Artificial intelligence in Medicare: utilization, spending, and access to AI-enabled clinical software.

OBJECTIVES: In 2018, CMS established reimbursement for the first Medicare-covered artificial intelligence (AI)-enabled clinical software: CT fractional flow reserve (FFRCT) to assist in the diagnosis of coronary artery disease. This study quantified Medicare utilization of and spending on FFRCT from 2018 through 2022 and characterized adopting hospitals, clinicians, and patients. STUDY DESIGN: Analysis, using 100% Medicare fee-for-service claims data, of the hospitals, clinicians, and patients who performed or received coronary CT angiography with or without FFRCT. METHODS: We measured annual trends in utilization of and spending on FFRCT among hospitals and clinicians from 2018 through 2022. Characteristics of FFRCT-adopting and nonadopting hospitals and clinicians were compared, as well as the characteristics of patients who received FFRCT vs those who did not. RESULTS: From 2018 to 2022, FFRCT billing volume in Medicare increased more than 11-fold (from 1083 to 12,363 claims). Compared with nonbilling hospitals, FFRCT-billing hospitals were more likely to be larger, part of a health system, nonprofit, and financially profitable. FFRCT-billing clinicians worked in larger group practices and were more likely to be cardiac specialists. FFRCT-receiving patients were more likely to be male and White and less likely to be dually enrolled in Medicaid or receiving disability benefits. CONCLUSIONS: In the initial 5 years of Medicare reimbursement for FFRCT, growth was concentrated among well-resourced hospitals and clinicians. As Medicare begins to reimburse clinicians for the use of AI-enabled clinical software such as FFRCT, it is crucial to monitor the diffusion of these services to ensure equal access.

How Should Medicare Pay for Artificial Intelligence?

This Viewpoint examines artificial intelligence­enabled clinical services, existing payment structures, and the economics of artificial intelligence pricing.

Facility Fees for Colonoscopy Procedures at Hospitals and Ambulatory Surgery Centers.

This cross-sectional study investigates commercial facility fee differences for colonoscopy procedures between US hospitals and ambulatory surgery centers located within the same county and contracting with the same insurers.

Prices for Common Services at Quaternary vs Nonquaternary Hospitals.

This study uses commercial claims data to assess whether quaternary hospitals charge higher prices for common, unspecialized services also offered by nonquaternary hospitals.

Role of prices in driving the variation in spending across medical groups.

OBJECTIVE: To understand the relative role of prices versus utilization in the variation in total spending per patient across medical groups. DATA SOURCES: We conducted a cross-sectional analysis of medical claims for commercially insured adults from a large national insurer in 2018. STUDY DESIGN: After assigning patients to a medical group based on primary care visits in 2018, we calculated total medical spending for each patient in that year. Total spending included care provided by clinicians within the medical group and care provided by other providers, including hospitals. It did not include drug spending. We estimated the case mix adjusted spending per patient for each medical group. Within each market, we categorized medical groups into quartiles based on the group's spending per patient. To decompose spending variation into price versus utilization, we compared spending differences between highest and lowest quartile medical groups under two scenarios: (1) using actual prices (2) using a standardized price (same price used for a given service across the nation). PRINCIPAL FINDINGS: In total, 3,921,736 patients were assigned to 7284 medical groups. Per-patient spending in the highest quartile of spending medical groups was $1813 higher than per-patient spending in the lowest spending quartile of medical groups (50% higher relative spending). This overall difference was primarily driven by differences in inpatient care, imaging, and specialty care. In the scenario where we used standardized prices, the difference in spending between medical groups in the top and bottom quartiles decreased to $1425, implying that 79% of the $1813 difference in spending between the top and bottom quartile groups is explained by utilization and the remaining 21% by prices. The likely explanation for the modest impact of prices is that patients cared for by a given medical group receive care across a wide range of providers. CONCLUSIONS: Prices explained a modest fraction of the differences in spending between medical groups.

Benchmarking Changes And Selective Participation In The Medicare Shared Savings Program.

