Health Equity Adjustment and Hospital Performance in the Medicare Value-Based Purchasing Program

Importance

Medicare's Hospital Value-Based Purchasing (HVBP) program will provide a health equity adjustment (HEA) to hospitals that have greater proportions of patients dually eligible for Medicare and Medicaid and that offer high-quality care beginning in fiscal year 2026. However, which hospitals will benefit most from this policy change and to what extent are unknown.

Objective

To estimate potential changes in hospital performance after HEA and examine hospital patient mix, structural, and geographic characteristics associated with receipt of increased payments.

Design, Setting, and Participants

This cross-sectional study analyzed all 2676 hospitals participating in the HVBP program in fiscal year 2021. Publicly available data on program performance and hospital characteristics were linked to Medicare claims data on all inpatient stays for dual-eligible beneficiaries at each hospital to calculate HEA points and HVBP payment adjustments.

Exposures

Hospital Value-Based Purchasing program HEA.

Main Outcomes and Measures

Reclassification of HVBP bonus or penalty status and changes in payment adjustments across hospital characteristics.

Results

Of 2676 hospitals participating in the HVBP program in fiscal year 2021, 1470 (54.9%) received bonuses and 1206 (45.1%) received penalties. After HEA, 102 hospitals (6.9%) were reclassified from bonus to penalty status, whereas 119 (9.9%) were reclassified from penalty to bonus status. At the hospital level, mean (SD) HVBP payment adjustments decreased by $4534 ($90 033) after HEA, ranging from a maximum reduction of $1 014 276 to a maximum increase of $1 523 765. At the aggregate level, net-positive changes in payment adjustments were largest among safety net hospitals ($28 971 708) and those caring for a higher proportion of Black patients ($15 468 445). The likelihood of experiencing increases in payment adjustments was significantly higher among safety net compared with non-safety net hospitals (574 of 683 [84.0%] vs 709 of 1993 [35.6%]; adjusted rate ratio [ARR], 2.04 [95% CI, 1.89-2.20]) and high-proportion Black hospitals compared with non-high-proportion Black hospitals (396 of 523 [75.7%] vs 887 of 2153 [41.2%]; ARR, 1.40 [95% CI, 1.29-1.51]). Rural hospitals (374 of 612 [61.1%] vs 909 of 2064 [44.0%]; ARR, 1.44 [95% CI, 1.30-1.58]), as well as those located in the South (598 of 1040 [57.5%] vs 192 of 439 [43.7%]; ARR, 1.25 [95% CI, 1.10-1.42]) and in Medicaid expansion states (801 of 1651 [48.5%] vs 482 of 1025 [47.0%]; ARR, 1.16 [95% CI, 1.06-1.28]), were also more likely to experience increased payment adjustments after HEA compared with their urban, Northeastern, and Medicaid nonexpansion state counterparts, respectively.

Conclusions and Relevance

Medicare's implementation of HEA in the HVBP program will significantly reclassify hospital performance and redistribute program payments, with safety net and high-proportion Black hospitals benefiting most from this policy change. These findings suggest that HEA is an important strategy to ensure that value-based payment programs are more equitable.

States With Medically Needy Pathways: Differences in Long-Term and Temporary Medicaid Entry for Low-Income Medicare Beneficiaries

Medically needy pathways may provide temporary catastrophic coverage for low-income Medicare beneficiaries who do not otherwise qualify for full Medicaid benefits. Between January 2009 and June 2010, states with medically needy pathways had a higher percentage of low-income beneficiaries join Medicaid than states without such programs (7.5% vs. 4.1%, p < .01). However, among new full Medicaid participants, living in a state with a medically needy pathway was associated with a 3.8 percentage point (adjusted 95% confidence interval [1.8, 5.8]) increase in the probability of switching to partial Medicaid and a 4.5 percentage point (adjusted 95% confidence interval [2.9, 6.2]) increase in the probability of exiting Medicaid within 12 months. The predicted risk of leaving Medicaid was greatest when new Medicaid participants used only hospital services, rather than nursing home services, in their first month of Medicaid benefits. Alternative strategies for protecting low-income Medicare beneficiaries' access to care could provide more stable coverage.

Are Older Americans Getting the Long-Term Services and Supports They Need?

ISSUE

Older adults' needs have evolved and are no longer met by the Medicare program. With the recent passage of the Bipartisan Budget Act of 2018 (BBA), Medicare Advantage (MA) plans can now provide beneficiaries with nonmedical benefits, such as long-term services and supports (LTSS), which Medicare does not cover.

GOAL

To examine the use of LTSS among Medicare beneficiaries age 65 and older living in the community and explore differences by age, income, and other variables.

METHODS

Descriptive analyses of the National Health and Aging Trends Study (NHATS), 2015.

