Downside risk in healthcare improves MA outcomes

When there is downside risk in healthcare payment arrangements, Medicare Advantage beneficiaries experience more favorable outcomes, such as fewer emergency department visits and hospital admissions, according to a new study in JAMA Network Open. The study associated at-risk MA with higher quality care and efficiency across almost all measures versus fee-for-service MA.

Among the outcome measures used in the study, researchers shared the following findings about MA beneficiaries cared for by providers in risk-based MA payment arrangements:

• 8.7% less likely to undergo hospital admissions.
• 8%-22% less likely to be admitted to the hospital for common chronic conditions, including diabetes, high blood pressure, chronic obstructive pulmonary disease and heart failure.
• 8.7% less likely to go to hospital emergency departments.
• 8.7% less likely to be admitted to the hospital from the emergency department.
• 15% less likely to experience use of high-risk medications that can result in serious adverse effects or death if used incorrectly or in combination with other medications.

Researchers also found more favorable outcomes among at-risk MA beneficiaries even after adjusting for differences in demographics, Hierarchical Condition Categories Risk Adjustment Factor scores and other health characteristics. They analyzed over 1 million MA enrollees from 2016-2019 cared for by 17 large physician groups, all of which are part of America's Physician Groups (APG).

"These results demonstrate that physician groups in accountable relationships with MA plans develop highly effective solutions for comprehensive patient care," said lead author of the study, Ken Cohen, M.D., a physician with APG member Optum Colorado Physician Group and executive director of translational research at Optum.

The physician groups analyzed in the study received lump sums for each MA enrollee to hold them accountable for quality and costs of care. They were considered "at risk" through these MA payments since they incentivized the providers to keep costs of care near or below the plan's lump sum payment.

In contrast, the physician groups also received fee-for-service payments for the care rendered to some MA beneficiaries. Fee-for-service payments are not considered risk-based since they represent a pay-for-volume system of care that does not hold providers accountable for quality or cost.

Physician groups in risk-based payment arrangements in MA have more financial resources because of the way they are paid for care, Cohen explained. Downside risk payments enable providers to focus on preventative care, provide intensive case management programs and deliver behavioral health services, among other interventions, he added. As a result, patients benefit from more tailored care services, as well as increased efficiency.

Downside risk payments through MA also enable providers to build the infrastructure for successful accountable relationships in MA. For example, this payment arrangement encourages population risk stratification, physician performance reporting and feedback, integrated pharmacy services and disease management programs, according to the study.

MA is a rapidly growing program, with the share of Medicare-eligible individuals in MA plans growing from 31.5% to 48.2% over the past eight years. Overall, MA enrollment has doubled over the past decade.

MA plans negotiate a variety of payment arrangements with their provider partners. The new JAMA Network Open study, however, suggests that some payment arrangements may be better than others at improving beneficiary outcomes.

"We think policymakers can now use these results to encourage and reward more MA plans and provider groups to form these close partnerships and dramatically improve patient care," said Susan Dentzer, president and CEO of APG.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.