In 2017 the Medicare Shared Savings Program (MSSP) began incorporating regional spending into accountable care organization (ACO) benchmarks, thus favoring the participation of ACOs and practices with lower baseline spending than their region. To characterize providers' responses to these incentives, we isolated changes in spending due to changes in the mix of ACOs and practices participating in the MSSP. In contrast to earlier participation patterns, the composition of the MSSP after 2017 increasingly shifted to providers with lower preexisting levels of spending relative to their region, consistent with a selection response. Changes occurred through the entry of new ACOs with lower baseline spending, the exit of higher-spending ACOs, and the reconfiguration of participant lists favoring lower-spending practices within continuing ACOs. These participation patterns varied meaningfully by ACO type. Although compositional changes could not be definitively tied to benchmarking changes, the disproportionate participation of providers with lower baseline spending implies substantial costs and the need for ACO benchmarking reforms.

Hospital Survival In Rural Markets: Closures, Mergers, And Profitability.

Financial distress among rural hospitals in the US has increased in recent years. Using national hospital data, we investigated how the decline in profitability has affected hospital survival, either independently or with a merger. The answer has direct implications for access to care and competition in rural markets. We assessed the rate of hospital closures and mergers in predominantly rural markets during the period 2010-18, focusing on hospitals that were unprofitable at baseline. A minority of unprofitable hospitals (7 percent) closed. A larger share (17 percent) merged, most commonly with organizations from outside of their local geographic market. Most unprofitable hospitals (77 percent) continued to operate through 2018 without closure or merger. About half of these hospitals returned to profitability. At the market level, 22 percent of markets served by unprofitable hospitals lost a competitor to closure or within-market merger. Out-of-market mergers affected 33 percent of markets with an unprofitable hospital. Overall, our results suggest that rural markets are experiencing meaningful rates of hospital closures and mergers, yet many hospitals have survived despite poor financial performance. Policies targeting access to care will continue to be important. Similar attention will be needed to address the competitive effects of hospital closures and mergers on prices and quality.

Reducing Medicare Advantage Benchmarks Will Decrease Plan Generosity, But Those Effects Will Likely Be Modest.

Concerns that Medicare Advantage (MA) plans are overpaid have motivated calls to reduce MA benchmarks-the dollar amounts set by the Centers for Medicare and Medicaid Services (CMS) against which MA plans bid to set premiums and fund extra benefits. However, cutting benchmarks may lead to higher MA enrollee premiums and decreased plan generosity. We assessed the relationships between MA benchmarks and plan generosity and benefits. We estimated that a $1,000 per year decrease in benchmarks would lead to small increases in annual premiums of about $60 and increases in annual deductibles of about $27. Copays would also increase modestly, and the propensity to offer benefits would generally decline by less than 5 percentage points, with the greatest impact being on the availability of dental, hearing, and vision benefits. These results suggest that although cuts to MA benchmarks would adversely affect plan generosity, those effects would be modest.

Association of Evaluation and Management Payment Policy Changes With Medicare Payment to Physicians by Specialty.

Importance: US primary care physicians (PCPs) have lower mean incomes than specialists, likely contributing to workforce shortages. In 2021, the Centers for Medicare & Medicaid Services increased payment for evaluation and management (E/M) services and relaxed documentation requirements. These changes may have reduced the gap between primary care and specialist payment. Objectives: To simulate the effect of the E/M payment policy change on total Medicare physician payments while holding volume constant and to compare these simulated changes with observed changes in total Medicare payments and E/M coding intensity, before (July-December 2020) and after (July-December 2021) the E/M payment policy change. Design, Setting, and Participants: Retrospective observational study of US office-based physicians who were in specialties with 5000 or more physicians billing Medicare and who had 50 or more fee-for-service Medicare visits before and after the E/M payment policy change. Exposures: E/M payment policy changes. Main Outcomes and Measures: Outcomes included physician-level simulated volume-constant payment change, total observed Medicare payment change, and share of high-intensity (ie, level 4 or 5) E/M visits before and after the E/M payment policy change. For each specialty, the median change in each outcome was reported. The payment gap between primary care and specialty physicians was calculated as the difference between total Medicare payments to the median primary care and median specialty physician. Results: The study population included 180 624 physicians. Repricing 2020 services yielded a simulated volume-constant payment change ranging from a 3.3% (-$4557.0) decrease for the median radiologist to an 11.0% ($3683.1) increase for the median family practice physician. After the E/M payment change, the median high-intensity share of E/M visits increased for physicians of nearly all specialties, ranging from a -4.4 percentage point increase (dermatology) to a 17.8 percentage point increase (psychiatry). The median change in total Medicare payments by specialty ranged from -4.2% (-$1782.9) for general surgery to 12.1% ($3746.9) for family practice. From July-December 2020 to July-December 2021, the payment gap between the median primary care physician and the median specialist shrank by $825.1, from $40 259.8 to $39 434.7 (primary care, $41 193.3 in July-December 2020 and $45 962.4 in July-December 2021; specialist, $81 453.1 in July-December 2020 and $85 397.1 in July-December 2021)-a relative decrease of 2.0%. Conclusions and Relevance: Among US office-based physicians receiving Medicare payments in 2020 and 2021, E/M payment policy changes were associated with changes in Medicare payment by specialty, although the payment gap between primary care physicians and specialists decreased only modestly. The findings may have been influenced by the COVID-19 pandemic, and further research in subsequent years is needed.

