Spending and Quality After Three Years of Medicare's Voluntary Bundled Payment for Joint Replacement Surgery

Medicare has reinforced its commitment to voluntary bundled payment by building upon the Bundled Payments for Care Improvement (BPCI) initiative via an ongoing successor program, the BPCI Advanced Model. Although lower extremity joint replacement (LEJR) is the highest-volume episode in both BPCI and BPCI Advanced, there is a paucity of independent evidence about its long-term impact on outcomes and about whether improvements vary by timing of participation or arise from patient selection rather than changes in clinical practice. We found that over three years, compared to no participation, participation in BPCI was associated with a 1.6 percent differential decrease in average LEJR episode spending with no differential changes in quality, driven by early participants. Patient selection accounted for 27 percent of episode savings. Our findings have important policy implications in view of BPCI Advanced and its two participation waves.

Navathe AS, Emanuel EJ, Venkataramani AS, Huang Q, Gupta A, Dinh CT, Shan EZ, Small D, Coe NB, Wang E, Ma X, Zhu J, Cousins DS, Liao JM: Spending and Quality After Three Years of Medicare's Voluntary Bundled Payment for Joint Replacement Surgery. Health Affairs 39(1): 58-66, Jan 2020.

The Impact of Medicare Copayments for Skilled Nursing Facilities on Length of Stay, Outcomes, and Costs

The purpose of this article was to investigate the impact of Medicare's skilled nursing facility (SNF) copayment policy, with a large increase in the daily copayment rate on the 20th day of a benefit period, on length of stay, patient outcomes, and costs. The authors used retrospective cohort study from 2012 to 2016 including Medicare claims and SNF assessment data, including SNF admissions for Medicare fee-for-service beneficiaries. The authors first estimated how changes in Medicare's SNF copayment on the 21st day of a patient's benefit period affect length of SNF stay. They then then used benefit day on admission as an instrumental variable to estimate the impact of SNF length of stay related to the copayment policy on readmission and Medicare payment. Medicare's SNF copayment policy is associated with shorter lengths of stay and worse patient outcomes, suggesting the copayment policy has unintended and negative effects on patient outcomes.

Werner RM, Konetzka RT, Qi M, Coe NB: The Impact of Medicare Copayments for Skilled Nursing Facilities on Length of Stay, Outcomes, and Costs. Health Services Research 54(6): 1184-1192, Dec 2019.

Disease-Specific Plan Switching Between Traditional Medicare and Medicare Advantage

This article uses the 2006 to 2012 Medicare Current Beneficiary Survey, to examine disease-specific switching rates between TM and MA and disease-specific ratios of mean baseline total Medicare expenditures of beneficiaries remaining in the same plan (stayers) vs those switching to another plan (switchers), respectively. We focused on beneficiaries with 1 or more of 10 incident diagnoses. Beneficiaries with a new diagnosis of Alzheimer disease and related dementias, hypertension, and psychiatric disorders had relatively high rates of switching into MA plans and low rates of switching out of MA plans. Among those with new diagnoses of psychiatric disorders and diabetes, more costly beneficiaries (those with higher costs) switched into MA plans. For cancer, more costly beneficiaries remained in MA plans.

Park S, Fishman P, White L, Larson EB, Coe NB: Disease-Specific Plan Switching Between Traditional Medicare and Medicare Advantage. Kaiser Permanente Journal 24, Nov 2019.

Cost of Dementia in Medicare Managed Care: A Systematic Literature Review

In this article, the authors conducted a systematic review of studies reporting the direct healthcare costs of treating older adults with diagnosed Alzheimer disease and related dementias (ADRD) within private Medicare managed care plans. 

P Fishman, NB Coe, L White, S Park, B Ingraham, EB Larson. “Cost of Dementia in Managed Care:  A Systematic Literature Review” American Journal of Managed Care.  2019. August. 

Association Between High Discharge Rates of Vulnerable Patients and Skilled Nursing Facility Copayments

Medicare pays for 100% of postacute care provided by skilled nursing facilities (SNFs) during the first 20 days within a benefit period. However, on the 21st day, most patients become responsible for a daily copayment of more than $150. This copayment may present a significant financial burden for some patients—particularly those with limited economic means—and motivate them to discharge from SNFs on the 20th day of care based on their financial resources rather than their recovery status. In this article, the researchers examine whether patterns of SNF discharge are associated with this change in Medicare payment responsibility on day 20.   

