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Is Mandatory Participation in Medicare Demonstrations Necessary?

May 25, 2022
10:31 am

Recently, Health Affairs Forefront, published a post by Dan L. Crippen, former director of the Congressional Budget Office and currently a Healthcare Leaddership Council consultant, that should be a catalyst for discussion on a critical element of the Center for Medicare and Medicaid Innovation’s future direction.

In his post, Dr. Crippen enters the debate over whether models being tested by CMMI should have mandatory or voluntary participation on the part of healthcare providers.  Some have argued that demonstration projects have floundered under voluntary participation because providers have brought in cohorts of comparatively healthy patients not reflective of the Medicare beneficiary population at large. He points to several examples, though, to make the case that voluntary participation did not result in adverse selection and that a more weighty problem plaguing CMMI demonstration projects has been the lack of timely data flowing to model participants.

The Crippen post is below and at the link above, which will take readers to the Health Affairs Forefront site.

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The tenth anniversary of the Center for Medicare and Medicaid Innovation (the Innovation Center) was in 2020. This anniversary was accompanied by several retrospectives of the results of the Innovation Center’s first decade of operation. Unfortunately, most of the analysts, including those from the Centers for Medicare and Medicaid Services (CMS), reached similar conclusions: that the demonstrations deployed by the Innovation Center neither saved much money nor greatly improved quality, the two primary objectives set out for the Innovation Center in the Affordable Care Act.

Past and present Innovation Center directors concluded that the primary reason for the demonstrations’ failure to achieve the objectives was selection bias by the providers who had volunteered to participate in the various models. The claim is that the providers brought with them a cohort of healthier-than-average patients, making it easy to show savings relative to the benchmark. Relative to providers with sicker patient populations, these providers were more motivated to participate in the demonstrations due to the potential opportunity to earn a bonus from the Innovation Center if they spent less than the Innovations Center’s benchmarks.

Some of the demonstrations included an alignment algorithm for assigning patients to providers within an accountable care organization (ACO), at least one of which assigned patients depending upon their previous use of participating providers in the ACO. In some demonstrations, there was considerable turnover in both the beneficiaries and providers, which theoretically allowed ACOs the opportunity to alter their risk pool by selecting or changing providers (or other aspects of the model) to create a patient population with certain characteristics or health care needs. The former and current directors concluded that only mandatory participation by providers would overcome this perceived selection bias.

However, before seeking a solution to this problem, the question of whether selection by voluntary providers contributed to the disappointing results of the demonstrations should be explored. This article summarizes a multitude of analyses surrounding the reasons the demonstrations show little savings or quality improvement. The analyses indicate that the failure was not due to voluntary, as opposed to mandatory, participation by providers. The article then suggests several ways that any future selection challenges could be addressed, should they occur, without requiring mandatory participation.

 

The Evidence On Selection Related To Voluntary Participation

As described below, outside observers, papers published by think tanks, academic research, contractors hired by the Innovation Center to provide an independent evaluation of the demonstrations, as well as reports by the Innovation Center itself neither found the existence of selection bias nor recommended mandatory participation. These experts offered many suggestions on how the Innovation Center could achieve its stated objectives, but mandatory participation was not among them.

The ACO model is one of the Innovation Center’s longest running demonstrations, albeit in different forms over time, which attempts to measure cost-effectiveness and quality of treatment. It is the early experience of this model that most proponents of mandatory participation cite as proof of selection bias, primarily because so many providers dropped out at the beginning of the demonstration. Only 123 (36 percent) of the 339 ACOs entering the program between 2012 and 2014 were still participating in 2020.

There were several reasons for the attrition, much of which occurred early in the program. Many of the provider groups were small and ill-equipped to provide the complex reporting and data required by the Innovation Center. The participants did not understand the convoluted requirements before they enrolled, and only thereafter realized they were very unlikely to achieve savings, and therefore the bonuses offered by the Innovation Center. Moreover, participants did not have the processes, experience, or capital to ultimately assume the downside risk required later in the demonstration. In accordance with the rules of the program, they were allowed to drop out and did so.

An outside evaluator concluded: “Pioneer ACO stakeholders also noted that the relationship between the ACOs’ activities and their financial results were not well understood or articulated and that they struggled to firmly understand the Pioneer model rules such as the beneficiary alignment algorithm and financial benchmark calculations…[which] raises the question of whether the alignment algorithm may de-align or not align beneficiaries who are less healthy.”

