Variation in Health Care Spending Target Decision Making, Not Geography (2013) / Chapter Skim
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3 Indexing Value in Medicare: The Role of Geographic Area Performance
3 Indexing Value in Medicare: The Role of Geographic Area Performance
Pages 79-98
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From page 79... ...
To decide whether to recommend Medicare adjustment of provider and hospital payments based on this definition of value, the committee had to define the scope and evaluate the conceptual and empirical dimensions of a geographically based value index. DEFINING A GEOGRAPHICALLY BASED VALUE INDEX Value indexes can take specific forms and serve many purposes.
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From page 80... ...
The bills' sponsors hoped that, by "linking rewards to the outcomes for an entire payment area," providers within a given area would coordinate care, thereby improving health care quality and reducing inefficiencies.2 With this historical context in mind, the committee limited its evaluation of a geographically based value index to a relative ratio that would use area-level composite measures of clinical health outcomes and cost to adjust individual hospital and provider payments under Medicare Parts A, B, and D (a geographic value index)
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From page 81... ...
without substantially diminishing health care outcomes. A geographic value index does not target an appropriate level of clinical decision making to trigger behavioral change at the patient-provider level.
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From page 82... ...
EMPIRICAL ASSESSMENT OF A GEOGRAPHIC VALUE INDEX A geographic value index for Medicare would have to generate hospital and provider payments perceived as fair. Proponents of a geographic value index argue that paying more (per unit of service or in total)
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From page 83... ...
. Spending Variation at the Hospital Service Area Level Within Hospital Referral Regions The committee investigated the extent and range of variation in spending in subregions within HRRs to test whether the HRR is an appropriate geographic unit upon which to base provider payment.
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From page 84... ...
Collectively, these findings demonstrate considerable variation in spending and utilization that can be explained not by HRR-level factors but by factors at the smaller, HSA geographic level or even below that level -- within HSAs. Spending Variation at the Hospital Level Within Hospital Referral Regions Hospitals within the same HRR vary substantially in their resource use, as can be seen from the committee's analysis of Dartmouth data on
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From page 85... ...
in drug spending. SOURCE: University of Pittsburgh, 2013.
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From page 86... ...
in drug spending. SOURCE: University of Pittsburgh, 2013.
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From page 87... ...
Figures 3-3, 3-4, and 3-5, respectively, display observed variation in Medicare spending at the hospital level within each HRR for the above three clinical conditions, after adjustment for input price and health status. The higher the point in the figure, the greater is the variation among hospitals in the HRR.
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From page 88... ...
/ 0.15 median spending 0.10 0.05 $45,000 $50,000 $55,000 $60,000 $65,000 Average spending in HRR for hip fracture patient FIGURE 3-4 Variation in price- and risk-adjusted Medicare spending for hip fracture in a hospital referral region. SOURCE: Committee analysis of unpublished Dartmouth data (personal communication, Jonathan S
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From page 89... ...
For more than two dozen clinical conditions, Blue Cross Blue Shield of Massachusetts (BCBSMA) regularly examines varia tion in practice patterns among Massachusetts physicians within particular specialties, comparing physicians with peers in the same practice as well as all comparable specialists across the state.
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From page 90... ...
SOURCE: Personal communication, Dana Gelb Safran, Blue Cross Blue Shield of Massachusetts, July 17, 2011.
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From page 91... ...
.9 Spending Variation at the Individual Provider Level Across Clinical Conditions Even individual physician performance varies across different measures of performance. A study by Partners HealthCare of six primary care physicians (PCPs)
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From page 92... ...
Therefore, for a single uniform geographic value index to generate fair reimbursement rates, data would at a minimum have to indicate that performance across a wide range of quality measures was relatively consistent within an area. Testing this notion, the committee drew on a small sample of the large universe of quality measures, estimating pairwise correlations between 18 condition-specific Medicare quality indicators (Acumen, LLC, 2013, p.
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From page 93... ...
"Acceptable" and "Unacceptable" Sources of Geographic Variation Some proponents of a geographic value index contend that area-level payments may be appropriate even if provider behavior varies within an area, reasoning that after controlling for acceptable sources of variation, any remaining variation represents inefficiencies correctable through arealevel payment incentives. To evaluate this assertion, the committee commissioned analyses (see Chapter 2)
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From page 94... ...
94 TABLE 3-2 Pearson Correlation Coefficients for Medicare Beneficiary Utilization (Risk-Adjusted Per-Member-Per-Month Cost) Across Cohorts Lower Congestive Breast Prostate Back Pain Cataracts Heart Failure Cancer Cancer Cholecystectomy Lower Back Pain 1.00 Cataracts 0.477 1.00 Congestive Heart Failure 0.907 0.483 1.00 Breast Cancer 0.574 0.311 0.583 1.00 Prostate Cancer 0.485 0.230 0.502 0.524 1.00 Cholecystectomy 0.593 0.353 0.624 0.406 0.406 1.00 SOURCE: Acumen, LLC, 2013.
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From page 95... ...
TABLE 3-3 Pearson Correlation Coefficients for Input-Price-Adjusted Spending Across Cohorts in the Harvard MarketScan Commercial Population Lower Congestive Breast Prostate Back Pain Cataracts Heart Failure Cancer Cancer Cholecystectomy Lower Back Pain 1.00 Cataracts 0.35 1.00 Congestive Heart Failure 0.52 0.36 1.00 Breast Cancer 0.49 0.52 0.37 1.00 Prostate Cancer 0.43 0.33 0.39 0.49 1.00 Cholecystectomy 0.40 0.36 0.39 0.42 0.36 1.00 SOURCE: Harvard University, 2012.
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From page 96... ...
Thus, assuming that composite measures of health care spending and health outcomes are used to measure value, the case for an area-wide payment adjuster is stronger if a payment change has consistent effects on the quality measures making up the composites. The committee's commissioned analyses did not reveal a consistent relationship between condition-specific utilization and area-wide condition-specific quality measures in the Medicare population.
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From page 97... ...
RECOMMENDATION 2: Congress should not adopt a geographi cally based value index for Medicare. Because geographic units are not where most health care decisions are made, a geographic value index would be a poorly targeted mechanism for encouraging value improve ment.
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From page 98... ...
2013. Geographic variation in health care spending and promotion of high-value health care Medicare Part D
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