Economics - General Medicare Physician Compensation

Can better physician practices reduce Medicare spending?

According to a paper by Rodriguez et al. (2022), the answer is ‘yes’. They use data from the 2017–18 National Survey of Healthcare Organizations and Systems (NSHOS), to determine if a physician practice has a “robust set of care management capabilities.” The specific capabilities that were used to determine whether the health system was robust included:

Ten practice capabilities were prioritized. Four technology and innovation capacity measures assessed practices’ adoption and implementation of care management programs for complex patients (six items), use of evidence-based guidelines for specific clinical areas (eight items), EHR decision support functions (eight items), and use of disease registries for seven conditions (eight items). Three management and culture capacity measures assessed learning and team culture (nine items), capacity for innovation (six items), and depression care management (six items) because effective depression care requires high practice orientation to learning and teamwork.15 Three composite measures of the patient-centered care focus of each practice location assessed patient engagement activities (twenty items), organizational processes for patient responsiveness (five items), and patient-reported outcomes (ten items).

Capabilities were then rescaled to range between 0 and 1.

To measure how these capabilities impacted Medicare spending, the authors linked the NSHOS responses with 2017 Medicare beneficiary fee-for-service claims data based on physicians’ Taxpayer Identification Numbers (TIN). The authors also examine a variety of quality measures such as screening (mammograms, A1c levels for diabetics, LDL screening), utilization (30-day rehospitalization, hospitalization for ambulatory sensitive conditions, and unnecessary emergency department visit), and cost.

Based on this approach, the authors found that:

…physician practice locations with robust capabilities spend less on Medicare fee-for-service beneficiaries but deliver quality of care that is comparable to the quality delivered in locations with low or mixed capabilities. The savings were concentrated in outpatient spending, which has important policy implications because value-based payment reforms have largely focused on preventing emergency department and hospitalization use as a primary way to reduce total spending.

How much cost savings can these “robust” physician practices deliver? ?

Based on the dollar-denominated savings estimates for the total spending model, which is per beneficiary savings of $615 for robust compared to mixed and $505 for robust compared to limited, if all thirty-eight million Medicare fee-for-service beneficiaries in 2017 were attributed to robust practices, approximately $14.9 billion could be saved annually.

Note: Unnecessary ED visit comes from the New York University Emergency Department Algorithm (Gandhi 2014).

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