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Effect of financial incentives on hospital-cardiologist integration and cardiac test location
Andy Ye Yuan1, Bernard Black2, Timea Viragh3
1Pritzker School of Law, Northwestern University, Chicago, Illinois, USA.
Insights
Medicare payment changes incentivized hospitals to acquire cardiology practices, shifting noninvasive cardiac tests from offices to hospital outpatient settings. This integration trend impacts independent cardiology practices nationwide.
Area of Science:
- Health Economics
- Cardiology
- Health Services Research
Background:
- Centers for Medicare and Medicaid Services (CMS) altered reimbursement for noninvasive cardiac tests starting in 2006.
- Reduced Medicare Fee-for-Service (M-FFS) payments for office-based tests contrasted with stable/increasing payments for hospital-based outpatient (HBO) tests.
Purpose of the Study:
- To investigate the impact of divergent reimbursement policies on the location of cardiac testing.
- To assess the relationship between payment differentials and hospital acquisition of cardiology practices.
Main Methods:
- Employed a difference-in-differences analysis comparing national M-FFS trends with Medicare Advantage (M-Adv) systems.
- Analyzed trends from 2005-2015 to identify shifts in cardiac test location and hospital-cardiologist integration.
Main Results:
- Reimbursement changes drove a significant shift of cardiac testing from cardiologist offices to HBO settings.
- Observed a concurrent rise in hospital acquisitions of cardiology practices.
- Geographic variation in integration and HBO testing prevalence was noted across states.
Conclusions:
- CMS reimbursement policies significantly influenced the consolidation of cardiology practices and the location of cardiac testing.
- Independent cardiology practice viability is increasingly threatened, particularly in smaller states, due to these economic pressures.
Abstract:
Starting around 2006, the Centers for Medicare and Medicaid Services (CMS) progressively reduced Medicare Fee-for-Service (M-FFS) payments for the principal noninvasive cardiac tests, when performed in a cardiologist office (Office), yet kept payments flat to increasing for the same tests, performed in the hospital-based outpatient (HBO) setting. This produced a growing gap between HBO and Office payments for the same tests, and thus an incentive for hospitals to acquire cardiology practices in order to move cardiac tests to the HBO location and capture the HBO/Office payment differential. We use difference-in-differences analysis, in which we compare national M-FFS trends in cardiac test location to those for a control group of several large, integrated Medicare Advantage (M-Adv) health systems over 2005-2015, which were not affected by these reimbursement changes, and provide evidence that these reimbursement changes led to a large shift in testing from Office to HBO. This shift was concurrent with a sharp rise in hospital-cardiologist integration. The rise in integration and the proportion of testing in HBO varied greatly across states. Independent practice remains viable in very large states, but is endangered in many states, and is all but extinct in a growing number of states.
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