Study raises questions over pay-for-performance program impacts
- Pay-for-performance programs are meant to improve quality and outcomes while lowering healthcare costs. But researchers found one program did not affect performance measures and could actually contribute to healthcare disparities without improving performance if risk-adjustment formulas and incentives are inadequate, a study in the Annals of Internal Medicine concluded.
- The researchers analyzed Medicare claims to see the impact on performance when practices with 100 or more clinicians were exposed to full Value-Based Payment Modifier (VM) incentives (penalties and bonuses) and practices with 10 or more clinicians were exposed to penalties only. They also looked at how adjusting for additional patient characteristics affected performance between practices serving higher- versus lower-risk patients.
- They found no statistically significant discontinuities between larger and smaller practices and performance. However, there were considerable differences when additional adjustments were made for practices with higher- and lower-risk patients, raising the potential for greater disparities in care, the study stated. An accompanying editorial from Austin Frakt and Ashish Jha stated the article "should be the final nail in the coffin of the current generation of P4P."
As more and more providers participate in value-based payment models, the study raises questions about how well some models work.
One of the drawbacks for VM is many of the performance measures have only been adjusted for a small number of patient characteristics, so the performance scores may reflect a mix of patient characteristics and quality activities, rather than just differences in quality of care, according to the study.
The researchers looked at four performance and spending measures: hospitalization for ambulatory care-sensitive conditions, all-cause 30-day readmissions, Medicare spending and mortality. Medicare claims from 2014 were analyzed for both large and small practices, and 2015 claims were also reviewed for large practices to assess VM impact in the second year of the program.
Practices serving disproportionately more higher-risk patients had higher rates of hospitalization for ambulatory care-sensitive conditions, Medicare spending and mortality than practices serving lower-risk patients after adjusting for basic patient characteristics. However, those differences narrowed when additional patient characteristics were taken into account.
The results suggest that value-based programs with weak incentives and limited risk-adjustment may exacerbate healthcare disparities without improving practice performance or reducing spending.
“In addition to depleting providers’ resources to improve care for vulnerable patients, these penalties might create incentives for practices to avoid sicker or poorer patients,” the researchers wrote. “To mitigate these unintended consequences, a portion of payments to practices in the MIPS might take the form of a per patient monthly payment (such as a care management fee) that is greater for higher-risk patients and does not depend on practice performance, as in the Comprehensive Primary Care Plus model.”
The study echoes a JAMA report that found value-based payment programs may penalize practices serving disproportionately large numbers of high-risk patients.
One factor in providers’ success with value-based care seems to be their experience with the particular payment model. “If you look at the data for the Medicare Shared Savings Program, which is the biggest of the ACO programs under CMS, there is a correlation between time spent in the program and the ability to generate savings," James Landman, director of healthcare finance policy at the Healthcare Financial Management Association, told Healthcare Dive earlier this year.
- Annals of Internal Medicine The Value-Based Payment Modifier: Program Outcomes and Implications for Disparities