0
We're unable to sign you in at this time. Please try again in a few minutes.
Retry
We were able to sign you in, but your subscription(s) could not be found. Please try again in a few minutes.
Retry
There may be a problem with your account. Please contact the AMA Service Center to resolve this issue.
Contact the AMA Service Center:
Telephone: 1 (800) 262-2350 or 1 (312) 670-7827  *   Email: subscriptions@jamanetwork.com
Error Message ......
Research Letter | Health Care Reform

Medicare Fee Cuts and Cardiologist-Hospital Integration FREE

Zirui Song, MD, PhD1; Jacob Wallace, BA2; Hannah T. Neprash, BA2; Michael R. McKellar, MHSA2; Michael E. Chernew, PhD2; J. Michael McWilliams, MD, PhD2
[+] Author Affiliations
1Department of Medicine, Massachusetts General Hospital, Boston
2Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
JAMA Intern Med. 2015;175(7):1229-1231. doi:10.1001/jamainternmed.2015.2017.
Text Size: A A A
Published online

Physician practices are increasingly integrating with hospitals.1 For physicians, the expansion of accountable care organization contracts, centered on clinicians taking responsibility for population spending and quality, makes independent practice more challenging. For hospitals and health systems, acquiring practices helps them control referral patterns, coordinate care, and improve their bargaining power with payers.

In 2010, based on recommendations from the American Medical Association and a national practice expense survey of physicians, the Centers for Medicare & Medicaid Services reduced fees for cardiology services, focusing on those delivered in the office setting.2 For example, payment for a myocardial perfusion image in the office was cut 26%, compared with 5% in the hospital outpatient department (HOPD). Payment for an echocardiogram was cut 16% in the office, compared with a 3% increase in the HOPD setting. This widened the already existing payment gap favoring HOPDs—by 2013, an echocardiogram cost Medicare 141% more in HOPDs than in the office.3

The American College of Cardiology (ACC) projected a surge of integration in response to physician office fee reductions, with cardiologists exchanging practice ownership for more predictable salaries as hospital employees.4 We analyzed trends in cardiologist-hospital integration.

We analyzed 2007-2012 medical claims in a continuously enrolled national sample of traditional Medicare beneficiaries and commercially insured individuals from Truven Medicare and Commercial databases. We measured cardiologist-hospital integration by calculating the share of volume billed in HOPDs. This captures both shifts in care to HOPDs and changes in practice patterns induced by physician-hospital integration. We focused on 3 affected services—myocardial perfusion imaging (MPI), echocardiograms, and electrocardiograms.3 We expected shares of HOPD volume to increase.

We used segmented regression to assess changes in integration growth after the physician office fee cut. Independent variables included beneficiary age and sex, time trend, a postintervention indicator, and the interaction between postintervention and trend. We also included quarter and metropolitan statistical area fixed effects. Standard errors were clustered by metropolitan statistical area.

This research was approved by the Harvard Medical School Institutional Review Board.

Our sample included 806 266 Medicare beneficiaries with a mean age of 75.7 years, who were 53.3% female, and represented all states, and 12 567 069 commercially insured individuals aged 55 to 64 years who were 52.8% female with a similar geographic distribution.

Across all services, prices favored the HOPD setting after 2010 (Table). The shares of volume in the HOPD setting also increased after 2010 (Figure). Growth in the HOPD share was 5.9, 3.9, and 2.7 percentage points per year (P < .001) faster after 2010 compared with before 2010 for MPI, echocardiograms, and electrocardiograms, respectively. The overall volume of echocardiograms and electrocardiograms per beneficiary continued to increase after the fee cut, while that for MPI decreased slightly (Table).

Table Graphic Jump LocationTable.  Price, Volume, and Site of Care for Cardiology Services Before and After 2010 Medicare Fee Cutsa
Place holder to copy figure label and caption
Figure.
Shares of Sentinel Cardiology Services Billed in the Hospital Outpatient Department Setting

The vertical dotted line represents the onset of 2010 Medicare fee cuts. The Truven Medicare and Commercial databases comprise large convenience samples of Medicare beneficiaries with Medicare Supplemental coverage for whom Medicare is the primary payer, as well as adults and families with commercial insurance from large US employers, respectively.

