Negotiated Reimbursement Rates for Cardiac Artery Bypass Surgery – Does Quality Matter?

Research objectives: New York State (NYS) has been publishing Cardiac Surgery Reports with individual surgeons' quality information for 20 years. Studies have shown that quality information presented in these reports can impact providers' market share and probability of contracting with insurance plans. The objective of this study is to examine the association between providers' reported quality and their negotiated prices with insurance plans.

Study Design: We merged information from the NYS Cardiac Surgery Reports with all surgeons' claims, submitted to insurance plans in NYS. The Cardiac Surgery Reports provide risk adjusted mortality rates for individual physicians, performing Coronary Artery Bypass (CABG) surgery in NYS. The claims data were provided by most insurance plans (85% of all claims records in NYS), conducting business in NYS, as part of their data contribution to FairHealth. The data were obtained by the Upstate Health Research Network for the purpose of computing reimbursement benchmark rates for out-of-network services. Multivariate regression models are estimated to test the study's hypothesis that CABG surgeons with higher quality command higher reimbursement rates, controlling for provider level and market level characteristics.

Principal Findings: The sample included 22,691 claims for CABG and valve procedures performed by 171 surgeons over the 2005-2009 period in NYS. In 2008, the reported mean risk adjusted mortality rate was 4.1 with large variability, ranging from 0 to 22.2 (lower is better). The average negotiated rate for the procedure was $3,500. The presentation will also include results from the multivariate regression models.

Policy Implications: This study will offer information about the relationship between performance of cardiac surgeons and the reimbursement they receive from health plans. Finding that CABG surgeons with higher quality negotiate higher reimbursement rates implies an implicit pay for performance system, with incentives to improve quality. If the CABG Reports are being used for reimbursement and price negotiations, their accuracy and appropriateness for these purposes need to be evaluated.