FINDINGS AND CONCLUSIONS

Two-thirds of older adults living in the community use some degree of LTSS. Reliance on assistive devices and environmental modifications is high; however many adults, particularly dual-eligible beneficiaries, experience adverse consequences of not receiving care. Although the recent policy change allowing MA plans to offer LTSS benefits is an important step toward meeting the medical and nonmedical needs of Medicare beneficiaries, only the one-third of Medicare beneficiaries enrolled in MA plans stand to benefit. Accountable care organizations operating in traditional Medicare also should have the increased flexibility to provide nonmedical services.

Cal MediConnect Enrollment: Why Are Dual-Eligible Consumers in Los Angeles County Opting Out?

Los Angeles County has the state’s lowest rate of consumer enrollment in Cal MediConnect, a program that is responsible for the delivery and coordination of medical, behavioral health, and long-term services and support benefits for individuals who are dually eligible for Medicare and Medi-Cal. This policy brief examines the factors that influence consumer decisions and may contribute to low enrollment rates. Influential factors include consumer knowledge of health care options, perception of choice, and disruption of existing care. Differences in decision making by age, complexity of health care needs, race/ethnicity, immigration status, and primary language are also noted. Policy recommendations include engaging consumers in the planning and dissemination of information about their health care options, optimizing consumer choice and implementing the least disruptive pathway to enrollment, and recognizing and responding to the great diversity of dual-eligible consumers in Los Angeles County.

The Effects of the Transition From Medicaid to Medicare on Health Care Use for Adults With Mental Illness

BACKGROUND

The transition from Medicaid-only to dual Medicare/Medicaid coverage has the potential to reduce financial barriers to health care for patients with serious mental illness through increased coverage or expanded access to clinicians as their reimbursement increases.

AIMS

To estimate the effect of dual coverage after Medicaid enrollment during the required waiting period among adults with serious mental illness on health care use, overall and related to mental health and substance use disorders (MHSUD).

METHODS

Data include enrollment and claims from Medicaid and Medicare in Missouri and South Carolina, from January 2004 to December 2007. We used an interrupted time-series design to estimate the effect of dual coverage on average use of outpatient, emergency department (ED), and inpatient care/month.

RESULTS

After 12 months of dual coverage, the probability of outpatient care use increased in both states from 4% to 9%. In Missouri, the mean probability and frequency of ED visits, total and MHSUD related, increased by 21%-32%; the probability of all-cause and MHSUD-related inpatient admissions increased by 10% and 19%, respectively. In South Carolina, the mean probability of any inpatient admission increased by 27% and of any MHSUD-related inpatient admission by 42%.

DISCUSSION

The increase in use of outpatient care is consistent with the expected increase in coverage of, and payment for, outpatient services under dual coverage relative to Medicaid-only. Sustained increases in ED and inpatient admissions raise questions regarding the complexity of obtaining care under 2 programs, pent-up demand among beneficiaries pretransition, and the complementarity of outpatient and inpatient service use.

Covering and Reimbursing Telehealth Services

Policymakers who are striving to achieve better health care, improved health outcomes and lower costs are considering new strategies and technologies. Telehealth is a tool that uses technology to provide health services remotely, and state leaders are looking to it now more than ever as a way to address workforce gaps and reach underserved patients. Among the challenges facing state lawmakers who are working to introduce or expand telehealth is how to handle covering patients and reimbursing providers.

The Medicare Hospital Readmissions Reduction Program: potential unintended consequences for hospitals serving vulnerable populations

OBJECTIVE

To explore the impact of the Hospital Readmissions Reduction Program (HRRP) on hospitals serving vulnerable populations.

DATA SOURCES/STUDY SETTING

Medicare inpatient claims to calculate condition-specific readmission rates. Medicare cost reports and other sources to determine a hospital's share of duals, profit margin, and characteristics.

STUDY DESIGN

Regression analyses and projections were used to estimate risk-adjusted readmission rates and financial penalties under the HRRP. Findings were compared across groups of hospitals, determined based on their share of duals, to assess differential impacts of the HRRP.

PRINCIPAL FINDINGS

Both patient dual-eligible status and a hospital's dual-eligible share of Medicare discharges have a positive impact on risk-adjusted hospital readmission rates. Under current Centers for Medicare and Medicaid Service methodology, which does not adjust for socioeconomic status, high-dual hospitals are more likely to have excess readmissions than low-dual hospitals. As a result, HRRP penalties will disproportionately fall on high-dual hospitals, which are more likely to have negative all-payer margins, raising concerns of unintended consequences of the program for vulnerable populations.

CONCLUSIONS

Policies to reduce hospital readmissions must balance the need to ensure continued access to quality care for vulnerable populations.

Are dual eligibles admitted to poorer quality skilled nursing facilities?

BACKGROUND

Dual eligibles, persons who qualify for both Medicare and Medicaid coverage, often receive poorer quality care relative to other Medicare beneficiaries.

OBJECTIVES

To determine whether dual eligibles are discharged to lower quality post-acute skilled nursing facilities (SNFs) compared with Medicare-only beneficiaries.

RESEARCH DESIGN

Following the random utility maximization model, we specified a discharge function using a conditional logit model and tested how this discharge rule varied by dual-eligibility status.

