GROWTH OF POPULATION-BASED PAYMENTS IS NOT ASSOCIATED WITH A - - PowerPoint PPT Presentation

GROWTH OF POPULATION-BASED PAYMENTS IS NOT ASSOCIATED WITH A DECREASE IN MARKET-LEVEL COST GROWTH, YET

David Muhlestein, PhD JD Nathan Smith, PhD

June 25, 2017

ACKNOWLEDGEMENTS

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Funding: Commonwealth Fund Research Contributors: Mark McClellan, MD PhD – Duke-Margolis Center for Health Care Policy Jim Landman, PhD JD – Healthcare Financial Management Association Keith Moore – McManis Consulting

PRESENTATION OVERVIEW

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• 1. Background
• 2. Analysis & Findings
• 3. Conclusions & Implications

BACKGROUND

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COST GROWTH

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0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

GDP

National Health Expenditures

Spending Per Capita Spending as % of GDP Source: CMS National Health Expenditure Data

COST VARIATION

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Risk-Adjusted Standardized Per Capita Costs for Medicare Beneficiaries

Under our current payment system, high value care is not rewarded

• Payment system does not incentivize coordinated, quality care
• Fragmented delivery system hinders coordination and quality

NEED FOR ACCOUNTABLE CARE

Accountable care requires simultaneous reform of the payment and delivery systems

ACO Definition: a group of providers responsible for the cost and quality outcomes of a defined population.

ACO GROWTH

Number of Lives Covered (Millions) 8

61 65 75 167 212 314 326 442 453 464 481 611 621 644 652 731 741 744 767 831 833 838 842 923

5 10 15 20 25 30 35 100 200 300 400 500 600 700 800 900 1000 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Number of ACOs

# of ACOs # of Covered Lives

32.4 Million Lives

Source: Muhlestein, Saunders, McClellan. “Growth of ACOs and Alternative Payment Models in 2017”

GEOGRAPHIC VARIATION IN GROWTH

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Source: Leavitt Partners Center for Accountable Care Intelligence

ACO RESULTS TO DATE

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• Small reduction in covered-population cost
• Wide variation in individual ACO performance
• More general improvement in quality
• No strong correlation between cost and quality

RESEARCH QUESTION

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Is the growth of population-based payment models associated with a decrease in health care cost growth or quality improvement at the market level?

ANALYSIS & FINDINGS

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STUDY DESIGN

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Methods

• Growth Curve
• Fixed Effects
• Qualitative case studies in nine markets

Data

• Medicare Claims Data – per beneficiary biannual cost growth for Medicare
• Truven Health Market Scan Commercial Claims Database – commercial biannual cost growth
• Torch Insight – commercial database from Leavitt Partners with ACO lives by market over time
• Medicare Hospital Compare – quality data

Unit of Analysis: Core-Based Statistical Area (metropolitan areas) Time Frame

• Commercial – 2012-2014
• Medicare – 2012-2015

SEMI-ANNUAL COST AND ACO GROWTH (AVERAGES)

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1.7% 2.8% 3.6% 4.3% 5.0% 5.6%

$4,887 $4,969 $1,602 $2,289

$1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 0% 1% 2% 3% 4% 5% 6%

2012S1 S012S2 2013S1 2013S2 2014S1 2014S2

Semi-Annual Costs VBP Penetration

Period

National VBP Penetration National Medicare Costs National Commercial Costs

GROWTH CURVE

15 Measure Intercept Slope Quadratic Cubic Medicare Costs

• 16.45 (4.5)***

1.5 (1.76)

• 0.38 (0.64)

0.03 (0.06) Commercial Costs

• 2.04 (3.61)
• 2.91 (2.56)

0.33 (0.41) Mortality - HF 0.02 (0.01)** 0 (0) Mortality - Pneumonia

• 0.01 (0.01)

0 (0) Mortality - AMI 0 (0.01) 0 (0) Readmission - HF

• 0.04 (0.01)***

0.01 (0) Readmission - Pneumonia

• 0.02 (0.01)~

0 (0) Readmission - AMI

• 0.1 (0.05)*
• 0.07 (0.04)

Readmission - CJR

• 0.11 (0.03)***

0 (0.03) *** p < .001, ** p < .01, * p < .05, ~ p < .10

Note: Numbers represent regression coefficient and SE in parentheses

Findings

• Baseline
• Markets with larger proportions of the population covered under a VBP model had lower initial per-

beneficiary Medicare costs; no difference for commercial costs

• Growth
• VBP penetration was not associated with the rate of growth for either Medicare or commercial costs.
• Quality
• No change in quality

Standard errors in parentheses *** p < .001, ** p < .01, * p < .05, ~ p < .10

FIXED EFFECTS

16 Costs Mortality Readmission Medicare Costs Commercial Costs HF Pneum AMI HF Pneum AMI CJR Overall VBP Penetration

• 0.81
• 0.94

0.01* 0.01 0.01~ (0.84) (1.59) (0.01) (0.01) (0.0) (0.0) (0.01) (0.0) (0.0) (0.01) Observation s 7,675 5,759 3,452 2,769 3,500 3,103 3,497 3,512 2,537 3,459 R-squared 0.16 0.08 0.05 0.38 0.1 0.5 0.84 0.28 0.54 0.25 CBSAs 962 962 881 737 887 809 887 888 671 880

Findings

• Growth of population-based models was not associated with a decrease in Medicare or commercial cost growth
• Coefficients directionally suggest lower cost growth
• Heart Failure mortality grew worse in markets with higher VBP penetration – likely random/spurious association
• When limiting the analysis to markets with higher rates of VBP penetration, there was ~$2 of slower growth (p=0.18)

Standard errors in parentheses *** p < .001, ** p < .01, * p < .05, ~ p < .10

CONCLUSIONS & IMPLICATIONS

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NO EVIDENCE, YET

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1. An increased growth in population-based payment models has not been shown to be associated with a decrease in cost growth at the market level, also not associated with an increase in cost growth 2. A minority of providers within most markets accept financial responsibility for a minority of their patients

• The “tipping point” for providers to really focus on

cost containment has not been reached 3. Still unknown whether a a concerted focus on lowering costs across all payers and patients will lead to lower costs

THE STORY BEHIND THE NUMBERS

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• 1. Change is Hard, Change when Times are good is nearly

Impossible

• Fee-for-service has been very good for most

providers

• 2. The current business model favors fee-for-service
• 3. Many organizations are preparing to bear risk under

population-based models, but they have not fully embraced the model, yet

• 4. There has not been a precipitating event to cause

markets to “tip”

POLICY IMPLICATIONS

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• 1. Policy of encouraging the adoption of VPB to lower

costs is still based more on theory than evidence

• 2. Until a critical mass of payments come through these

models, providers are not going to make substantive changes

• 3. Each market will have a different driver that can

encourage greater adoption of these payment models

KEY TAKEAWAYS

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• Non-uniform growth of costs and population-

based payment models around the country

• Evidence to date does not show that increases

in population-based models leads to a slow down in cost growth (also doesn’t lead to an increase in costs)

• Providers are preparing for population-based

payment models, but are content to focus on fee-for-service for now

QUESTIONS?

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