Other credible sources determined that voluntary participation did not result in adverse selection. For example:

  • One analysis concluded: “We also find no evidence that ACOs systematically manipulated provider composition or billing to earn bonuses…. Robustness checks revealed no evidence of residual risk selection…. Careful examination of selection issues revealed that these findings were not driven by nonrandom participation.”
  • A study published by the Brookings Schaffer Center concluded: “Evidence suggests that there was minimal systematic patient-level risk selection by ACOs in the first three years of the Medicare Shared Savings Program (MSSP).”  
  • An internal CMS evaluation noted: “It does not appear that participants are selecting healthier patients.”
  • The Innovation Center engaged outside experts to evaluate the operation of each demonstration, several of whom included explicit conclusions about selection bias. One expert concluded: “This finding suggests that AIM [AIM Investment Model] ACO participant changes over time did not result in selection of certain types of beneficiaries, on average.”

No evaluator of the many demonstrations suggested that that mandatory participation was necessary to produce better results. In one demonstration, the third-party reviewer concluded that the results of the mandatory model were no better than voluntary models. One study directly compared results for mandatory verses voluntary participation and concluded: “spending changes did not differ between the voluntary and mandatory hospitals. This result does not support the concept that organizations perform better when self-selecting into programs.”

If Not Selection, Then What?

While adverse selection did not distort model results, studies did show that there was a myriad of other factors that plagued the initial demonstrations and persisted throughout much of the first decade. A common complaint by providers was a lack of timely data from the Department of Health and Human Services on demonstration operation and performance. One CMS internal evaluator lamented that the inability of CMS technology systems to perform basic tasks for value-based care, including providing performance data to participants, was a key contributor to the reasons providers dropped out.

Additionally, in a 2020 Medicare Payment Advisory Commission meeting, commissioners expressed the view that the multiplicity and overlap of demonstrations made it difficult for participants to sort out the effects of one demonstration from the other. This burden of sorting through the complex requirements for providing data and reports, and inconsistent reporting specifications between the demonstrations, caused many smaller participants to quickly drop out of the demonstrations.

The benchmark calculations, which were intended to measure providers’ effects on costs, were too narrowly drawn and created disincentives that increased over time. The use of historical performance for providers could lock in original calculations of savings/costs. Savings by providers with high-cost patients resulted in lower future benchmarks, which made it more difficult to continue to achieve savings, reducing the incentive to do so.

Many of the shortcomings of previous demonstrations were recognized by the Innovation Center in its assessment of the first decade. The review included a number of suggestions, including health equity a centerpiece of every model; reducing the number, complexity, and redundancy of the many models; re-evaluating how the Innovation Center designs financial incentives to ensure meaningful provider participation (presumably including mandatory participation given the director’s previous comments); better enabling participants to handle down-side risk by providing the tools to participate; reducing the complexity of establishing benchmarks; and expanding the definition of success to include lasting transformation and a broad array of quality investments, rather than focusing on each model’s cost and quality.

Looking Ahead

Despite evidence to the contrary, the Innovation Center has not publicly dropped its position that adverse selection is a problem and that the solution is to require mandatory participation by providers.

Even if selection remains a concern for the Innovation Center, there are ways to detect and correct for selection. One alternative is the expanded use of risk adjusters to assess each participant’s risk before, during, and after the demonstration. Risk adjustment, which is typically used to establish initial payment rates, can also be used to evaluate the risk pools of participants at the end of demonstrations, with payments and shared savings adjusted accordingly.

If benchmarks remain the comparator, risk adjustment will become more important, especially as applied to high- and low-cost beneficiaries as benchmarks converge over time. Risk adjustment is and will continue to be an imperfect process but can be improved by better data, improved statistical techniques, and perhaps, artificial intelligence.

Evidence from many different sources shows that adverse selection has not heretofore been an issue and is not a cause of the failures of past Innovation Center demonstrations in meeting the objectives of savings and quality. Other factors in the operation of the demonstrations are much more likely to explain the results. If selection should ever become an issue, there are ways to adjust models other than forcing providers to participate.

 

Americans Deserve the Full Truth About Medicare-For-All and its Ramifications for their Healthcare

May 05, 2022
4:24 pm

So much of the nation’s discussion about the Medicare-for-all concept takes place through a political prism.  It’s important, though, to fully understand what such a drastic change to our healthcare system would mean for patients and the care on which they depend.  We welcome Barclay Berdan, the chief executive officer of Texas Health Resources, a faith-based non-profit healthcare system, to share his expertise on the subject.

Americans Deserve the Full Truth About Medicare-For-All and its Ramifications for their Healthcare

by Barclay Berdan, chief executive officer, Texas Health Resources

Everyone, advocates and opponents alike, acknowledges that changing our healthcare system from the status quo to a Medicare-for-all concept would bring about a seismic transformation in the way Americans receive care. Given that such an idea has become a frequent talking point in policy and political circles, it’s critical that the public understand the full ramifications of such a complete remake of American healthcare.

