Ex ante evaluation of risk adjustment models for prospective provider payment: a conceptual framework and empirical application.

SGR Out, MACRA In: Medicare's Move Toward Merit-Based Pay

CONTEXT: The US healthcare system suffers from high healthcare costs, suboptimal health outcomes, and a fragmented primary care system, at least in part due to a fee-for-service payment model. The National Academies of Sciences, Engineering, and Medicine recommend a transition to alternative payment models (APMs) as a pathway to implementing high-quality primary care. Many suggest that practices need at least 25% APM-attributable revenue (AAR) in order to see change. OBJECTIVE: We sought to assess the adoption of APMs among primary care practices in Virginia. STUDY DESIGN: Mixed-methods evaluation of practice surveys and semi-structured interviews. POPULATION STUDIED: All primary care practices in Virginia were surveyed. 40 clinicians from responding practices were interviewed, representing the spectrum of rurality, ownership, and APM penetrance. DATASET: Surveys were emailed and mailed to practices up to six times between 9/1/21 and 4/22/22. Non-responding practices were called. Surveys followed up a 2018 primary care survey with an emphasis on APM. Interviews further explored findings. OUTCOME MEASURES: Practice characteristics, current APM participation, AAR, and interest in future APM. RESULTS: 418 of 2119 practices completed the survey (19.7%). Nearly half (49%) of practices have no AAR, 30% have 1-10% AAR, 9% have 11-24% AAR, and 12% practices have 25% or more AAR. For practices with no (0% AAR), medium (11-24% AAR) and high (≥25% AAR), there were only minor differences in: ownership (clinician owned: 59% vs 39% vs 46% / health system owned: 29% vs 50% vs 39%), care of vulnerable populations (81% vs 89% vs 85%), quality measurement (51% vs 67% vs 68%), and social needs screening (29% vs 28% vs 32%). However, for practices with no, medium, and high AAR, practices with medium payment seemed different from the others in terms of APM perspective including: interest in Medicaid APM (29% vs 65% vs 28%), would make changes if more APM (24% vs 41% vs 17%), reduce turnover with more APM (19% vs 41% vs 35%), and improve access with more APM (35% vs 59% vs 31%). Many clinicians felt APMs would allow them to hire additional support staff and care for more patients, yet there was skepticism on whether APMs would represent a true increase in primary care investment. CONCLUSIONS: While uptake of APM is low, there is general interest in more APM and a belief it can improve care. Practices with a medium amount of AAR may be most open and amenable to change.

BACKGROUND: Publicly funded mental health systems are increasingly implementing managed care systems, such as capitation, to control costs. Capitated contracts may increase the risk for disenrollment or adverse outcomes among high cost clients with severe mental illness. Risk-adjusted payments to providers are likely to reduce providers' incentives to avoid or under-treat these people. However, most research has focused on Medicare and private populations, and risk adjustment for individuals who are publicly funded and severely mentally ill has received far less attention. AIMS OF THE STUDY: Risk adjustment models for this population can be used to improve contracting for mental health care. Our objective is to develop risk adjustment models for individuals with severe mental illness and assess their performance in predicting future costs. We apply the risk adjustment model to predict costs for the first year of a pilot capitation program for the severely mentally ill that was not risk adjusted. We assess whether risk adjustment could have reduced disenrollment from this program. METHODS: This analysis uses longitudinal administrative data from the County of Los Angeles Department of Mental Health for the fiscal years 1991 to 1994. The sample consists of 1956 clients who have high costs and are severely mentally ill. We estimate several modified two part models of 1993 cost that use 1992 client-based variables such as demographics, living conditions, diagnoses and mental health costs (for 1992 and 1991) to explain the variation in mental health and substance abuse costs. RESULTS: We find that the model that incorporates demographic characteristics, diagnostic information and cost data from two previous years explains about 16 percent of the in-sample variation and 10 percent of the out-of-sample variation in costs. A model that excludes prior cost covariates explains only 5 percent of the variation in costs. Despite the relatively low predictive power, we find some evidence that the disenrollment from the pilot capitation initiative input have been reduced if risk adjustment had been used to set capitation rates. DISCUSSION: The evidence suggests that even though risk adjustment techniques have room to improve, they are still likely to be useful for reducing risk selection in capitation programs. Blended payment schemes that combine risk adjustment with risk corridors or partial fee-for-service payments should be explored. IMPLICATIONS FOR HEALTH CARE PROVISION, USE, AND POLICY: Our results suggest that risk adjustment methods, as developed to data, do not have the requisite predictive power to be used as the sole approach to adjusting capitation rates. Risk adjustment is informative and useful; however, payments to providers should not be fully capitated, and may need to involve some degree of risk sharing between providers and public mental health agencies. A blended contract design may further reduce incentives for risk selection by incorporating a partly risk-adjusted capitation payment, without relying completely on the accuracy of risk adjustment models. IMPLICATIONS FOR FURTHER RESEARCH: Risk adjustment models estimated using data sets containing better predictors of rehospitalization and more precise clinical information are likely to have higher predictive power. Further research should also focus on the effect of combination contract designs.