P Chatterjee, M Qi, NB Coe, RT Konetzka, RM Werner. “Association of High Discharge Rates of Vulnerable Patients with Skilled Nursing Facility Copayments.” JAMA Internal Medicine. 2019. May. doi:10.1001/jamainternmed.2019.1209

Impact of Health Plan Reforms in Washington on Employment Decisions

The State of Washington, as part of a State Innovation Model (SIM) grant, is changing the payment model within state employee health insurance plans. The system is moving away from traditional fee-for-service reimbursement to value-based payment, through insurance design (the creation of accountable care network insurance products) and bundled payment strategies. New plans were rolled out in January 2016 (enrollment occurred in late 2015), with the stated goal of getting 80% of state employees covered by plans that contain value-based purchasing within the next 5 years. The goal of payment reform is to improve member experience, member health, and cut costs. However, changing health insurance during employment can, directly and indirectly, change labor market outcomes. Decreasing costs of insurance could lead people to remain in the state-employment sector longer. However, it could also influence retirement timing, by changing the relative costs of insurance through improving health.

This paper examines who switches to value-based insurance, where the insurance explicitly decreases premiums without changing out-of-pocket costs. We find that the peak age for switching insurance plans is 35–45, even among the subsample of individuals who would not need to change their usual sources of care. Second, we look at the labor market activity – both leaving the state-employee sector and retiring from state-employment – and find that younger workers with value-based insurance plans are less likely to leave state employment. Further, we find evidence of value-based insurance, available at a reduced cost to both employees and retirees, leads to a shifting downward in the distribution of retirement age. While these findings support the existence of both the price and income effects, the effect sizes are rather small.

Coe, NB, “Impact of Health Plan Reforms in Washington on Employment Decisions.” Journal of Pension Economics and Finance. 2019, 1-15, DOI: 10.1017/S1474747219000143

Coverage Gaps and Cost-Shifting for Work-Related Injury and Illness: Who Bears the Financial Burden?

This article details the ways in which financial burden imposed by work-related injury/illness, and points out areas which are under-researched to focus policy efforts where improvement is most needed.

Sears, JM, AT Edmonds, NB Coe, “Coverage Gaps and Cost-Shifting for Work-Related Injury and Illness: Who Bears the Financial Burden?” Medical Care Research and Review. 2019. April. DOI: 10.1177/1077558719845726. PMID: 31018756 

What is the marginal benefit of payment‐induced family care? Impact on Medicaid spending and health of care recipients

Research on home‐based long‐term care has centered almost solely on the costs; there has been very little, if any, attention paid to the relative benefits. This study exploits the randomization built into the Cash and Counseling Demonstration and Evaluation program that directly impacted the likelihood of having family involved in home care delivery. They find that some family involvement in home‐based care significantly decreases health‐care utilization: lower likelihood of emergency room use, Medicaid‐financed inpatient days, any Medicaid hospital expenditures, and fewer months with Medicaid‐paid inpatient use. We find that individuals who have some family involved in home‐based care are less likely to have several adverse health outcomes within the first 9 months of the trial, including lower prevalence of infections, bedsores, or shortness of breath, suggesting that the lower utilization may be due to better health outcomes.

Coe, NB, J Guo, RT Konetzka, CH Van Houtven. “What is the Marginal Benefit of Payment-Induced Family Care?” Health Economics. 2019, 28(5); 678-692 (Also appeared as NBER Working Paper 22249). 

Medicare expenditures attributable to dementia

This article estimates dementia's incremental cost to the traditional Medicare program. The authors compared Medicare expenditures for 60 months following a claims-based dementia diagnosis to those for a randomly selected, matched comparison group.   Dementia's five-year incremental cost to the traditional Medicare program is approximately $15 700 per patient, nearly half of which is incurred in the first year after diagnosis. Increased costs for individuals with dementia were driven by more intensive use of Medicare part A covered services.

White, L, P Fishman, A Basu, EB Larson, NB Coe, “Medicare Expenditures Attributable to Dementia.” Health Services Research. 2019. P 1-9

Patient Outcomes After Hospital Discharge to Home With Home Health Care vs to a Skilled Nursing Facility

This article examines how patient outcomes and Medicare spending are affected by the decision to discharge patients to home with home health care vs to a skilled nursing facility for postacute care. The authors find that among Medicare beneficiaries eligible for postacute care at home or in a skilled nursing facility, discharge to home with home health care was associated with higher rates of readmission, no detectable differences in mortality or functional outcomes, and lower Medicare payments.

Werner, R.M., NB Coe, M. Qi, and R.T. Konetzka. “Patient Outcomes after Hospital Discharge to Home with Home Health Care Vs to a Skilled Nursing Facility.” JAMA Internal Medicine. Forthcoming. 2019. March.