Going Below The Surface E-newsletter: June 2021
June 23, 2021
Before you close your computer and head to the beach, read on for some health spending studies that caught our attention. They tackle some of the issues that have been top of mind for many of us, like resource allocation, health equity, health access and the unanticipated effects of management and system changes.
Social determinants of health – factors like housing, transportation, and poverty – have a huge impact on patients’ health, yet most payers, Medicare included, do not adjust provider reimbursements to reflect the level of care provided to patients with social needs. To explore ways federal payment reform could address these factors, the Center for Professionalism & Value in Health Care hosted a policy design workshop that included a diverse group of federal and state officials, consumers and providers, among others. The group outlined key policy elements to account for social risk in federal reimbursements, including designing payment programs to address social need, not just health costs, and using geographic and population outcomes data to assess areas of need. Participants agreed using geographic location can support collaboration among the federal, state, local and private agencies that address social determinants of health, but accountability measures will be needed to ensure resources are meeting population and individual needs.
Why it Matters:
Risk adjustment for socio-economic factors avoids penalizing providers working with underserved or disadvantaged populations. To reach the right patients, we need robust, granular data that most accurately reflects the social characteristics of patient populations. These considerations are critical to ensuring our health system is working for vulnerable populations. Efforts such as the policy design workshop showcase how various players from across the health care landscape can work together to develop evidence-based considerations for policymakers. As a multistakeholder organization, Going Below The Surface recognizes the need to convene stakeholders to address complicated health system challenges.
As we’ve written previously, larger-scale hospital mergers and physician practice consolidation can lead to reduced competition and increased prices. According to an article in Health Affairs, independent practices participating in health system-led Accountable Care Organizations (ACOs) also could lead to rare price jumps, even if those practices were not formally acquired. This “softer” form of consolidation lead to some increases of about 4% among independent practices that joined health system-led ACOs.
Another form of consolidation that can raise prices is the acquisition of physician practices by private equity firms. A separate Health Affairs study examined these transitions among private equity firms that purchased dermatologists’ practices between 2012-2017. One-and-a-half years after acquisition, prices paid to private equity dermatologists for routine medical visits were 3%–5% higher than those paid to non–private equity dermatologists.
Why it Matters:
It is not just large-scale hospital consolidation that can lead to price increases for patients and our health system. The incentives created in private equity acquisitions can do so as well. While the percentage price increase seen in some ACO physician practices is small, the authors argued the impact of these increases could grow as ACOs’ contracting expands. Parsing through the evidence to find patterns of rising spending can help us identify misaligned incentives that ultimately drive up prices.