Organization and Performance of US Health Systems.

Importance: Health systems play a central role in the delivery of health care, but relatively little is known about these organizations and their performance. Objective: To (1) identify and describe health systems in the United States; (2) assess differences between physicians and hospitals in and outside of health systems; and (3) compare quality and cost of care delivered by physicians and hospitals in and outside of health systems. Evidence Review: Health systems were defined as groups of commonly owned or managed entities that included at least 1 general acute care hospital, 10 primary care physicians, and 50 total physicians located within a single hospital referral region. They were identified using Centers for Medicare & Medicaid Services administrative data, Internal Revenue Service filings, Medicare and commercial claims, and other data. Health systems were categorized as academic, public, large for-profit, large nonprofit, or other private systems. Quality of preventive care, chronic disease management, patient experience, low-value care, mortality, hospital readmissions, and spending were assessed for Medicare beneficiaries attributed to system and nonsystem physicians. Prices for physician and hospital services and total spending were assessed in 2018 commercial claims data. Outcomes were adjusted for patient characteristics and geographic area. Findings: A total of 580 health systems were identified and varied greatly in size. Systems accounted for 40% of physicians and 84% of general acute care hospital beds and delivered primary care to 41% of traditional Medicare beneficiaries. Academic and large nonprofit systems accounted for a majority of system physicians (80%) and system hospital beds (64%). System hospitals were larger than nonsystem hospitals (67% vs 23% with >100 beds), as were system physician practices (74% vs 12% with >100 physicians). Performance on measures of preventive care, clinical quality, and patient experience was modestly higher for health system physicians and hospitals than for nonsystem physicians and hospitals. Prices paid to health system physicians and hospitals were significantly higher than prices paid to nonsystem physicians and hospitals (12%-26% higher for physician services, 31% for hospital services). Adjusting for practice size attenuated health systems differences on quality measures, but price differences for small and medium practices remained large. Conclusions and Relevance: In 2018, health system physicians and hospitals delivered a large portion of medical services. Performance on clinical quality and patient experience measures was marginally better in systems but spending and prices were substantially higher. This was especially true for small practices. Small quality differentials combined with large price differentials suggests that health systems have not, on average, realized their potential for better care at equal or lower cost.

Changes in use of low-value services during the COVID-19 pandemic.

The COVID-19 pandemic led to a significant disruption, then recovery, of health care services use. Prior research has not examined the relative rates of resumption of high-value and low-value care. We examined the use of 6 common low-value services that received a D grade from the US Preventive Services Task Force compared with clinically comparable high-value services in a large commercially insured population nationwide from before the pandemic to April 1, 2021. We found that, overall, low-value services and high-value services were disrupted similarly. In aggregate, low-value care declined to 56.2% and high-value care to 53.2% in the initial month of the pandemic (April 2020) relative to baseline (number of visits in 2019 normalized by relevant enrolled population), then rebounded to 83.1% of baseline for low-value services and 95.0% of baseline for high-value services by January 2021. Substantial heterogeneity appeared across clinical contexts, such as prostate cancer screening for men 70 years and older rebounding to 111.8% of baseline and asymptomatic chronic obstructive pulmonary disease screening remaining at 38.5% of baseline in January 2021. This suggests that although, on average, resuming lower-value services may have been perceived to be a lesser priority by providers and patients, the pandemic may have had heterogeneous effects on consumer and provider decision-making along the dimension of clinical value. This enhances our understanding of how disruptions affect the relationship between clinical value and usage of different services and suggests the need for more targeted interventions to reduce low-value care.

