Purpose: Reporting states (RS) publish hospital-specific report cards for coronary artery bypass graft (CABG) (MS-DRG 235 and 236) surgery. When RS are compared with non-reporting states (NRS), do report cards influence the volume of CABG surgery performed? Methods: Using publicly available Medicare data (hospitalcompare.hhs.gov) for CABG-only procedures, the volume of CABG procedures performed in RS (CA, MA, NJ, NYS, and PA) was compared with the volume of these procedures performed in NRS. Results: In the continental US during the financial year 2008 a total of 41,589 Medicare patients underwent a CABG (33,318 CABGs in NRS versus 8,272 CABGs in RS). A similar percentage of states in each group regulated their markets with certificate-ofneed statutes (30% NRS versus 40% RS). Per million capita (pmc), the number of CABG providers in the two groups was similar with respect to hospitals (4.1±1.6 hospitals pmc in NRS versus 2.9±1.2 hospitals pmc in RS); cardiac surgeons (2.4±1.5 surgeons pmc in NRS versus 5.1±2.9 surgeons pmc in RS); and interventional cardiologists (ICs) (18.3±5.5 ICs pmc in NRS versus 21.2±5.0 ICs pmc in RS). However, pmc, NRS performed significantly more CABG procedures (152.0±62.6 CABGs pmc in NRS versus 113.8±31.6 CABG pmc in RS; p=0.05). Conclusions: States that publish hospital-specific report cards perform significantly fewer CABGs per capita than states without report cards. As the government’s national hospital-specific report card becomes more popular, the per capita performance of CABGs in NRS could fall to the level found in RS due to the reputational incentives created by the use of hospital-specific report cards.
The modern era of government-sponsored provider-specific report cards began two decades ago with the settlement of a freedom of information lawsuit. After New York State (NYS) began collecting coronary artery bypass grafting (CABG) outcomes data, Newsday sued the State to compel disclosure of provider-specific mortality statistics.1 After a compromise on disclosures settled this lawsuit, NYS enacted a reporting statute that defined precisely which provider-specific (hospital and surgeon) data the State would henceforth disclose publicly. Subsequently, four other states (California [CA], Massachusetts [MA], New Jersey [NJ], and Pennsylvania [PA]) have enacted similar reporting statutes for cardiac services.
Less appreciated is the fact that government-sponsored provider-specific report cards are a key component of value-based purchasing (VBP).2 In 2002, the Institute of Medicine (IOM) argued that governmental report cards could favorably influence medical inflation by the creation of reputational incentives that encouraged healthcare providers to become more risk-averse,3 and improve market transparency to drive competition.4 The Center for Medicare and Medicaid Services (CMS) responded three years later by adopting a system of VBP (composed of pay-for- performance [P4P] bonuses and the creation of Hospital Compare, an online hospital-specific report card) for determining Medicare reimbursement.5
While early studies of the reputational incentives created by provider-specific report cards failed to demonstrate lasting market impact,6 more recent observational studies have reached the opposite conclusion.7 Herein, we analyze the market impact of state-sponsored report cards on CABG volume. Using publicly available data from the Hospital Compare website, we found that states utilizing report cards perform significant fewer CABG procedures per capita than states that do not utilize report cards. This observational study suggests that as Hospital Compare and the soon-to-be-launched Physician Compare8 gain popularity, CMS CABG report cards could negatively affect the volume of CABG procedures performed on Medicare patients in states that currently do not have reporting statutes.
The volume of CABG-only (MS-DRG 235 and 236) procedures performed on Medicare patients during fiscal year (FY) 2008 in the five reporting states (RS) that publish CABG provider-specific report cards (CA, MA, NJ, NYS, and PA) were compared with the volume of CABG procedures performed in the remaining continental non-reporting states (NRS). Although Washington State currently publishes CABG provider-specific outcomes data, during FY 2008 these data were not available to the public. Accordingly, Washington State was placed in the NRS group.
For each state, Hospital Compare served as the source document for determining the volume of CABG procedures performed and the number of hospitals that offer CABG. Similarly, other public source documents were used to obtain relevant demographic data. Population data were obtained from the US Census Bureau,9 while Health Grades was the source for the number of cardiac surgeons10 and interventional cardiologists (ICs)11 practicing in each state. Whether a state had enacted a certificate-of-need (CON) statute (suggesting that a state’s healthcare market is more highly regulated) was determined from the National Conference of State Legislatures website.12
The data used for statistical comparison are presented as mean ± standard deviation. All statistical comparisons were made with Student’s T-test. For readers interested in how their home state’s statistics compared with other states, state-specific data are provided in the two appendices at the end of the article (RS data are located in Appendix A, while NRS data are located in Appendix B).