Objectives: Efficient use of health resources has become a major concern for health policy makers and researchers when health expenditures are continously increasing. Prospective risk adjustment, using ex ante information and relating health expenditures and individual or population characteristics and morbidity, is generally recommended as a tool for controlling the cost and promoting incentives for efficiency in the health provision. However, it also can promote incentives for risk selection. Concurrent risk adjustment, using ex post or actual information on health conditions and costs, improves the access and quality of the health services provision and avoids the incentives for risk selection although it also reduces the efficiency. This paper follows a relatively new literature on risk adjustment in which a mixed formula, using both prospective and concurrent risk adjustment, seeks to maximize the efficiency incentives involved in the prospective risk adjustment and minimize the incentives for selection through a concurrent risk adjustment for high risk individuals suffering a set of specific conditions. Methods: We utilize individual data on total health expenditures, including pharmaceutical, primary care, and hospital and specialised attention expenditures, and health conditions for the population belonging to an integrated healthcare delivery organization in Catalonia in years 2004 and 2005 in order to show the gain of a hybrid risk adjustment versus either an only prospective or only concurrent risk adjustment formula. The individual health conditions are classified by the Clinical Risk Group classification system. Results: Concurrent risk adjustment obtains better results in terms of R-squared than prospective risk adjustment although it decreases incentives for efficiency. However, the use of a hybrid formula with concurrent payments for individuals with specific conditions can solve the problem of selection while incentives for efficiency are maximum for a high proportion of the population. Conclusions: A hybrid risk adjustment system is expected to solve the trade-off between efficiency in provision and the risk selection problem and thus promoting efficient use of health resources. The interest of a hybrid risk adjustment proposal relies also on its feasibility and easy implementation.

Development of a risk-adjusted capitation model based on principal inpatient diagnoses in Taiwan.

Global interest is growing in new value-based models of financing, delivering, and paying for health care services that could produce higher-quality and lower cost outcomes for patients and for society. However, research indicates evidence gaps in knowledge related to alternative payment models (APMs) in early experimentation phases or those contracted between private insurers and their health care provider-partners. The aim of this research was to understand and update the literature related to learning how industry experts design and implement APMs, including specific elements of their models and their choice of stakeholders to be involved in the design and contractual details. A literature review was conducted to guide the research focus and to select themes. The sample was selected using snowball sampling to identify subject matter experts (SMEs). Researchers conducted 16 semi-structured interviews with SMEs in the US, the Netherlands, and Germany in September and October 2021. Interviews were transcribed and using Braun and Clarke's six-phase approach to thematic analysis, researchers independently read, reviewed, and coded participants' responses related to APM design and implementation and subsequently reviewed each other's codes and themes for consistency. Participants represented diverse perspectives of the payer, provider, consulting, and government areas of the health care sector. We found design considerations had five overarching themes: (1) population and scope of care and services, (2) benchmarking, metrics, data, and technology; (3) finance, APM type, risk adjustment, incentives, and influencing provider behavior, (4) provider partnerships and the role of physicians, and (5) leadership and regulatory issues. This study confirmed several of the core components of APM model designs and implementations found in the literature and brought insights on additional aspects not previously emphasized, particularly the role of physicians (especially in leadership) and practice transformation/care processes necessary for providers to thrive under APM models. Importantly, researchers found significant concerns relevant for policymakers about regulations relating to health data sharing, rigid price-setting, and inter-organizational data communication that greatly inhibit the ability to experiment with APMs and those models' abilities to succeed long-term.

