts for medical risk using the CMS hierarchical conditions category score, the measure is not adjusted for functional status and common neuropsychological comorbidities or for local market and economic variables which may impact patient outcomes but be outside the clinician’s control. Thus, a central concern of this program is whether outpatient clinicians who care for vulnerable populations will be inappropriately penalized due to the measure not accounting for all meaningful determinants of cost. A new paper analyzes Medicare data from 2006 through 2013 and found that patient depression, dementia, limitations in activities of daily living, as well as patient residence in areas of mental health care shortage or high unemployment were associated with substantially higher TACC, even after applying standard Medicare risk adjustment methods. The researchers estimate that adding these factors to risk adjustment calculations reduced outpatient safety-net clinicians’ underperformance relative to non-safety-net clinicians by 5 percentage points, or 52 percent. These findings highlight the importance of accounting for patient cognitive and functional status, as well as local market factors when developing alternative payment models. Full study here.

San Diego County Quality Improvement Collaborative Resulted in Nearly 4,000 Acute Myocardial Infarction Hospitalizations Avoided, $86 Million Saved During First 6 Years

Study by: Allen Fremont, Alice Y. Kim, Katherine Bailey, Hattie Rees Hanley, et al

Age-Adjusted Hospitalizations for Acute Myocardial Infarction per 100,000 Population in San Diego County and the Rest of California, 2007-2016

Eliminating unnecessary hospital admissions and readmissions through value-based initiatives is a central goal of healthcare reform efforts. One strategy that several communities have employed is quality improvement collaboratives, which are made up of policy makers, healthcare stakeholders, and community groups and are focused on sharing evidence-based best practices targeted at a specific goal. The “Be There San Diego” quality improvement collaborative was launched in 2011 with the aim of reducing cardiovascular events. A new study uses a difference-in-difference design to compare acute myocardial infarction (AMI) hospitalization rates in San Diego County and the rest of California before and after the collaborative was launched. The researchers found hospitalization rates decreased by 22 percent in San Diego County versus 8 percent in the rest of the state from 2007-2010 and 2011-2016. This resulted in an estimated 3,826 AMI hospitalizations avoided and $86 million in savings in San Diego during the first 6 years of the collaborative. The researchers note that a number of other regional and national activities aimed at improving cardiac health may have contributed to the success of the collaborative. However, the large reductions compared to trends in the state overall suggest that these types of health collaboratives that bring together a range of stakeholders focused on a specific aim can have a significant impact on overall population health. Full study here.