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Our Take: Full-risk payment models lead to less use of acute care and greater shared savings, but quality of care may suffer, data suggest

Mar 28, 2022

Value-based payment arrangements structured with two-sided financial risk can reduce acute care utilization by Medicare Advantage beneficiaries, compared with upside-only financial risk payment models and traditional fee-for-service (FFS) payments, a recent analysis indicates.

In general, and as anticipated, full-risk payment models also generate higher shared savings than upside-only risk models do, according to a separate analysis.

But the results of the second analysis showed that when accountable care organizations participating in the Medicare Shared Savings Program (MSSP) switched from upside-only risk to two-sided risk, there was a tendency for their quality of care to diminish.

The first analysis, which was published in JAMA Network Open, was conducted by researchers at Humana, Harvard, and Tufts University School of Medicine.  The researchers analyzed three years of claims data for nearly 500,000 members enrolled in Medicare Advantage plans offered by Humana. Within that claims data, they identified hospitalizations, observation stays, and emergency department (ED) visits, which they subsequently segmented into potentially avoidable events and all-cause events.

The members attributed to primary care organizations participating in two-sided risk payment models had lower utilization rates for all three types of acute care as compared with those attributed to primary care organizations with FFS payment arrangements.

The analysis did not reveal any significant difference in utilization rates between FFS and one-sided risk payment arrangements for any of the three types of acute care.

The association between value-based payment and lower acute care utilization was most apparent when looking at the potentially avoidable care events. For example, in comparisons with FFS payments, the full-risk models were associated with a 15.6% relative reduction in avoidable hospitalizations, whereas the relative reduction for all-cause hospitalizations was 4.2%.

“The lack of significant differences between FFS and upside-only risk models suggests that downside financial risk may play a key role in effective value-based payment arrangements,” the researchers wrote.

They acknowledged limitations to their analysis, such as potential selection bias in terms of which primary care organizations participate in value-based payment models.

To conduct the second analysis, Indranil Bardhan, a professor at the University of Texas at Austin, used CMS data, predominantly from the Medicare Shared Savings Program (MSSP). He presented his findings at the recent HIMSS conference in Orlando.

According to Healthcare Finance, Bardhan noticed certain trends when he analyzed the data, namely that the ACOs’ shared savings were lower during the early years — while they were participating in an upside-only risk track — but their shared savings increased significantly after they switched to a two-sided risk track.

Their quality of care, on the other hand, decreased after the switch.

“But the quality of two-sided ACOs is still higher than one-sided ACOs, which makes them more attractive if you’re a policymaker,” Bardhan said. “You see better cost savings at a higher level of quality, though quality does go down overall.”

He said the MSSP should do more to hold ACOs accountable for their performance on quality measures, such as by implementing self-benchmarks (so that ACOs would compare their progress — or lack thereof — with a baseline measure or the previous year) in addition to the peer benchmarks already in use.

Bardhan also suggested providing incentives for ACOs to continuously improve their quality of care.

Our Take:  The only real surprise here, or at least the only concern, is the drop in quality of care when ACOs take on downside risk.

The goal of the Humana-Harvard analysis was to generate additional evidence of the effects that the shift toward value-based payment models has had specifically within the MA population, since the adoption of value-based care models has occurred more rapidly in this segment than in traditional Medicare or other types of health plans.

In an interview with Fierce Healthcare, Humana’s chief medical officer, Dr. William Shrank, who was one of the authors of the study, said of the findings, “This is just more ammunition that value-based care works.”

Of note, according to Humana’s latest value-based care report, two-thirds (67%) of the insurer’s individual MA members seek care from primary care physicians participating in value-based arrangements.

Humana’s report also states that members affiliated with value-based care physicians had a significantly greater average annualized PCP visit rate as compared with members affiliated with non-value-based physicians (3,408 visits per 1,000 members vs. 2,712 visits per 1,000 members) but a lower average annualized ED visit rate (194 visits per 1,000 members vs. 209 visits per 1,000 members).

The insurer estimates that in 2020, its MA members would have incurred an additional $3.1 billion in medical costs if they had been enrolled in original Medicare instead of receiving value-based care.

So, yeah, there’s plenty of evidence that value-based care, with its emphasis on preventive care, lowers health care costs overall.

When it comes to shared savings models, though, the results are murkier. Health Affairs published a good article about this back in 2018.

Since then, CMS tried not so successfully to push more ACOs to take on downside risk through the “Pathways to Success” overhaul of the MSSP. As Dr. Bardhan, who conducted the second analysis we wrote about above, said, “There’s a carrot and a stick.”

The Pathways to Success program relied too heavily on the stick. The result was that many ACOs dropped out instead of being forced to transition to a two-sided risk track. While it’s good for ACOs to have some skin in the game, it only works if they’re actually in the game.

As others have noted, certain issues associated with MSSP and other shared savings models stem from the fact that the models are built on a fee-for-service framework. This could at least partially explain the trend Dr. Bardhan found in his analysis regarding the drop in quality of care after ACOs transition to a full-risk track. When providers focus too intently on cutting the cost of care, then the other two legs of the Triple Aim — improving the patient experience of care and the health of populations — become more challenging.

We’ll see what happens as CMS and the Innovation Center work to cull the payment models available to providers and ACOs. Given that the new leadership is making both health equity and transparency more of a priority, we’re inclined to believe that those other two legs of the Triple Aim stand to benefit.

Health Care Rounds Season 6 opener with Robin Shah

We took a long break — we’ve been busy at Darwin — but we’re back with a great lineup of guests for Season 6! We kick off this season with Robin Shah, Founder and CEO of Thyme Care and founding member of OneOncology. John and Robin discuss the classification of super-networks and break down the differences in existing models. Find out how payers are managing various disease states by outsourcing their risk and the impact it has on patient care. Please rate and review if you like Health Care Rounds as it helps other people find us!

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