Implemented by the Centers for Medicare and Medicaid Services, alternative payment models (APMs) provide financial incentives to clinicians and health care organizations (HCOs) for delivering high-quality, cost-efficient care to patients (1). In APMs, clinicians and HCOs are held accountable for specific clinical conditions, episodes, or populations. Whereas in the traditional-fee-for-service payment system, clinicians and HCOs have been financially rewarded for providing a high volume of services to patients regardless of their health status, APMs have promoted a shift toward payment that is linked to the cost and/or quality of care (2). APMs have demonstrated promising results in the quest for health care value, but they also present concerns. One issue critical to the success of APMs is ensuring appropriate and fair risk adjustment.

46 Background: Alternative payment models (APMs) aim to address the rising cost of cancer care ($173 billion in 2020) by promoting high-value care. This study explored the challenges and opportunities associated with implementation of APMs in oncology practice sites across the U.S. Methods: A novel survey was created through literature review and a focus group of content experts and researchers. This survey was distributed electronically (Qualtrics) to oncology/hematology physicians (MDs) and quality officers (QOs) at U.S academic (AC) and community (CO) cancer centers from August 2020 to November 2020. Each participant reported on their center’s experience with APMs. A descriptive analysis was conducted. Results: A total of 136 sites were contacted and 28 sites (13AC/15CO) participated (21% response rate). There were 30 (67%) sites that implemented an APM, the most common was the CMS Oncology Care Models (CMS OCM) (87%, n=26), which typically took 6 months or less for implementation (66%, n=20) and was reported to improve benchmark performance (63%, n=10). The most common reasons APMs were not implemented were administrative complexity (53%, n=8); difficulty with alignment of multiple payers to APM (47%, n=7); and need for a median of 5 full-time hires. A larger number of QOs indicated participation in CMS OCM compared to MDs [94% (n=15) vs. 76% (n=11)]. The biggest difficulty experienced by MDs was adoption of innovation at site’s financial risk (43%, n=6) compared to QOs who focused on administrative and financial burden (43%, n=7). Community cancer sites were more likely to use APMs (100%, n=23) compared to AC sites (31%, n=7). The largest difficulty experienced by CO sites was adoption of innovations at their own financial risk (26%, n=6) compared to high costs, administrative burden and lack of payer engagement (29%, n=2 each) for AC sites. The most common challenge with incentives among CO sites was concerns with risk adjustment of quality measures (57%, n=13) compared to increased complexity of incentive compensation (57%, n=4) for AC sites. CO sites indicated that quality measure performance reviews were primarily conducted by administrative staff compared to clinical leaders for AC sites. Conclusions: Administrative burden and access to appropriate patient data inhibit the impact of APMs. MDs are primarily concerned about the penalties and financial risk, whereas QOs focus on administrative complexities. For CO and AC sites, the adoption and implementation of APMs to improve cost and care delivery was not without significant challenges. This study demonstrates the multifaceted impact APMs have on care delivery.

Risk-Adjusted Mortality Analysis of Percutaneous Coronary Interventions by American College of Cardiology/American Heart Association Guidelines Recommendations

The Ethics of Transparency: Publication of Cardiothoracic Surgical Outcomes in the Lay Press