Table 1 summarizes the demographic data for RS and NRS. Not surprisingly, the NRS had a substantially larger population than the five RS (225.4 million population in NRS versus 83.9 million population in RS); more cardiac surgeons (474 surgeons in NRS versus 358 surgeons in RS); more hospitals performing CABG (881 hospitals in NRS versus 246 hospitals in NRS); and more ICs (4,315 ICs in NRS versus 1,583 ICs in RS). However, based on the use of CON regulations, the two groups regulate their healthcare markets to a similar degree (30% of NRS regulated their markets by CON statutes versus 40% of RS).
A different picture of provider distribution emerges when the two groups are compared on a per million capita (pmc) basis. Pmc, the two groups had a similar number of cardiac surgeons (2.4±1.5 surgeons pmc in NRS [range 0–6.2 surgeons pmc] versus 5.1±2.9 surgeons pmc in RS [range 3.7–10.0 surgeons pmc]); hospitals performing CABG (4.1±1.6 hospitals pmc in NRS [range 1.5–9.4 hospitals pmc] versus 2.9±1.2 hospitals pmc in RS [range 1.9–4.7 hospitals pmc]); and ICs (18.3±5.5 ICs pmc in NRS [range 5.6–29.7 ICs pmc] versus 21.2±5.0 ICs pmc in RS [range 14.6–27.0 ICs pmc]).
Table 2 summarizes the volume of CABG procedures performed in the two groups during the study period. Again, with its substantially larger population, it is not surprising that the NRS group performed more CABGs (33,318 CABGs in NRS versus 8,271 CABGs in RS). However, on a per capita basis, this difference not only persisted but also became statistically significant (152.0±62.6 CABGs pmc in NRS [range 56.3–291.1 CABGs pmc] versus 113.8±31.6 CABGs pmc in RS [range 63.1–149.2 CABGs pmc]; p=0.05).
The chief finding of this observational study is that NRS performed significantly more CABG procedures pmc than did the RS despite having similar per capita access to care (hospitals, cardiac surgeons, and ICs), a single source for reimbursement, and a similar degree of market regulation as determined by CON status.
One explanation for our data would be to hypothesize that ICs in RS over-prescribed percutaneous coronary intervention (PCI) for the treatment of coronary artery disease (CAD), resulting in fewer patients being referred for CABG. However, this seems unlikely. First, while ICs wield some discretion to substitute PCI for CABG, the substitution relationship between PCI and CABG volume is non-linear. Specifically, while the volume of patients treated with PCI has increased by 70% in a recent five-year period, the volume of CABG-only procedures performed in NYS has decreased only modestly.13 Second, because the degree of market regulation in the two groups was similar and Medicare was the sole source of reimbursement in this study, the economic incentives operative on ICs in NRS and RS should be similar. In short, there is nothing to suggest that ICs in the two groups should behave differently.
A better explanation for our findings is that, in accordance with VPB theory, publication of government-sponsored provider-specific report cards makes CABG providers more risk-averse. Other observational studies using Medicare data have demonstrated that after receiving an adverse report card, hospitals tend to ship more high-risk cardiac surgery cases to higher-volume institutions and offer fewer ancillary cardiac services.14 Accordingly, it is not surprising that both Cutler15 and Romano16 observed that after receiving an adverse report card, hospitals experienced a substantial fall in the volume of cardiac surgery they performed. (However, the converse is not true: after receiving a positive report card a hospital is rarely rewarded with market share of cardiac surgical services.)
