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Observational Study
. 2020 Feb;35(2):578-585.
doi: 10.1007/s11606-019-05318-7. Epub 2019 Sep 16.

Impact of an Episode-Based Payment Initiative by Commercial Payers in Arkansas on Procedure Volume: an Observational Study

Julius L Chen  1 , Michael E Chernew  2 , A Mark Fendrick  3 , Joseph W Thompson  4 , Sherri Rose  2
Affiliations
Observational Study

Impact of an Episode-Based Payment Initiative by Commercial Payers in Arkansas on Procedure Volume: an Observational Study

Julius L Chen et al. J Gen Intern Med. 2020 Feb.

Abstract

Background: Episode-based payment (EBP) is gaining traction among payers as an alternative to fee-for-service reimbursement. However, there is concern that EBP could influence the number of episodes.

Objective: To examine how procedure volume changed after the introduction of EBP in 2013 and 2014 under the Arkansas Health Care Payment Improvement Initiative.

Design: Using 2011-2016 commercial claims data, we estimate a difference-in-differences model to assess the impact of EBP on the probability of a beneficiary having an episode for four procedures that were reimbursed under EBP in Arkansas: total joint replacement, cholecystectomy, colonoscopy, and tonsillectomy.

Participants: Commercially insured beneficiaries in Arkansas serve as our treatment group, while commercially insured beneficiaries in neighboring states serve as our comparison group.

Interventions: Statewide implementation of EBP for various clinical conditions by two of Arkansas' largest commercial insurers.

Main measures: For a given procedure type, the primary outcomes are the annual rate of procedures (number of procedures per 1000 beneficiaries) and the probability of a beneficiary undergoing that procedure in a given quarter.

Key results: The relationship between EBP and procedure volume varies across procedures. After EBP was implemented, the probability of undergoing colonoscopy increased by 17.2% (point estimate, 2.63; 95% CI, 1.18 to 4.08; p < 0.001; Arkansas pre-period mean, 15.29). The probability of undergoing total joint replacement increased by 9.9% (point estimate, 0.091; 95% CI, - 0.011 to 0.19; p = 0.08; Arkansas pre-period mean, 0.91), though this effect is not significant. There is no discernable impact on cholecystectomy or tonsillectomy volume.

Conclusions: We do not find clear evidence of deleterious volume expansion. However, because the impact of EBP on procedure volume may vary by procedure, payers planning to implement EBP models should be aware of this possibility.

Keywords: health economics; health insurance; health policy; physician behavior; reimbursement.

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Conflict of interest statement

Dr. Chernew reports having equity in Archway Health, V-BID Health, Virta Health, and Paladin Healthcare Capital. He reports having consulted for the American Hospital Association, Anthem Health Insurance, Janssen Pharmaceuticals, Madalena Consulting, Merck & Company, Milliman, Navigant, Pfizer, PhRMA, Precision Health Economics, State of North Carolina, Takeda Pharmaceuticals, University of Michigan, White & Case, Amgen, J&J, Sanofi, University of Maine, McKinsey & Company, and John Freedman Healthcare. He has received research funding from the Laura and John Arnold Foundation, NIH/NIA, NBER/AHRQ, CMS via Abt Associates, MITRE/CMS, Altarum/RWJK, Peterson Center on Health Care, and The Commonwealth Fund. Dr. Fendrick reports having consulted for AbbVie, Amgen, Centivo, Community Oncology Association, Department of Defense, EmblemHealth, Exact Sciences, Freedman Health, Health at Scale Technologies, Health Management Associates, Lilly, MedZed, Penguin Pay, Risalto, Sempre Health, State of Minnesota, Wellth, and Zansors. He has received research funding from AHRQ, Boehringer-Ingelheim, Gary and Mary West Health Policy Center, Laura and John Arnold Foundation, National Pharmaceutical Council, PCORI, PhRMA, RWJ Foundation, and State of Michigan/CMS. All other authors report no relationships or potential conflicts of interest.

Figures

Figure 1
Figure 1
Rate of total joint replacement episode–triggering procedures. Blue diamonds indicate annual rates for Arkansas. Green squares indicate annual rates for all controls. The vertical orange line indicates partial commercial EBP implementation (AR BCBS only) in 2013. The vertical maroon line indicates full commercial EBP implementation (AR BCBS and QC) in 2014. All controls refers to Missouri, Alabama, Mississippi, Louisiana, and Texas. Source: Authors’ analysis of Truven Health MarketScan Commercial Claims and Encounters data for 2011–2016.
Figure 2
Figure 2
Rate of cholecystectomy episode–triggering procedures. Blue diamonds indicate annual rates for Arkansas. Green squares indicate annual rates for all controls. The vertical maroon line indicates commercial EBP implementation (AR BCBS and QC) in 2014. All controls refers to Missouri, Alabama, Mississippi, Louisiana, and Texas. Source: Authors’ analysis of Truven Health MarketScan Commercial Claims and Encounters data for 2011–2016.
Figure 3
Figure 3
Rate of colonoscopy episode–triggering procedures. Blue diamonds indicate annual rates for Arkansas. Green squares indicate annual rates for all controls. Red triangles indicate annual rates for Alabama and Louisiana. The vertical maroon line indicates commercial EBP implementation (AR BCBS) in 2014. All controls refers to Missouri, Alabama, Mississippi, Louisiana, and Texas. While we show the trend for all control states pooled, only Alabama and Louisiana pass the pre-trends test and thereby form the control group for our primary specification. Source: Authors’ analysis of Truven Health MarketScan Commercial Claims and Encounters data for 2011–2016.
Figure 4
Figure 4
Rate of tonsillectomy episode–triggering procedures. Blue diamonds indicate annual rates for Arkansas. Green squares indicate annual rates for all controls. The vertical maroon line indicates commercial EBP implementation (AR BCBS) in 2014. All controls refers to Missouri, Alabama, Mississippi, Louisiana, and Texas. Source: Authors’ analysis of Truven Health MarketScan Commercial Claims and Encounters data for 2011–2016.
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