Today, roughly 160 million people in this country have private health insurance that is sponsored by an employer. Almost 14 million have purchased private health plans through the Affordable Care Act marketplaces. Even within the Medicare program, 26 million beneficiaries have elected to enroll in private Medicare Advantage plans. Under the predominant Medicare-for-all proposals we’ve seen, these private plans would all go away and be replaced by a single government-run health coverage infrastructure. We would be remiss if we didn’t give thought to how this could affect patient access to hospitals and physicians.

Hospitals are required to think about what we call payer mix. Private health insurance reimburses at a higher rate for healthcare services than Medicare and Medicaid do.  In fact, historically, Medicare and Medicaid payments are less than the actual cost hospitals absorb in providing those services. (According to one study, in 2017, those combined Medicare and Medicaid underpayments totaled nearly $77 billion.).  Hospitals, which generally operate on very thin margins, can afford to keep their doors open and provide care to Medicare and Medicaid patients because of those comparatively-higher private plan reimbursements.

So what happens if every single American becomes a Medicare beneficiary?  Our first concern has to be those communities that are in greatest risk of losing their hospitals even under the current healthcare financing system.  According to the Center for Healthcare Quality and Payment Reform, 130 rural hospitals have closed in the past decade and another 900 are in danger of ceasing operations in the near future.  Many of these healthcare providers have low financial reserves and could not absorb a significant revenue loss.

Then, there are the current and future healthcare workforce shortages that were only exacerbated by the COVID-19 pandemic.  A Mercer study tells us that, just four years from now, we will have a shortage of 3.2 million healthcare workers. Within a system financed entirely by the federal government, how will salary rates be set for healthcare professions and will they be sufficient to encourage more people to pursue health-related jobs?  And will we have enough personnel to meet what will be an expected rise in utilization under a system in which presumably everyone is covered for every healthcare service (or, will a Medicare-for-all system have to impose restrictions on utilization, a topic that has been severely under-discussed up to now).

Of course, it is always possible that, in creating a Medicare-for-all program, Congress could establish reimbursement rates that are sufficiently high to fully replace the loss of private plan payment levels.  That would, however, raise a plethora of questions about total cost for a Medicare-for-all program and the taxes required to pay for it.

The point being that we are likely to hear a lot about Medicare-for-all in the weeks and months ahead. We need more than political rhetoric, though, to rationalize completely overturning a healthcare system that is currently utilized by most Americans.  Tough questions about ramifications and possible consequences need to be asked and answered before we even consider moving from point A to a radically different point B. In the meantime, we should look at how to improve the current system to provide better care to those who don’t currently have access to it, roughly 10 million uninsured individuals without access to subsidies. Also, the administration’s action this month to improve the Affordable Care Act’s coverage affordability for families was an important step.  It is abundantly clear that we can improve both health care and health by improving what we have.

 

Lawmakers Have a Drug Pricing Solution Right in Front of Them

October 04, 2021
10:52 am

As Congress continues to deliberate on drug pricing proposals that many would call extreme, even radical – empowering the federal government to set prices instead of having prices negotiated in the marketplace – a leading health policy research firm has issued findings that should lead lawmakers to turn toward solutions that would not undermine medical innovation but would have a significant impact on the actual costs consumers experience at the pharmacy counter.

In 2020, Senator Chuck Grassley (R-IA), then chairman of the Senate Finance Committee, introduced the Prescription Drug Pricing Reduction Act (PDPRA)  which, for a time, enjoyed bipartisan support.  The bill would have, among other provisions, capped out-of-pocket costs for Medicare Part D beneficiaries at $3,100 annually, allowed beneficiaries to spread those costs over a full year instead of facing heavy charges up front, and reduced coinsurance levels in the initial coverage phase of Part D from 25 to 20 percent.

Avalere, the highly-respected health policy research firm, has performed some new analysis on what the Prescription Drug Pricing Reduction Act would do for Part D enrollees (those who do not qualify for low-income assistance), and it’s striking.

The Avalere study found that the provisions of the PDPRA would provide beneficiaries a 23 percent reduction in out-of-pocket costs compared to current law.  The research showed even greater cost reductions for Black (25%), Hispanic (25%) and North American Native (26%) beneficiaries.

And as the Avalere authors point out, the impact of lower out-of-pocket costs goes beyond financial security: “A large body of research has identified relationships between out-of-pocket costs for prescription drugs, treatment adherence, and health outcomes.  In addition, non-adherence to treatment can have a significant impact on patient outcomes, resulting in higher costs of care, disease progression, and adverse events.  As policymakers further consider reforms to Part D, assessing the impact of reforms on different patient populations, based on disease/condition, race, and reason for entitlement is an essential step to understanding all the possible impacts on access, affordability, health outcomes, and health disparities.”

