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Cognitive, functional impairment associated with higher Medicare spending

Beneficiaries with depression, dementia and limitations in activities of daily living had substantially increased Medicare total annual costs of care, which could affect provider compensation, according to a study published in JAMA Internal Medicine.

“Medicare is moving toward value-based payment,” Kenton J. Johnston, PhD, from the College for Public Health and Social Justice at St. Louis University, and colleagues wrote. “The Merit-Based Incentive Payment System (MIPS) program judges outpatient clinicians’ performance on a measure of annual Medicare spending. However, this measure may disadvantage outpatient clinicians who care for vulnerable populations because the algorithm omits meaningful determinants of cost.”

Johnston and colleagues conducted a retrospective observational study to investigate how local area health care supply, economic conditions and factors not included in Medicare risk adjustment, such as patient neuropsychological and functional status, impact Medicare total annual cost of care.

The researchers examined patient-reported cognitive and functional status using the Medicare Current Beneficiary Survey and local area characteristics using the Area Health Resources File. Medicare total annual cost of care was defined as the total annual reimbursed amount per patient for Medicare Part A and Part B services.

A total of 111,414 physicians and 30,058 patients (58.1% women; mean age, 71.84 years) were included.

Data showed that the mean total annual cost of care was $9,117. Beneficiaries with depression ($14,436), dementia ($18,311) and difficulty with three or more activities of daily living ($19,113) or instrumental activities of daily living ($17,443) had total annual costs of care higher than the mean.

When adjusting for comorbidities, these factors were still associated with higher total annual costs of care, with depression $2,740 (95% CI, 2,200-2,739) higher, dementia $2,922 (95% CI, 2,399-3,445) higher and difficulty with three or more activities of daily living $3,121 (95% CI, 2,633-3,609) higher or instrumental activities of daily living $895 (95% CI, 452-1,337) higher.

Living in a mental health care shortage area ($9,233), having a high proportion of residents in poverty ($9,569) or unemployed ($9,658) were also associated with higher total annual cost of care.

Outpatient safety-net clinicians’ underperformance on Medicare total annual cost of care relative to non-safety-net clinicians declined by 52% when neuropsychological and functional factors and local residence area factors were added to risk adjustment calculations.

Neuropsychological and functional risk factors “exert an independent effect on annual Medicare spending that is largely beyond the control of outpatient clinicians and not accounted for by current Medicare risk adjustment methods,” Johnston and colleagues concluded. “Consequently, Medicare’s MIPS scoring formula may inappropriately penalize outpatient safety-net clinicians. In the future, CMS could consider accounting for patient cognitive and functional status as well as local area health care supply and economic conditions in risk adjustment.” – by Alaina Tedesco

Disclosure: Johnston reports no relevant financial disclosures. Please see study for all other authors’ relevant financial disclosures.