A flawed risk-adjustment model is causing Medicare to overpay some health plans and providers and underpay others, according to a new study published by BMJ.
The problem is that people in some parts of the country visit healthcare providers more frequently than in others, according to the findings. Based on diagnoses, though, it turns out more visits don't necessarily equate to sicker patients, suggesting Medicare has been overpaying in those regions.
"Adjusting without correction for regional variation in visit rates tends to make regions with high rates of visits seem to have lower mortality and lower costs and vice versa," the researchers conclude. "Visit-corrected comorbidity measures better explain variation in age, sex, and race mortality than observed measures, and reduce observational intensity bias."
Commenting on the report in the Kaiser Health News blog "Capsules," Jordan Rau notes that risk adjustment is intended to avoid unfairly penalizing hospitals with large numbers of very frail and ill patients who are more likely to die. Those hospitals shouldn't be penalized for having higher death rates than hospitals with relatively healthy patients, he says, since the death rate is a function largely of statistics rather than quality of care.
Rau highlights the authors' argument that when patients see doctors more frequently and get more tests, they receive more new diagnoses. Areas of the country "with gluts of hospital beds, specialists and other providers tend to deliver more care, whether it's needed or not," he says.
Meanwhile, areas of the country with more sick people don't experience higher visit rates, lead study author Dr. John Wennberg told Rau. "The way we're doing it now has a lot of problems," Wennberg said.
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