This research should serve as an invitation for lawmakers to pull back from extreme approaches and the significant consequences that can impact patients and the future of our healthcare system and instead look to common-sense solutions that will directly achieve a bipartisan objective – reducing the amount of money seniors are paying out of pocket for the medicines they need.

The Problematic Push to Slow Medicare Advantage’s Positive Health Impact

September 23, 2021
3:40 pm

In the complex deliberations on Capitol Hill to assemble a social spending package that can pass both houses, one of the prominent proposals being discussed is the expansion of Medicare benefits to include dental, vision, and hearing coverage.  The cost would be significant, over $300 billion over 10 years based on an earlier estimate.  There are valid arguments to be made for closing gaps in current Medicare coverage. Where millions of Medicare beneficiaries need to be concerned, though, is in one of the ideas being tossed around to pay for this coverage expansion, placing the financial burden on Medicare Advantage (MA) plans and those who rely on them for their healthcare.

Some have suggested financing these additional benefits by excluding them from the benchmark that Medicare uses to determine payment rates for Medicare Advantage plans.  The USC-Brookings Schaeffer Initiative for Public Policy, in fact, published an essay advocating this approach.

Let’s break down exactly what this means and clarify the ramifications of such a step.  Under this approach, Congress would be creating new defined benefits for Medicare beneficiaries, but it would not be funding those benefits for MA plans.  MA plans receive rebates from the government by submitting bids for the coming plan year that are lower than the benchmark.  Those rebates are generally funneled back into additional benefits for enrollees and initiatives to address social determinants of health (more on that in a moment).  If the range of defined Medicare benefits expands but that is not reflected in the benchmark, that will mean a significant shrinkage of rebates to MA plans.

Put succinctly, for the first time ever, Medicare would be segmenting its beneficiary population into different groups with different levels of benefits. Medicare Advantage plans and enrollees will be paying for expanded benefits for those in conventional fee-for-service Medicare, and there will be consequences for doing that.

Today, more than four of every 10 Medicare beneficiaries – over 26 million in all – are enrolled in an MA plan, with that number growing annually.  And as more seniors enroll in these plans, the collective health of the over-65 population improves.  Research has shown that MA plans surpass conventional fee-for-service Medicare on multiple clinical quality measures and patient experience standards.

Just as importantly, as health experts come to the increasing realization that non-clinical social determinants can have an even greater impact on health than clinical care, more Medicare Advantage plans are providing coverage for transportation, housing, nutrition and social support services. This can make a profound difference in the lives of at-risk seniors. If, however, lawmakers choose to take dollars out of Medicare Advantage in order to fund proposed dental, hearing and vision benefits, something has to give.

No one is suggesting that Congress shouldn’t address existing gaps in Medicare coverage, but there needs to be greater foresight in determining how to pay for it.  It makes little sense to undermine a program that is providing quality healthcare to our most vulnerable age group and is addressing the social determinants that affect lives and health.

Medicare Part D Facts Keep Getting in the Way of Politics

August 10, 2018
11:56 am
It’s campaign season, so that means we’re seeing an escalation in the number of politicians who insist that the federal government must involve itself in “negotiating” prices for the Medicare Part D prescription drug program.  (I put negotiating in quotations because it’s a misnomer to suggest that government negotiates in the understood sense of the world.  It is closer to reality to say that the feds set prices.)
The problem with this assertion regarding Medicare Part D is that the facts keep getting in the way.
Last week, the Centers for Medicare and Medicaid Services announced that average monthly premiums for Part D plans are expected to drop from $33.59 in 2018 to $32.50 in 2019.  This is the second consecutive year in which average premiums will have declined and follows several previous years in which premium levels remained relatively flat.   In other words, the inference that urgent action is needed to fundamentally change the Medicare Part D structure isn’t supported by any evidence that consumers are being harmed by the status quo.
In fact, the approach employed when Congress created the Medicare prescription drug program just over a decade ago remains just as viable today.  The best way to maintain affordability is to empower consumers to select from several competing drug plans on the basis of value.  Part D enrollees will naturally gravitate to the plans that cover the drugs their physicians prescribe and do so at affordable cost.
That’s not to say there aren’t actions that need to be taken regarding Part D.  For example, Congress needs to act expeditiously to address the “out of pocket cliff,” the forthcoming change in the out-of-pocket spending threshold that must be met in order to qualify for catastrophic coverage.  If not address, this “cliff” will cost beneficiaries several hundred dollars that many can’t afford.
On the whole, though, when politicians tell you this political season that we need a heavier government hand in Medicare Part D pricing, please be aware that the numbers don’t back up that claim.