With health care costs in the United States rising at an exponential rate, providers, payers, and policymakers have all sought to develop alternative payment models to seek value in care. For procedures such as total knee arthroplasty (TKA), which accounts for Medicare’s largest inpatient expenditure, the Centers for Medicare and Medicaid Services (CMS) and private insurers have introduced bundled payment programs aimed at reducing cost and improving the quality of patient care. Although traditionally, TKA has been reimbursed by Medicare through a fee-for-service model rewarding quantity of services provided versus quality of service, the Bundled Payments for Care Improvement Initiative (BPCI) and the Comprehensive Care for Joint Replacement Model (CJR) seek to align incentives among providers and health care systems by providing a single payment for all services rendered during an episode of care for TKA. Although early published data from these programs suggests substantial cost savings to CMS without an increase in complications, concerns exist regarding access to care for patients who may utilize more resources in an episode of care. Without appropriate risk adjustment, providers are disincentivize to perform TKA on patients at risk for complications and readmissions. Alternative payment models have reduced costs and improved patient outcomes by incentivizing providers to optimize modifiable risk factors before elective TKA, including glycemic control, smoking, body mass index, and malnutrition. Several studies, however, have shown that nonmodifiable risk factors including advanced age, lower socioeconomic status, and several medical and orthopaedic comorbidities are costlier to the health care system following TKA. These patients may face difficulty obtaining quality arthroplasty care with the expansion of bundled payment programs. In order to protect access to care, alternative payment models should not penalize surgeons and hospitals for caring for complex patients and instead provide appropriate, fair, risk-adjusted payments.

Adjustment needs to be incorporated in alternative payment models

Concerns exist regarding the lack of risk adjustment in alternative payment models for patients who may use more resources in an episode of care. The purpose of this study was to quantify the additional costs associated with individual medical comorbidities and demographic variables. We reviewed a consecutive series of primary total hip and knee arthroplasty patients at our institution from 2015 to 2016 using claims data from Medicare and a single private insurer. We collected demographic data and medical comorbidities for all patients. To control for confounding variables, we performed a stepwise multivariate regression to determine the independent effect of medical comorbidities and demographics on 90-day episode-of-care costs. Six thousand five hundred thirty-seven consecutive patients were identified (4,835 Medicare and 1,702 private payer patients). The mean 90-day episode-of-care cost for Medicare and private payers was $19,555 and $30,020, respectively. Among Medicare patients, comorbidities that significantly increased episode-of-care costs included heart failure ($3,937, P < 0.001), stroke ($2,604, P = 0.002), renal disease ($2,479, P = 0.004), and diabetes ($1,368, P = 0.002). Demographics that significantly increased costs included age ($221 per year, P < 0.001), body mass index (BMI; $106 per point, P < 0.001), and unmarried marital status ($1896, P < 0.001). Among private payer patients, cardiac disease ($4,765, P = 0.001), BMI ($149 per point, P = 0.004) and age ($119 per year, P = 0.002) were associated with increased costs. Providers participating in alternative payment models should be aware of factors (cardiac history, age, and elevated BMI) associated with increased costs. Further study is needed to determine whether risk adjustment in alternative payment models can prevent problems with access to care for these high-risk patients.

In the 2009 reform of the German collective remuneration system for outpatient medical care, on the level of overall remuneration, the morbidity risk was transferred to the health funds fulfilling a long-term demand of physicians. Nevertheless not transferring morbidity adjustment to the levels of physician groups and singular practices can lead to budgets not related to patient needs and to incentives for risk selection for individual doctors. The systematics of the distribution of overall remuneration in the German remuneration system for outpatient care are analysed focusing on the aspect of morbidity adjustment. Using diagnostic and pharmaceutical information of about half a million insured subjects, a risk adjustment model able to predict individual expenditures for outpatient care for different provider groups is presented. This model enables to additively split the individual care burden into several parts attributed to different physician groups. Conditions for the use of the model in the distribution of overall remuneration between physician groups are developed. A simulation of the use of diagnoses-based risk adjustment in standard service volumes then highlights the conditions for a successfull installation of standard service volumes representing a higher degree of risk adjustment. The presented estimation model is generally applicable for the distribution of overall remuneration to different physician groups. The simulation of standard service volumes using diagnosis-based risk adjustment does not provide a more accurate prediction of the expenditures on the level of physician practices than the age-related calculation currently used in the German remuneration system for outpatient medical care. Using elements of morbidity-based risk adjustment the current German collective system for outpatient medical care could be transformed towards a higher degree of distributional justice concerning medical care for patients and more appropriate incentives avoiding risk selection. Limitations of the applicability of risk-adjustment can be especially pointed out when a high share of lump-sum-payments is used for the remuneration of some physician groups.

Maximizing donors' gifts: A comparison of actual and expected solid organ yield among VCA donors.