In addition to hospital-specific report cards, RS also publish surgeon-specific report cards. Like hospital-specific report cards, surgeon-specific report cards tend to make surgeons more risk-averse. Within three years of PA’s introduction of a state-sponsored surgeon-specific report card into the market, 63% of cardiac surgeons in this state admitted to being less willing to operate on high-risk patients.17 Using pre-operative screening of CABG patients, cardiac surgeons who are under report-card-induced pressures can keep their risk-adjusted mortality rate to an acceptable level.18 Consequently, it seems that in RS only elite groups of risk-tolerant cardiac surgeons are willing to take on high-risk cardiac procedures.19
Federal Cardiac Surgery Report Cards. Ostensibly to improve the quality of care rendered to Medicare patients, the federal government launched its own provider-specific report card in 2003 with the passage of the Hospital Quality Data for Annual Payment Update Initiative (HQDI).20 Under this Act, receipt of full Medicare reimbursement was conditional on hospitals ‘voluntarily’ submitting certain performance measurements and mortality data to CMS. Given the financial realities of the current hospital market, virtually all hospitals were willing to submit these metrics to obtain full reimbursement.21 In turn, the government compiles and publishes these metrics on its Hospital Compare website.
In 2006, the government enacted the Physician Quality Reporting Initiative (PQRI).22 Completely analogous to the HQDI, PQRI conditions full receipt of Medicare reimbursement to physicians ‘voluntarily’ submitting certain performance measurements and mortality data to CMS.
In 2009, CMS began formal rule-making for a Physician Compare website to determine which quality metrics voluntarily submitted by physicians will be published by CMS.23 Once Physician Compare is up and running (potentially as soon as 2011), the CMS report card for cardiac surgery will be as comprehensive as the report cards currently published by the RS.
The key difference between the CMS’ and the RS’ cardiac surgery report cards will be the size of the market impact. The RS’ report cards only affect their own geographic markets, thereby allowing for a ‘Cleveland Clinic’ effect. After NYS began publishing its cardiac surgery report, the Cleveland Clinic experienced a substantial uptick in the number of complex revascularizations it performed due to an influx of NYS patients.24 Located in an NRS, the Cleveland Clinic and its surgeons operated in a more risk-tolerant environment, thereby allowing the Clinic to gain national market share. By contrast, the CMS’ report card for cardiac surgery will affect all states, regardless of whether a particular state has enacted a reporting statute. However, as the CMS’ cardiac surgery report cards will contain virtually identical information to that found in the current RS’ cardiac surgery report cards, the CMS’ report cards will not add new information to RS markets. Thus, it seems unlikely that the CMS’ cardiac surgery report card will have a substantial impact on RS markets. On the other hand, the CMS’ cardiac surgery report card will add new information to NRS markets. Thus, if the cardiac surgery providers in NRS react to the government’s report cards by becoming more risk-averse, the volume of CABG procedures performed in NRS could fall to the level currently found in RS. In addition, because the scope of the CMS’ cardiac surgery report cards covers the entire nation, it seems likely that NRS would no longer be able to benefit from a Cleveland Clinic effect.
Limitations. Although the General Accounting Office has recommended the use of per capita analysis as a means to identify resource-intensive providers, such analyses have their limitations.25 In particular, observational per capita studies are not designed to determine causation. To determine whether government-published cardiac surgery report cards cause a reduction in CABG volume will require further studies. A second limitation to this study is the use of CON certification as an index to state market regulation. From a legal perspective, CON certification is only a crude index of the degree to which a state regulates its healthcare market. Finally, like all report card studies, this study assumes that the currently published report cards affect the market.
This may or may not be true, because the most recent provider-specific report card data available to the public often reflect market conditions two to three years previously. This is unfortunate because Jha and Epstein have observed that the composition of cardiac surgeons in RS is not stable over a three-year period.26
From the CMS’ perspective, state-sponsored provider-specific report cards are an inadequate tool to implement VBP. In particular, patients and physicians are mobile, while state-based report cards have limited geographic impact. Moreover, most states do not publish cardiac surgery report cards. Thus, one reason Medicare patients in McAllen Texas have the highest per capita consumption of cardiac services in the nation is that Texas is an NRS.27 Therein lies the appeal of Hospital (and Physician) Compare as provider-specific report cards: these report cards are designed to make all Medicare providers who offer CABG-only services more risk-averse.
The author wishes to thank Louisiana State University (LSU) Law Professor Edward P Richards and Department of Veterans Affairs Surgery Director Dr William Gunnar for their thoughtful comments on this paper. Nothing in this article should be construed as representing Department of Veterans Affairs policies or procedures.
- Report cards on cardiac surgery – New York State’s approach, N Engl J Med, 1995;332(18):1229–33.
