Risk Adjustment May Lessen Penalties On Hospitals Treating Complex Cardiac Patients Under Medicare’s Bundled Payments

To reduce variation in spending, Medicare has considered implementing a cardiac bundled payment program for acute myocardial infarction and coronary artery bypass graft. Because the proposed program does not account for patient risk factors when calculating hospital penalties or rewards ("recon...

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Bibliographic Details
Published in:Health Affairs 2017-12, Vol.36 (12), p.2165-2174
Main Authors: Markovitz, Adam A., Ellimoottil, Chandy, Sukul, Devraj, Mullangi, Samyukta, Chen, Lena M., Nallamothu, Brahmajee K., Ryan, Andrew M.
Format: Article
Language:English
Subjects:
Accounting
Beneficiaries
Bundling
Capitation
Cardiac surgery
Complex patients
Complexity
Coronary artery
Coronary vessels
Corruption
Expenditures
Fines & penalties
Government programs
Health care
Health care access
Health care policy
Health maintenance organizations
Heart
Heart attacks
Heart diseases
Heart surgery
Hispanic Americans
HMOs
Hospitalization
Hospitals
Incentives
Mathematical analysis
Medicaid
Medicare
Myocardial infarction
Neighborhoods
Patients
Payments
Penalties
Prices
Prospective payment systems
Quality
Racial profiling
Reconciliation
Reduction
Reinforcement
Rewards
Risk adjustment
Risk analysis
Risk factors
Safety
Socioeconomic factors
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Summary:To reduce variation in spending, Medicare has considered implementing a cardiac bundled payment program for acute myocardial infarction and coronary artery bypass graft. Because the proposed program does not account for patient risk factors when calculating hospital penalties or rewards ("reconciliation payments"), it might unfairly penalize certain hospitals. We estimated the impact of adjusting for patients' medical complexity and social risk on reconciliation payments for Medicare beneficiaries hospitalized for the two conditions in the period 2011-13. Average spending per episode was $29,394. Accounting for medical complexity substantially narrowed the gap in reconciliation payments between hospitals with high medical severity (from a penalty of $1,809 to one of $820, or a net reduction of $989), safety-net hospitals (from a penalty of $217 to one of $87, a reduction of $130), and minority-serving hospitals (from a penalty of $70 to a reward of $56, an improvement of $126) and their counterparts. Accounting for social risk alone narrowed these gaps but had minimal incremental effects after medical complexity was accounted for. Risk adjustment may preserve incentives to care for patients with complex conditions under Medicare bundled payment programs.
ISSN:0278-2715
1544-5208
DOI:10.1377/hlthaff.2017.0940