Since the snow shows no sign of stopping, we might as well stay cozy inside and read up on the latest health policy research from January! This month we read about patient care after private equity acquisition of hospitals, and how to improve risk-adjustment accuracy in Medicare Advantage. 

Changes in Patient Care Experience After Private Equity Acquisition of US Hospitals

Anjali Bhatla, Victoria L. Bartlett, Michael Liu, ZhaoNian Zheng, Rishi Wadhera. JAMA. January 2025. Available here.

Researchers funded by the American Heart Association used data from Irving Levin Associates and Pitchbook, the American Hospital Association, and CMS Impact Files to evaluate whether the acquisition of hospitals by private equity (PE) firms was associated with changes in the quality of patient care, when compared with non-PE hospitals selected as controls.

What it Finds

• Following acquisition of a hospital there was a decrease in patient-reported staff responsiveness at PE hospitals compared with control hospitals. 
• Global measures of patient care experience worsened after a hospitals’ acquisition by private equity, and the difference in overall patient care experience measures between PE hospitals and non-PE hospitals grew each year following acquisition reaching around five percentage points by year three post-acquisition.
  • These changes exceeded the national 3.6% decline in patient care experience scores observed during the COVID-19 pandemic. 

Why it Matters

Improving patient-centered care is a national priority, and these findings highlight how patient care experience may decline with private equity ownership, raising questions about the quality of clinical care, staffing levels, and patient outcomes. This analysis found that the decrease in patient experience scores at PE hospitals compared with control hospitals grew each year following acquisition, suggesting that the effects of organizational changes implemented by PE may compound over time. The findings suggest that private equity strategies may prioritize financial returns over patient care, which could have long-term consequences on health outcomes and clinical quality. Policymakers need to consider the implications of private equity ownership on patient care and explore options for oversight to safeguard patient interests.

Combining Patient Survey Data With Diagnosis Codes Improved Medicare Advantage Risk-Adjustment Accuracy

Meghan Bellerose, Hannah O. James, Jay Shroff, Andrew M. Ryan, David J. Meyers. Health Affairs. January 2025. Available here.

A research team at Brown University linked  2016-2019 medical and pharmaceutical claims to Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey responses of Medicare Advantage (MA) enrollees to compare the predictive accuracy of different risk-adjustment strategies versus the standard Hierarchical Condition Categories (HCC) approach. 

What it Finds

• Survey-based models, particularly when combined with HCC scores (which CMS estimates from beneficiaries’ diagnosis codes and demographic characteristics), were found to improve prediction of MA utilization, especially for beneficiaries with the highest and lowest predicted healthcare use.
• The exclusion of diagnosis codes from health risk assessments (HRAs) and chart reviews resulted in slightly less predictive accuracy compared to standard HCC scores, though adding survey data enhanced model performance.

Why it Matters

Improving risk-adjustment models is crucial to ensuring that Medicare Advantage plans are reimbursed fairly for managing their enrollees’ care while reducing incentives for discretionary diagnosis coding or upcoding. Better risk adjustment could also improve the financial sustainability of the Medicare program. Integrating health survey responses into risk adjustment could help counteract risk-score inflation and ensure that higher payments are directed to plans covering sicker populations. If CMS excludes diagnoses most prone to upcoding, surveys could fill in gaps of important health information and improve fairness in payments to plans serving high-need beneficiaries.