The Effects of Payment Incentives, Benefit Design, and Provider Organization on the Value of Care

Abstract

This dissertation explores how the design of health care payment systems and changes in the organization of providers affect the value, equity, and efficiency of care. The first two chapters investigate how the design of the Medicare Advantage (MA) payment system and recent supplemental benefit policies affect plan offerings and beneficiaries’ utilization of care. The third chapter assesses the effects of vertical consolidation between physicians and health systems on care quality and patient steering. The findings from these papers have important implications for policy to improve the value of the U.S. health care system. The payment system establishes incentives for MA plans to attract and retain beneficiaries from minoritized racial and ethnic groups and those dually eligible for Medicaid (duals) by offering these groups additional benefits. In Chapter 1, with coauthors J. Michael McWilliams and Vilsa E. Curto, we examine how payment incentives in the MA program resulted in differential plan offerings to groups of historically underserved beneficiaries after a 2020 policy change granted MA plans broader flexibility in benefit design (Special Supplemental Benefits for the Chronically Ill [SSBCI]). We found that plans with higher shares of patients from these groups were more likely to offer SSBCI benefits: a 1 standard deviation increase in a plan’s non-white share was associated with a 20.8 percentage point (p .010) increase in the probability that the plan offered any SSBCI benefit. We found stronger associations in more competitive markets and for groups that can be more easily targeted with additional benefit offerings. These findings are consistent with the potential for population-based payment systems to redistribute resources to underserved groups in ways that could mitigate health care disparities; they also highlight the challenges and tradeoffs involved. In Chapter 2 with coauthors J. Michael McWilliams and Michael E. Chernew, we investigate the value of supplemental benefits delivered through MA. The availability and type of supplemental benefits offered in the MA program has increased over time, driven by growing rebates and recent policies expanding the benefits plans can provide. Some supplemental benefits may be more highly valued by beneficiaries than others. For example, direct health services such as dental, vision, and hearing are likely essential for most enrollees. An example of a benefit that is not a medical service, but can provide additional health-related value, is non-emergency medical transportation (NEMT). NEMT may serve as a complement for medical care to expand access to and use of services by providing rides to doctors’ appointments. Therefore, NEMT has the potential to increase utilization of routine outpatient care and in turn reduce emergency care. In this study, we investigate the value of supplemental transportation by examining the impact of MA plans offering NEMT on enrollees’ utilization of care. To do so, we leverage the 2019 expansion of the definition of “primarily health related” supplemental benefits. We found that the offering of NEMT led to a decrease in ambulance use days of 0.008 days (95% CI, -0.016 - -0.001; p=0.037), representing a 5% decrease from the pre-period treatment group mean of 0.16 use days per beneficiary per year. We did not find strong evidence of increased value, measured by changes in care utilization, associated with the offering of NEMT for evaluation and management, imaging, procedure, emergency room, or annual wellness visits. Future research should investigate the impact of other supplemental benefits or combinations of benefits that are frequently offered together to understand the value of MA benefit packages overall. This knowledge is needed to make decisions regarding MA payment rates, allowable benefits, and how to efficiently provide high-value coverage in the Medicare program. In Chapter 3 with coauthors Anna D. Sinaiko, Vilsa E. Curto, Mark Soto, and Meredith B. Rosenthal, we investigate the effects of vertical consolidation in health care delivery. Vertical relationships (ownership, affiliations, joint contracting) between physicians and health systems are increasing in the US. Many proponents of vertical relationships argue that increased spending associated with consolidation is accompanied by improvements in quality of care. In this study, we used stacked difference-in-differences to estimate the effect of vertical relationships between primary care physicians (PCPs) and large health systems on use of low-value care, post-hospitalization follow-up, utilization among patients with ambulatory care-sensitive conditions (ACSC), and timeliness of specialty care for commercially insured individuals in Massachusetts over the period 2013-2017. A patient’s PCP entering a vertical relationship had no association with the probability of follow-up within 90 days of cancer diagnosis with any oncologist but led to a 7.34–percentage point (pp) (95% CI, 2.28-12.40; p=0.010) increase in the probability of follow-up with an oncologist in the health system. PCP–health system vertical relationships led to a significant decrease in fragmentation of practice site visits of −1.05 pp (95% CI, −2.05 to 0.05; p=0.040). We found no effect of PCP-health system vertical relationships on patients’ low-value care or ACSC utilization. These results should be considered by policymakers when assessing the potential benefits against the demonstrated harms (spending increases) of vertical consolidation.