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News Clips
Paragon Institute (1/8) Opportunities for Medicare Site Neutrality in 2025 – Medicare site-neutral payments would reduce wasteful spending, patient expenses, and health care consolidation by lowering Medicare’s payment rates for routine services provided in hospitals, which are higher than those of equivalent services in physician offices and ambulatory surgical centers. There are a variety of site neutrality proposals, some of which account for concerns such as the impact of payment reforms on rural hospitals. Lawmakers should design site neutrality policies that (1) eliminate existing differentials without creating new exemptions, (2) lower payment rates, (3) do not tolerate payment differentials or create excessively complex incentive structures in order to compensate rural hospitals, (4) do not undermine savings with excessive new Medicare spending, and (5) avoid government price controls in the private market.
Health Affairs (1/5) Use Of Patient Health Survey Data For Risk Adjustment To Limit Distortionary Coding Incentives In Medicare – A core problem with the current risk-adjustment system in Medicare Advantage and ACO programs—the Hierarchical Condition Categories (HCC) model—is that the inputs (coded diagnoses) can be influenced for gain by risk-bearing plans or providers. Using existing survey data on health status (which provide less manipulable inputs), we found that the use of a hybrid risk score drawing from survey data and a scaled-back set of HCCs would, in addition to mitigating coding incentives, modestly lessen risk-selection incentives, strengthen payment incentives to deliver efficient care, allocate payment across ACOs more efficiently according to markers of population health that are not as affected by practice patterns or coding efforts, and redistribute payment in a manner that supports equity goals. Although sampling error and survey nonresponse present challenges, analyses suggest that these should not be prohibitive. Overall, our proof-of-concept analysis suggests that using survey data to improve risk-adjustment performance is a promising strategy that merits further development.
Health Affairs (1/5) Medicare Risk Adjustment: Goals, Reform Proposals, And New Frontiers – Risk adjustment modifies payments to health insurers based on enrollee characteristics that are predictive of higher or lower medical spending. Risk-adjustment policy is a key ingredient for the success of regulated individual insurance markets in Medicare and beyond. Researchers have identified shortcomings of Medicare’s current risk-adjustment system, illustrated the limits of coarse fixes, and proposed new strategies that improve the data and calculations used to generate beneficiary risk scores. This Perspective reviews the various goals of risk-adjustment policy and explains how proposed enhancements could further some of these goals. However, risk adjustment is a complex, high-stakes policy issue; success may require more fundamental reforms. Further progress may come from major investments toward research on plan payment design and the development and implementation of performance metrics for the risk-adjustment system. Policy makers should consider both policies implemented abroad as well as novel, exploratory models for reform.
Healthcare Dive (1/3) States curb CON laws to boost bed capacity – States are rolling back Certificate of Need, or CON, laws in the face of growing demand for health care and mounting evidence that they might not lower spending. CON laws often require providers to get regulatory approval for large capital expenditures and projects, like some healthcare facilities. Facility mergers, acquisitions and ownership changes also require CON approval in some states. The laws aim to control spending by limiting unnecessary facility expansion or duplicative services within an area. Without CON laws, supporters say providers could raise prices to compensate for underutilized hospital beds and services.
American Enterprise Institute (12/16) A Framework for Evaluating Vertical Integration Among Payers and Providers – Leaders of CMS across administrations have promoted the policy goal of driving all of Medicare and the majority of Medicaid patients into risk-based contracting models by 2030. With nearly half of Medicare beneficiaries enrolled in Medicare Advantage plans and nearly three-quarters of Medicaid beneficiaries receiving their benefits through Medicaid Managed Care Organizations (MCOs), policymakers have used comprehensive risk-adjusted capitated managed care models to achieve their stated policy goals of transforming volume to value. The drive towards risk-adjusted capitation encourages vertical integration through mergers, joint ventures, and organic growth with an aim to organize and integrate health financing and care delivery. The article lays out a framework through nine examples in the following arenas to weigh pro-competitive benefits against anti-competitive harms: market definition, related products, market shares, and concentration; unilateral effects; coordinated effects; and pro-competitive effects and improved outcomes.
Forbes (12/16) Why Elon Musk Should Add Medicare Site-Neutrality To DOGE’s To-Do List – Elon Musk and Vivek Ramaswamy have declared war on government bloat. They hope to use the new Department of Government Efficiency, or DOGE, to axe wasteful spending and slash bureaucratic red tape that costs Americans trillions of dollars in foregone economic growth. One of the best places to start would be the asinine rules that enable hospitals to overcharge Medicare by billions each year. The higher reimbursements were originally intended to compensate for the unique regulatory requirements and costs associated with maintaining a large hospital campus. And that rationale makes sense for services provided at an actual hospital—it's reasonable to reimburse more for an x-ray administered in an emergency department than in a doctor's office, which doesn't face nearly the same level of government-mandated overhead costs.
JAMA (12/16) Paying More for Primary Care—A New Approach by Medicare – Policymakers have argued that increasing primary care investment would not only improve health but also decrease downstream use, such as hospitalizations and emergency department visits, saving money in the long run. CMS implemented a series of payment models based partly on this rationale, but these models have not clearly led to significant investments in primary care or increased primary care access. One example is the MSSP and its accountable care organizations (ACOs), groups of physicians who operate under spending benchmarks with quality incentives and the opportunity to share in savings they produce for Medicare. Although ACOs have so far yielded modest savings for CMS, they have not led to more primary care visits (in person or via telehealth), which is notable because attribution of patients to an ACO is based on having enough primary care visits. Furthermore, the lack of observed changes in primary care visits may partially explain why observed changes in chronic disease management have been limited. Medicare payments for primary care services also count as expenditures against shared savings calculations, potentially dampening incentives for ACOs to invest aggressively in these services.
Center for American Progress (12/16) Policies To Combat Anticompetitive Practices in Health Care – Policymakers have argued that increasing primary care investment would not only improve health but also decrease downstream use, such as hospitalizations and emergency department visits, saving money in the long run. CMS implemented a series of payment models based partly on this rationale, but these models have not clearly led to significant investments in primary care or increased primary care access. One example is the MSSP and its accountable care organizations (ACOs), groups of physicians who operate under spending benchmarks with quality incentives and the opportunity to share in savings they produce for Medicare. Although ACOs have so far yielded modest savings for CMS, they have not led to more primary care visits (in person or via telehealth), which is notable because attribution of patients to an ACO is based on having enough primary care visits. Furthermore, the lack of observed changes in primary care visits may partially explain why observed changes in chronic disease management have been limited. Medicare payments for primary care services also count as expenditures against shared savings calculations, potentially dampening incentives for ACOs to invest aggressively in these services.
Health Affairs (12/16) Assessing Provider Adoption Of Medicare Advanced Alternative Payment Models – There has been significant adoption of AAPMs over the past seven years, although much work remains to be done. To achieve its aggressive goals, CMS needs to significantly expand the number of providers who are participating in APMs. They can do this by continuing to develop targeted new advanced alternative payment models while also strongly incentivizing providers to join the existing models. Understanding how individual providers are participating in different models and how that varies by factors such as specialty and location will be key to help CMS direct its efforts in the most efficient way.
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