SUBJECTS

A total of 692,875 Medicare fee-for-service patients (22% duals) who were discharged for Medicare paid SNF care between July 2004 and June 2005.

MEASURES

Medicare enrollment and the Medicaid Analytic Extract files were used to determine dual eligibility. The proportion of Medicaid patients and nursing staff characteristics provided measures of SNF quality.

RESULTS

Duals are more likely to be discharged to SNFs with a higher share of Medicaid patients and fewer nurses. These results are robust to estimation with an alternative subsample of patients based on primary diagnoses, propensity of being dual eligible, and likelihood of remaining in the nursing home.

CONCLUSIONS

Disparities exist in access to quality SNF care for duals. Strategies to improve discharge planning processes are required to redirect patients to higher quality providers, regardless of Medicaid eligibility.

Assessing care integration for dual-eligible beneficiaries: a review of quality measures chosen by states in the financial alignment initiative

Caring for the 9 million low-income elderly or disabled adults who are eligible for full benefits under both Medicare and Medicaid can be extremely costly. As part of the federal Financial Alignment Initiative, states have the opportunity to test care models for dual-eligibles that integrate acute care, behavioral health and mental health services, and long-term services and supports, with the goals of enhancing access to services, improving care quality, containing costs, and reducing administrative barriers. One of the challenges in designing these demonstrations is choosing and applying measures that accurately track changes in quality over time—essential for the rapid identification of effective innovations. This brief reviews the quality measures chosen by eight demonstration states as of December 2013. The authors find that while some quality domains are well represented, others are not. Quality-of-life measures are notably lacking, as are informative, standardized measures of long-term services and supports.

Medicaid program; state plan home and community-based services, 5-year period for waivers, provider payment reassignment, and home and community-based setting requirements for Community First Choice and home and community-based services (HCBS) waivers. Final rule

This final rule amends the Medicaid regulations to define and describe state plan section 1915(i) home and community-based services (HCBS) under the Social Security Act (the Act) amended by the Affordable Care Act. This rule offers states new flexibilities in providing necessary and appropriate services to elderly and disabled populations. This rule describes Medicaid coverage of the optional state plan benefit to furnish home and community based-services and draw federal matching funds. This rule also provides for a 5-year duration for certain demonstration projects or waivers at the discretion of the Secretary, when they provide medical assistance for individuals dually eligible for Medicaid and Medicare benefits, includes payment reassignment provisions because state Medicaid programs often operate as the primary or only payer for the class of practitioners that includes HCBS providers, and amends Medicaid regulations to provide home and community-based setting requirements related to the Affordable Care Act for Community First Choice State plan option. This final rule also makes several important changes to the regulations implementing Medicaid 1915(c) HCBS waivers.

The Affordable Care Act's new tools and resources to improve health and care for low-income families across the country

The Commonwealth Fund Scorecard on State Health System Performance for Low-Income Populations, 2013, finds wide gaps by income in access to care, quality of care received, and health outcomes in all states, and major differences between states in health system performance for people with below-average incomes. The Affordable Care Act provides state and local leaders with unprecedented opportunity along with new tools and resources to raise the standard for everyone and to begin to close the geographic and income divide. This issue brief reviews provisions of the law that have the potential to benefit low- and modest-income individuals, including those that expand health insurance coverage; strengthen primary care and improve care coordination; bolster the capacity of providers serving low-income communities; move toward greater accountability for the quality and cost of care; and invest in public health. It concludes by highlighting some of the challenges that lie ahead.

A conversation with Donald Berwick on implementing national health reform

Michael Birnbaum interviews Donald Berwick shortly after his departure from the Centers for Medicare and Medicaid Services about the national health care landscape. Berwick discusses the strategic vision, policy levers, operational challenges, and political significance of federal health care reform. He rejects the notion that the Affordable Care Act represents a government takeover of health care financing or service delivery but says the law's Medicaid expansion and its creation of health benefit exchanges present a "watershed moment for American federalism." Berwick argues that the solution to Medicare's cost-containment challenge lies in quality improvement. He is optimistic that accountable care organizations can deliver savings and suggests that shifting risk downstream to providers throws the health insurance model into question. Finally, looking to the future, Berwick sees a race against time to make American health care more affordable.

New options to integrate care and financing for persons dually eligible for Medicare and Medicaid

This paper reviews barriers to clinical and financial integration in services for dual eligibles prior to passage of the ACA, identifies models used by states to integrate care through contract and waiver authorities available to CMS prior to passage of the ACA, describes two new demonstrations proposed by CMS through the Medicare-Medicaid Coordination Office and Innovation Center, and discusses several new models available for consideration by federal and state policymakers. These options draw on experience from existing programs and waivers to provide suggested changes to existing programs, as well as a permanent state plan option for a fully integrated, capitated care model. This model could be made available to states prior to the completion of the demonstration process begun by the Medicare-Medicaid Coordination Office and Innovation Center.