Graphic Jump Location

Aggregate analyses of all cardiovascular imaging and cardiovascular medicine services produced qualitatively similar results. Similar results were also found in commercial populations, suggesting that integration was associated with comparable effects across payers (Table).

Integration accelerated after the fee cuts. This is consistent with the 2010 ACC Practice Census, which found that 40% of cardiologists planned to integrate with hospitals due to the fee cuts and 13% were considering it.5 The Medicare Payment Advisory Commission estimated that if cardiology imaging alone continued to migrate to HOPDs, nearly all would be provided there by 2021, costing an additional $1.1 billion per year to Medicare and $290 million per year in beneficiary cost sharing because of higher prices for facility-based services.3

Hospital outpatient departments may be more expensive than office settings because of the costs of licensing requirements, ancillary services, maintaining standby capacity, and treating more complex patients.3 However, if equivalent quality care could be delivered in the office, the case for paying the higher fee may be more difficult to justify. Moreover, while higher HOPD payments may be covering higher hospital costs, they may also be passed on to physicians through higher salaries. Ultimately, integration may offset savings that fee cuts were intended to achieve, both because facility-based fees are higher and because of higher prices due to market power.

Our results may not be causal or generalizable. Other market forces could have also encouraged integration, such as hospitals acquiring practices to preserve their referral base under new payment models and the rising costs of independent practice, including malpractice premiums, infrastructure costs (eg, electronic medical records), and costs of meeting new quality reporting or performance goals. Moreover, integration has not been limited to cardiology, supporting the potential effect of broader secular factors. At the service level, the effect of any fee cut depends on its magnitude, the previous fees in each setting, and changes in the volume of affected and substitute services across different sites of care.

Amidst growing recognition of payment disparities across sites of care, policies that aim to equalize payments across settings have received increasing attention. The president’s fiscal year 2016 budget proposes site-neutral payments, estimated to save nearly $29.5 billion over 10 years. If fee cuts did indeed lead to hospital acquisition of physician practices, then narrowing the payment gap may lead to less physician-hospital integration, which might in turn limit price increases from market power.6

Corresponding Author: Zirui Song, MD, PhD, Department of Medicine, Massachusetts General Hospital, 55 Fruit St, Boston, MA 02114 (zirui_song@post.harvard.edu).

Published Online: May 26, 2015. doi:10.1001/jamainternmed.2015.2017.

Author Contributions: Dr Song had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

Study concept and design: Song, Wallace, McWilliams.

Acquisition, analysis, or interpretation of data: All authors.

Drafting of the manuscript: Song.

Critical revision of the manuscript for important intellectual content: All authors.

Statistical analysis: Song, Neprash, McKellar, Chernew.

Obtained funding: Song, McWilliams.

Administrative, technical, or material support: Wallace.

Study supervision: McWilliams.

Conflict of Interest Disclosures: None reported.

Funding/Support: Supported by grants from the National Institute on Aging (grant F30 AG039175) to Dr Song, from the Robert Wood Johnson Foundation/Health Care Financing Organization (grant 71408) to Drs McWilliams and Chernew, and from the National Science Foundation Graduate Research Fellowship (grant 1144152) to Mr Wallace.

Role of the Funder/Sponsor: The National Institute on Aging, the Robert Wood Johnson Foundation/Health Care Financing Organization, the National Science Foundation, and organizations with which the authors are affiliated had no role in the design and conduct of the study; in the collection, analysis, and interpretation of the data; in the preparation, review, or approval of the manuscript; or in the decision to submit the manuscript for publication.