- Institute of Medicine, Leadership by Example: Coordinating Government Roles in Improving Health Care Quality, Washington, DC: NAS Press, 2002.
- McLean TR, Will reputational incentives stimulate a reversal of the physician brain drain?, J Health Serv Res Policy, 2008;13:50–52.
- McLean TR, Reputational Incentives: How improving transparency can drive competition, Am Heart Hosp J, 2009;7(1):27–32.
- Department of Health and Human Services, Hospital Compare. Available at: www.hosptialcompare.hhs.gov (accessed June 2, 2009).
- Peterson ED, DeLong ER, Jollis JG, et al., The effects of New York’s bypass surgery provider profiling on access to care and patient outcomes in the elderly, J Am Coll Cardiol, 1998;32(4):993–9.
- Hibbard JH, Stockard J, Tusler M, Hospital performance reports: impact on quality, market share, and reputation, Health Aff, 2005;24(4):1150–60.
- Heart Rhythm Society: 2009 Medicare Physician Fee Schedule Proposed Rule. Available at: www.hrsonline.org/Policy/Coding Reimbursement/reimbursement/physician/mpfs_proposed_rule_ 2009.cfm (accessed October 3, 2009).
- US Census Bureau, Quickfacts. Available at: quickfacts.census.gov/ qfd/states/53000.html (accessed January 3, 2010).
- HealthGrades, Cardiac Surgeons (2010). Available at: www.health grades.com/local-doctors-directory/by-specialty/cardiac-surgery (accessed January 7, 2010).
- HealthGrades:, Interventional Cardiologists (2010). Available at: www.healthgrades.com/local-doctors-directory/by-specialty/ interventional-cardiology (accessed January 7, 2010).
- National Conference of State Legislatures, Certificate of Need: State Health Laws and Programs. Available at: www.ncsl.org/Issues Research/Health/CONCertificateofNeedStateLaws/tabid/14373/ Default.aspx (accessed January 4, 2010).
- McLean TR, In New York State, do more percutaneous coronary interventions mean fewer or more complex referrals to cardiac surgeons?, Am Heart Hosp J, 2008;6(1):30–36.
- Dranove D, Kessler D, McClellan M, et al., Is more information better? The effects of report cards on health care providers, NBER Working Paper No. 8697, January 2002. Available at: www.nber. org/papers/w8697 (accessed September 8, 2009).
- Cutler DM, Huckman RS , Landrum MD, The role of information in medical markets: an analysis of publicly reported outcomes in cardiac surgery, American Economic Review, 2004;94(2):342–6.
- Ramano PS, Zhou H, Do well-publicized risk-adjusted outcomes effect hospital volumes?, Med Care, 2004;42(4):367–77.
- Schneider EC, Epstein AM, Influence of Cardiac- Surgery Performance Reports on Referral Practices and Access to Care — A Survey of Cardiovascular Specialists, N Engl J Med, 1996:335(4):251–6.
- Albert M, Halevy N, Antman E, Preoperative evaluation for cardiac surgery. In: Cohn LH (ed.), Cardiac Surgery in the Adult, New York: McGraw-Hill, 2008.
- Glance LG, Dick A, Mukamel DB, et al., Are High-Quality Cardiac Surgeons Less Likely to Operate on High-Risk Patients Compared to Low-Quality Surgeons? Evidence from New York State, Health Serv Res, 2007;43(5):300–12.
- Pub. L. 108-173; §501.
- McLean TR, Using the market to regulate health care price: Why heart hospitals will have an advantage in the world of post Diagnostic Related Group pricing, Am Heart Hosp J, 2004;2(3):165–9.
- Tax Relief and Health Care Act of 2006 (H.R. 6111).
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- Omoigui NA, Miller DP, Brown KJ, et al., Outmigration for coronary bypass surgery in an era of public dissemination of clinical outcomes, Circulation, 1996;93:27–33.
- General Accounting Office, Per Capita Method Can Be Used to Profile Physicians and Provide Feedback on Resource Use, 2009; GAO-09-802.
- Jha AK, Epstein AJ, The predictive accuracy of the New York State coronary artery bypass surgery report-card system, Health Aff, 2006;25(3):844–55.
- Gawande A, The cost conundrum, The New Yorker, June 1, 2009. Available at: www.newyorker.com/reporting/2009/06/01/090601 fa_fact_gawande