Do ACOs reduce spending?

Medicare’s Shared Savings Program (MSSP) is a program that created accountable care organizations (ACOs).  Providers in get bonuses if they are able to reduce health care costs and also maintain quality.  In theory, the program makes sense, increase reimbursement for high-quality, low-cost providers.  The key question, however, is whether it works. A recent study in NEJM…

“Adjustments” drive variation in Medicare hospital reimbursement rates

In my previous work, I have examined regional variation in Medicare and Medicaid costs through reports to the Institute of Medicine and publications in peer-reviewed journals.  We found significant variation in health care costs across regions, that high-cost regions tended to remain high cost over time, but that a region that is high-cost for treating one medical condition…

The problem with bundled payments

Bundled payments sound like a great idea for improving efficiency and in the short-run they are. Bundled payments involve paying a fixed fee for the treatment of a specific patient over a specific time period.  For instance, CMS have considered using a singled bundled payment to reimburse providers for both acute and post-acute care providers.  This approach gives providers…

Who are the high-cost patients?

Accountable care organizations are responsible for managing the quality and cost of patients.  However, a small share of patients make up a large share of health care cost.  How can ACOs improve the care and reduce the cost of these patients? First, ACOs need to understand the needs of high-cost patients.  A perspective by Powers and…

Managing post-acute care cost

Medicare’s move towards bundling payment for acute and post-acute care means that hospitals have an incentive to carefully monitor care received after discharge.  But what are the key drivers of post-acute care cost: hospital readmissions? use of any post-acute care? type of post-acute care used? A paper by Huckfeldt et al. (2016) examines Medicare claims data…

FFS vs. Capitation Reimbursement: Responses by Physicians and Medical Students

How do people respond to financial incentives?  In the medical world, physicians often are paid fee-for-service (FFS) or capitation.  Physicians receiving FFS reimbursement receive additional compensation for each additional service they do.  For instance, physicians under FFS receive twice as much compensation for 2 office visits as they would for 1 office visit.  On the other hand,…

2016 ASSA: How does competitions among insurers affect premiums

Typically, most economists believe that increased competition decreases prices.  However, is that the case for competition among health insurers? On the one hand, competition among health insurers could decrease prices if consumers choose plans based on premiums.  Competition may increase insurer’s incentive to negotiate with providers and may force insurers to make lower margins or lower…

Are “Focused Factories” a good idea?

In recent years, there has a been a trend towards patient-centered care focusing on caring for a patient holistically.  For instance, a NEJM perspective piece by Porter states: Accountability for value should be shared among the providers involved. Thus, rather than “focused factories” concentrating on narrow groups of interventions, we need integrated practice units that are…