Connecting the Dots

How incentives under a Medicare alternative payment model might affect radiology practices.Connecting the Dots

We're in uncharted territory. More than ever before, our health care system is so complex that it is increasingly difficult to foresee the consequences of proposed policies and organizational changes.

 That challenge is particularly difficult when it comes to preparing for the sweeping changes to reimbursements under the Medicare Access and CHIP Reauthorization Act (MACRA). MACRA replaces existing CMS quality programs with the Quality Payment Program (QPP), which rewards physicians based on performance data and participation in new payment and delivery models.

And radiology practices are now facing a dilemma: They must determine whether they will participate in the QPP under the Merit-Based Incentive Payment System (MIPS) or the alternative payment model (APM) provisions. Although some radiology leaders believe that most radiology practices will be best served by participating via the MIPS framework, it is imperative to also consider radiology's role in APMs.

That's where the new study by the Harvey L. Neiman Health Policy Institute™ comes in. The paper, published in collaboration with industrial engineers from Virginia Polytechnic Institute, in Blacksburg, Va., analyzes how the incentives in an APM might influence cost, quality, utilization, and technological investment.

Modeling the Future

To help radiologists gain foresight about APM participation, the investigators studied the Medicare Shared Savings Program (MSSP) for Accountable Care Organizations (ACOs) and developed a mathematical model to predict the effect of new payment systems on stakeholder decisions and system-wide outcomes.

Under MSSP, an ACO and its members (e.g., hospitals, primary care physicians, and radiologists) continue to receive standard Medicare reimbursements, plus incentives based on achieving cost savings and quality targets.

The model helps determine how the incentive program affects CT use, and how the MSSP could be redesigned to minimize unnecessary CT scans. It takes into account multi-level interactions, decisions, and outcomes for various stakeholders — including the payer, ACO, hospital, primary care physicians, radiologists, and patients.

Here are the basic assumptions for the model:

• Patients care about getting well and will follow physicians' diagnostic and treatment recommendations.
• All of the patients are covered by a public payer that wishes to maximize patient health at the lowest possible cost.
• Hospitals, primary care physicians (PCPs), and radiologists care both about their patients' health and the monetary benefits received from providing care.
• PCPs and radiologists want to work with the latest, value-added technology; hospitals must decide if they are willing to purchase that new technology (in this case, an improved CT scanner).

On top of this underlying framework, there are several decision points:

• Hospitals and physicians can choose to form and participate in an ACO.
• The hospital will manage the ACO.
• PCPs and radiologists can separately choose whether or not to participate.

The decision to participate in the ACO depends on answers to these questions:

• What is the cost benchmark the ACO must not exceed in order to achieve savings?
• How are the savings shared among various provider groups?
• Will ACO participation influence whether the hospital purchases the new CT scanner?
• How aggressively will providers order images?

The answers to these questions will alter model situations for patient health, image utilization, and overall cost.

Arriving at Answers

The model, however, doesn't answer these questions directly. Instead, researchers must recalibrate the model hundreds of times using various parameters to explore ranges of outcomes and look for breakpoints where decisions are made. The results provide decision-making insights for the following:

• The payer about how to improve the MSSP
• ACOs about how to distribute MSSP incentives among members
• Hospitals about whether to invest in new CT imaging systems
• Radiologists and PCPs about whether or not to participate and at what cost thresholds

After analyzing outputs from the model, investigators discovered the following insights:

Provider participation in ACOs occurs at widely different cost benchmarks.
If the cost benchmark is too aggressive, hospitals simply won't participate — especially ones that have already substantially reduced their costs prior to an ACO — since it would be difficult to achieve rigorous cost-cutting thresholds. Even when hospitals are willing to form an ACO, convincing PCPs to participate requires a low savings threshold — and lower still for radiology practice participation — because their share of potential savings is limited.

Physician shares vary according to the cost benchmarks sets between payers and ACOs.
With aggressive cost benchmarks, ACOs are willing to pass all of the savings to physicians to incentivize cost cutting via reductions in imaging utilization. With easy-to-achieve cost thresholds, hospitals retain all of the potential savings and simply engage with providers through fee-for-service.

The dynamic relationship between provider shares and the cost threshold have important implications on utilization and patient health.
With aggressive savings targets, PCPs order fewer images — often beneath the threshold required to maintain patient health. However, with easier to achieve benchmarks, physicians actually ordered more imaging under the ACO program (where hospitals retain all of the savings) — raising the possibility of unnecessary radiation exposure.

ACO participation reduces the likelihood hospitals will invest in new technology.
This finding doesn't mean hospitals won't invest at all. But new technologies must produce more than marginal increases in clinical effectiveness in order to justify the expense and still meet hospitals' savings targets.

Searching for the Silver Bullet

To participate or not participate? That is the question when it comes to ACOs. Unfortunately, there is no set of rules for when and under what conditions a radiology practice should participate in an ACO.

Based on the findings of the study, however, the likeliest outcome of ACO participation is either no savings accruing to radiologists or reduced imaging volumes — perhaps both. With that said, some radiologists participating in ACOs have seen (or will see) incentive payments. But the model suggests that these shared savings will likely occur in short-lived ACOs with extremely aggressive savings thresholds.

Of deep concern were the potentially health-compromising decreases and increases in imaging utilization that occurred with relatively modest changes to ACO parameters. These ramifications indicate that CMS and the ACOs must carefully negotiate savings benchmarks that are neither too stringent nor too lenient in order to ensure appropriate imaging utilization. To mitigate the risk, ACOs should also consider the use of evidence-based clinical decision support systems to protect patients' quality of care.

Preventing Unintended Consequences

The analysis shows the importance of a model- and data-driven evaluation of MSSP, specifically when setting the cost benchmark. The current practice of ACOs negotiating for a more lenient cost benchmark may lead to higher costs and worse health outcomes. However, a cost benchmark that's too stringent can result in CT testing thresholds that are too low, and may further jeopardize the willingness of ACOs to participate.

Although the study only considers the CMS ACO MSSP, it is likely many of the implications of the model are applicable to radiology practices under the other APM arrangements, such as the Next-Generation ACO Model or the Bundled Payments for Care Improvement initiative. And, as we learn from the CMS ACO MSSP, it is possible that at least some of the unintended consequences uncovered in the study are a direct result of the way incentives are structured.


neiman institute incentives


By Danny R. Hughes, PhD, Harvey L. Neiman Institute senior director for health policy research and senior research fellow

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