How Emerging Telehealth Models Challenge Policymaking.

Policy Points Current telehealth policy discussions are focused on synchronous video and audio telehealth visits delivered by traditional providers and have neglected the growing number of alternative telehealth offerings. These alternative telehealth offerings range from simply supporting traditional brick-and-mortar providers to telehealth-only companies that directly compete with them. We describe policy challenges across this range of alternative telehealth offerings in terms of using the appropriate payment model, determining the payment amount, and ensuring the quality of care.

The merits of administrative benchmarks for population-based payment programs.

The different approaches to setting benchmarks for population-based payment models (empirical, bidding based, and administratively set) have unique advantages and challenges.

The Contribution of Price Growth to Pharmaceutical Revenue Growth in the United States: Evidence from Medicines Sold in Retail Pharmacies.

CONTEXT: To what extent does pharmaceutical revenue growth depend on new medicines versus increasing prices for existing medicines? Moreover, does using list prices, as is commonly done, instead of prices net of confidential rebates offered by manufacturers, which are harder to observe, change the relative importance of the sources of revenue growth? METHODS: This study uses data from SSR Health LLC to address these research questions using decomposition methods that analyze list prices, prices net of rebates, and sales for branded pharmaceutical products sold primarily through retail pharmacies. FINDINGS: From 2009 to 2019, retail pharmaceutical revenue growth was primarily driven by new products rather than by price increases on existing products. Failing to account for confidential rebates creates a more prominent role for price increases in explaining revenue growth, because list price inflation during this period was 10.9%, whereas net price inflation was 3.3%. CONCLUSIONS: Policies that restrict price growth on existing medicines likely need to be coupled with policies that reduce launch prices to have a meaningful long-term impact on pharmaceutical revenue growth. Using pharmaceutical list prices is often an inadequate approximation for net prices because the role of rebates has increased and varies by drug class.

Paying patients to use lower-priced providers.

OBJECTIVE: Many employers have introduced rewards programs as a new benefit design in which employees are paid $25-$500 if they receive care from lower-priced providers. Our goal was to assess the impact of the rewards program on procedure prices and choice of provider and how these outcomes vary by length of exposure to the program and patient population. STUDY SETTING: A total of 87 employers from across the nation with 563,000 employees and dependents who have introduced the rewards program in 2017 and 2018. STUDY DESIGN: Difference-in-difference analysis comparing changes in average prices and market share of lower-priced providers among employers who introduced the reward program to those that did not. DATA COLLECTION METHODS: We used claims data for 3.9 million enrollees of a large health plan. PRINCIPAL FINDINGS: Introduction of the program was associated with a 1.3% reduction in prices during the first year and a 3.7% reduction in the second year of access. Use of the program and price reductions are concentrated among magnetic resonance imaging (MRI) services, for which 30% of patients engaged with the program, 5.6% of patients received an incentive payment in the first year, and 7.8% received an incentive payment in the second year. MRI prices were 3.7% and 6.5% lower in the first and second years, respectively. We did not observe differential impacts related to enrollment in a consumer-directed health plan or the degree of market-level price variation. We also did not observe a change in utilization. CONCLUSIONS: The introduction of financial incentives to reward patients from receiving care from lower-priced providers is associated with modest price reductions, and savings are concentrated among MRI services.

Coding-Driven Changes In Measured Risk In Accountable Care Organizations.

Claims data, which form the foundation of risk adjustment in payment for health care services, may reflect efforts to capture more-or more severe-clinical conditions rather than true changes in health status. This can distort payments. We quantify this in the context of Medicare's accountable care organization (ACO) program by comparing risk scores derived from two different measurement approaches. One approach uses diagnoses coded on claims based on Centers for Medicare and Medicaid Services Hierarchical Condition Categories (HCC), and the other uses self-reported, survey-based health data from the Consumer Assessment of Healthcare Providers and Systems (CAHPS). During 2013-16 HCC-based risk scores grew faster than CAHPS-based risk scores (2.1 percent versus 0.3 percent annually), and the gap in HCC- and CAHPS-based risk score growth varied widely across ACOs. The average gap in risk score growth appears to be the result primarily of HCC coding practices rather than poor performance of the CAHPS model, suggesting that coding practices (not necessarily driven by ACO contracts) may account for most of the observed risk score growth for ACO beneficiaries.