Changes in Coded Severity and Risk Selection Under Accountable Care

Background:

In the Medicare Shared Savings Program (MSSP), accountable care organizations (ACOs) are eligible to receive shared savings bonuses if they lower spending below a financial benchmark based on attributed beneficiaries historical spending. To avoid penalizing ACOs caring for higher-risk beneficiaries, the MSSP adjusts ACOs’ savings benchmarks by beneficiaries’ baseline risk score. To discourage increased coding intensity, the benchmark is not adjusted upward if beneficiaries’ risk scores rise while in the MSSP. As a result, ACOs face an incentive to avoid high-risk beneficiaries, i.e., favorable selection. We examined whether the MSSP was associated with within-beneficiary changes in risk score and whether risk score was associated with beneficiary entry and exit in the MSSP.

Methods: We used national data for a random 20% sample of beneficiaries in Traditional Medicare from 2008 to 2014. We first tested for changes in coding intensity by evaluating the association between beneficiary MSSP exposure and within-beneficiary changes in risk score over time. We estimated a linear regression model that included a time-varying indicator of cumulative MSSP exposure, beneficiary fixed effects, year fixed effects, and time-varying area-level characteristics. We next tested for favorable selection in the MSSP by examining the relationship between beneficiary risk score and beneficiary exit from the MSSP. We estimated exit as a function of prior- year risk score, market fixed effects, year fixed effects, and beneficiary characteristics. We then compared growth in risk score across beneficiaries who were always in the MSSP, never in the MSSP, entered the MSSP, or exited the MSSP. Supplemental decomposition analyses assessed the relative contribution of risk score growth vs. levels to MSSP exit.

Results: Medicare beneficiaries in our sample contributed 13,864,627 beneficiary-years (n=1,980,661 beneficiaries). The MSSP was not associated with consistent within-beneficiary changes in risk score (0.0% change in risk score, 95% confidence interval [CI], -0.3% to 0.3%). High-risk beneficiaries were disproportionately likely to exit MSSP ACOs: beneficiaries at the 95th and 99th percentile of risk score in the prior year had a 21.6% and 25.0% chance of exiting an MSSP ACO in the subsequent year, as compared to a 16.0% chance among beneficiaries at the median risk score (risk difference, 5.7 percentage-point [p.p.] and 9.1 p.p., respectively, both P<.001). MSSP exit was particularly concentrated among beneficiaries with increased risk score growth while in the MSSP and following exit from the MSSP: compared to beneficiaries always in the MSSP, exiting beneficiaries had risk score growth that was 4.8 p.p. higher (95% CI, 3.8 to 5.9) prior to exit and 3.1 p.p. higher (95% CI, 1.9 to 4.3) following exit. In a supplemental decomposition analysis, we found that 73% of beneficiary exit was due to higher risk score growth and 27% was due to higher non-increasing risk score levels.

Conclusion: The decision to not upwardly adjust risk score in the MSSP has successfully deterred coding increases but may have led ACOs to avoid high-risk beneficiaries. Medicare should strengthen incentives to care for high-risk beneficiaries in the MSSP, e.g., adjusting for pre-existing “risk velocities” and utilizing prospective beneficiary attribution.