Improving target price calculations in Medicare bundled payment programs

Cher, Benjamin A Y; Gulseren, Baris; Ryan, Andrew M.

doi:10.1111/1475-6773.13675

Cited by 5 publications

(5 citation statements)

References 23 publications

(34 reference statements)

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“…This finding suggests that target prices are not true counterfactuals and highlights the difficulty that CMS faces in prospectively determining target prices, whereby it must set a spending reduction goal by using historical spending to predict future spending trajectories . Targets could be improved by using empirical Bayes estimation . Second, higher target prices were associated with success, offering more room to cut spending compared with lower target prices.…”

Section: Discussionsupporting

confidence: 62%

“…We first calculated target prices for each condition in which each hospital chose to participate. To do so, we followed CMS’s methodology and estimated the following: (1) a compound lognormal regression model of hospitals’ historical 90-day episode spending for discharges between January 1, 2013, and December 31, 2016, which included patient case-mix and hospital characteristics; and (2) a linear model of the spending trend for peer groups of hospitals with similar characteristics . Per CMS methods, case-mix was captured using age, comorbidities (via Hierarchical Condition Categories), disability as the reason for Medicare entitlement, and dual eligibility for Medicare and Medicaid.…”

Section: Methodsmentioning

confidence: 99%

“…Hospital characteristics included location, rurality, teaching status, and safety-net status (defined by CMS as whether 60% of Medicare beneficiaries are dually eligible for Medicaid) . Consistent with prior research and as recommended by CMS, we calculated target prices only for inpatient conditions with 20 or more observations in the baseline period …”

Section: Methodsmentioning

confidence: 99%

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Association of Hospital Participation in Bundled Payments for Care Improvement Advanced With Medicare Spending and Hospital Incentive Payments

Shashikumar

Gulseren

Berlin

et al. 2022

JAMA

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ImportanceBundled Payments for Care Improvement Advanced (BPCI-A) is a Centers for Medicare &amp; Medicaid Services (CMS) initiative that aims to produce financial savings by incentivizing decreases in clinical spending. Incentives consist of financial bonuses from CMS to hospitals or penalties paid by hospitals to CMS.ObjectiveTo investigate the association of hospital participation in BPCI-A with spending, and to characterize hospitals receiving financial bonuses vs penalties.Design, Setting, and ParticipantsDifference-in-differences and cross-sectional analyses of 4 754 139 patient episodes using 2013-2019 US Medicare claims at 694 participating and 2852 nonparticipating hospitals merged with hospital and market characteristics.ExposuresBPCI-A model years 1 and 2 (October 1, 2018, through December 31, 2019).Main Outcomes and MeasuresHospitals’ per-episode spending, CMS gross and net spending, and the incentive allocated to each hospital.ResultsThe study identified 694 participating hospitals. The analysis observed a −$175 change in mean per-episode spending (95% CI, −$378 to $28) and an aggregate spending change of −$75.1 million (95% CI, −$162.1 million to $12.0 million) across the 428 670 episodes in BPCI-A model years 1 and 2. However, CMS disbursed $354.3 million (95% CI, $212.0 million to $496.0 million) more in bonuses than it received in penalties. Hospital participation in BPCI-A was associated with a net loss to CMS of $279.2 million (95% CI, $135.0 million to $423.0 million). Hospitals in the lowest quartile of Medicaid days received a mean penalty of $0.41 million; (95% CI, $0.09 million to $0.72 million), while those in the highest quartile received a mean bonus of $1.57 million; (95% CI, $1.09 million to $2.08 million). Similar patterns were observed for hospitals across increasing quartiles of Disproportionate Share Hospital percentage and of patients from racial and ethnic minority groups.Conclusions and RelevanceAmong US hospitals measured between 2013 and 2019, participation in BPCI-A was significantly associated with an increase in net CMS spending. Bonuses accrued disproportionately to hospitals providing care for marginalized communities.

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Section: Discussionsupporting

confidence: 62%

Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

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Association of Hospital Participation in Bundled Payments for Care Improvement Advanced With Medicare Spending and Hospital Incentive Payments

Shashikumar

Gulseren

Berlin

et al. 2022

JAMA

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“…Hospital mean 90-day episode spending was calculated by adding the national mean total episode spending to the hospital’s estimated fixed effect. In keeping with BPCI-A program procedures, reliability adjustment was not used (Appendix Table 5) 14 . Hospitals were then ranked by estimated mean episode payment and grouped into quartiles, weighted at the patient-episode level.…”

Section: Methodsmentioning

confidence: 99%

“…In keeping with BPCI-A program procedures, reliability adjustment was not used (Appendix Table 5). 14 Hospitals were then ranked by estimated mean episode payment and grouped into quartiles, weighted at the patient-episode level. Highest and lowest-spending quartile hospitals were compared visually (Fig.…”

Section: Study Design and Statistical Analysismentioning

confidence: 99%

Identifying Sources of Inter-Hospital Variation in Episode Spending for Sepsis Care

Sankaran,

Gulseren,

Prescott

et al. 2024

Medical Care

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Objective: To evaluate inter-hospital variation in 90-day total episode spending for sepsis, estimate the relative contributions of each component of spending, and identify drivers of spending across the distribution of episode spending on sepsis care. Data sources/study setting: Medicare fee-for-service claims for beneficiaries (n=324,694) discharged from acute care hospitals for sepsis, defined by MS-DRG, between October 2014 and September 2018. Research Design: Multiple linear regression with hospital-level fixed effects was used to identify average hospital differences in 90-day episode spending. Separate multiple linear regression and quantile regression models were used to evaluate drivers of spending across the episode spending distribution. Results: The mean total episode spending among hospitals in the most expensive quartile was $30,500 compared with $23,150 for the least expensive hospitals (P<0.001). Postacute care spending among the most expensive hospitals was almost double that of least expensive hospitals ($7,045 vs. $3,742), accounting for 51% of the total difference in episode spending between the most expensive and least expensive hospitals. Female patients, patients with more comorbidities, urban hospitals, and BPCI-A-participating hospitals were associated with significantly increased episode spending, with the effect increasing at the right tail of the spending distribution. Conclusion: Inter-hospital variation in 90-day episode spending on sepsis care is driven primarily by differences in post-acute care spending.

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