Isaacs  SL, Jellinek  PS, Ray  WL.  The independent physician—going, going …. N Engl J Med. 2009;360(7):655-657.
PubMed   |  Link to Article
Centers for Medicare & Medicaid Services.  Medicare program; payment policies under the physician fee schedule and other revisions to Part B for CY 2010. Fed Regist. 2009;74(226);61737-62188.
PubMed
Medicare Payment Advisory Commission. Report to the Congress: Medicare and the Health Care Delivery System. Washington, DC: Medicare Payment Advisory Commission; June 2013.
Brindis  R, Rodgers  GP, Handberg  EM.  Team-based care: a solution for our health care delivery challenges. J Am Coll Cardiol. 2011;57(9):1123-1125.
PubMed   |  Link to Article
American College of Cardiology. ACC 2010 Practice Census. Washington, DC: American College of Cardiology; October 2010.
Baker  LC, Bundorf  MK, Kessler  DP.  Vertical integration: hospital ownership of physician practices is associated with higher prices and spending. Health Aff (Millwood). 2014;33(5):756-763.
PubMed   |  Link to Article

Figures

Place holder to copy figure label and caption
Figure.
Shares of Sentinel Cardiology Services Billed in the Hospital Outpatient Department Setting

The vertical dotted line represents the onset of 2010 Medicare fee cuts. The Truven Medicare and Commercial databases comprise large convenience samples of Medicare beneficiaries with Medicare Supplemental coverage for whom Medicare is the primary payer, as well as adults and families with commercial insurance from large US employers, respectively.

Graphic Jump Location

Tables

Table Graphic Jump LocationTable.  Price, Volume, and Site of Care for Cardiology Services Before and After 2010 Medicare Fee Cutsa

References

Isaacs  SL, Jellinek  PS, Ray  WL.  The independent physician—going, going …. N Engl J Med. 2009;360(7):655-657.
PubMed   |  Link to Article
Centers for Medicare & Medicaid Services.  Medicare program; payment policies under the physician fee schedule and other revisions to Part B for CY 2010. Fed Regist. 2009;74(226);61737-62188.
PubMed
Medicare Payment Advisory Commission. Report to the Congress: Medicare and the Health Care Delivery System. Washington, DC: Medicare Payment Advisory Commission; June 2013.
Brindis  R, Rodgers  GP, Handberg  EM.  Team-based care: a solution for our health care delivery challenges. J Am Coll Cardiol. 2011;57(9):1123-1125.
PubMed   |  Link to Article
American College of Cardiology. ACC 2010 Practice Census. Washington, DC: American College of Cardiology; October 2010.
Baker  LC, Bundorf  MK, Kessler  DP.  Vertical integration: hospital ownership of physician practices is associated with higher prices and spending. Health Aff (Millwood). 2014;33(5):756-763.
PubMed   |  Link to Article

Correspondence

CME
Also Meets CME requirements for:
Browse CME for all U.S. States
Accreditation Information
The American Medical Association is accredited by the Accreditation Council for Continuing Medical Education to provide continuing medical education for physicians. The AMA designates this journal-based CME activity for a maximum of 1 AMA PRA Category 1 CreditTM per course. Physicians should claim only the credit commensurate with the extent of their participation in the activity. Physicians who complete the CME course and score at least 80% correct on the quiz are eligible for AMA PRA Category 1 CreditTM.
Note: You must get at least of the answers correct to pass this quiz.
Please click the checkbox indicating that you have read the full article in order to submit your answers.
Your answers have been saved for later.
You have not filled in all the answers to complete this quiz
The following questions were not answered:
Sorry, you have unsuccessfully completed this CME quiz with a score of
The following questions were not answered correctly:
Commitment to Change (optional):
Indicate what change(s) you will implement in your practice, if any, based on this CME course.
Your quiz results:
The filled radio buttons indicate your responses. The preferred responses are highlighted
For CME Course: A Proposed Model for Initial Assessment and Management of Acute Heart Failure Syndromes
Indicate what changes(s) you will implement in your practice, if any, based on this CME course.

Multimedia

Some tools below are only available to our subscribers or users with an online account.

1,129 Views
3 Citations
×

Related Content

Customize your page view by dragging & repositioning the boxes below.

See Also...
Articles Related By Topic
Related Collections
Jobs
JAMAevidence.com

The Rational Clinical Examination: Evidence-Based Clinical Diagnosis
Patients Referred for Echocardiograms

The Rational Clinical Examination: Evidence-Based Clinical Diagnosis
Evidence Summary and Review 2