Value-Based Payment Modifier worsens health care disparities

The Value-Based Payment Modifier: Program Outcomes and Implications for Disparities

By Eric T. Roberts, PhD; Alan M. Zaslavsky, PhD; J. Michael McWilliams, MD, PhD
Annals of Internal Medicine, November 28, 2017


When risk adjustment is inadequate and incentives are weak, pay-for-performance programs, such as the Value-Based Payment Modifier (Value Modifier [VM]) implemented by the Centers for Medicare & Medicaid Services, may contribute to health care disparities without improving performance on average.

To estimate the association between VM exposure and performance on quality and spending measures and to assess the effects of adjusting for additional patient characteristics on performance differences between practices serving higher-risk and those serving lower-risk patients.

Exploiting the phase-in of the VM on the basis of practice size, regression discontinuity analysis and 2014 Medicare claims were used to estimate differences in practice performance associated with exposure of practices with 100 or more clinicians to full VM incentives (bonuses and penalties) and exposure of practices with 10 or more clinicians to partial incentives (bonuses only). Analyses were repeated with 2015 claims to estimate performance differences associated with a second year of exposure above the threshold of 100 or more clinicians. Performance differences were assessed between practices serving higher- and those serving lower-risk patients after standard Medicare adjustments versus adjustment for additional patient characteristics.

Fee-for-service Medicare.

Random 20% sample of beneficiaries.

Hospitalization for ambulatory care–sensitive conditions, all-cause 30-day readmissions, Medicare spending, and mortality.

No statistically significant discontinuities were found at the threshold of 10 or more or 100 or more clinicians in the relationship between practice size and performance on quality or spending measures in either year. Adjustment for additional patient characteristics narrowed performance differences by 9.2% to 67.9% between practices in the highest and those in the lowest quartile of Medicaid patients and Hierarchical Condition Category scores.

Observational design and administrative data.

The VM was not associated with differences in performance on program measures. Performance differences between practices serving higher- and those serving lower-risk patients were affected considerably by additional adjustments, suggesting a potential for Medicare's pay-for-performance programs to exacerbate health care disparities.


Practices with high-risk patients are vulnerable to value-based payment penalties

By Maria Castellucci
Modern Healthcare, November 29, 2017

The use of pay-for-performance payment models could drive providers to turn away low-income patients with complex care needs, a new study suggests.

The report, published this week in Annals of Internal Medicine, found practices that cared for high-risk patients were more likely to receive financial penalties under the CMS' Value-based Payment Modifier program because their patients had higher rates of hospitalization, mortality and Medicare spending.

The mandatory program penalized or rewarded physicians based on their quality outcomes and cost of care. The program was a precursor to and was replaced by the Medicare Access and CHIP Reauthorization Act (MACRA).

"These penalties are disproportionately affecting practices serving sicker and poorer patients," said Eric Roberts, an author of the study and assistant professor of health policy and management at the University of Pittsburgh. "This could send providers the wrong signal that if they want to avoid penalties, treating more complex patients isn't advantageous for them."

The study also found that outcomes didn't improve among practices after the program went into effect even though they were financially penalized if their performance didn't improve.

The study adds to a growing debate among health policy experts regarding the value of pay-for-performance payment models. Concerns have been raised that such models don't motivate providers to improve and financially penalize providers who treat low-income patients.

In an editorial in response to the Annals study, Dr. Ashish Jha, a professor of health policy and management at the Harvard School of Public Health, along with other colleagues wrote, "It is high-time to abandon (the standalone pay-for-performance) model."

Although it will take a few more years before the impact of MIPS can be evaluated, the program probably also disproportionately penalizes safety-net providers just like the Value-based Payment Modifier Program because it's set-up similarly, Roberts said.



By Don McCanne, M.D.

This study provides confirmation that not only does a value-based payment modifier (P4P) fail to improve performance, it also exacerbates health care disparities. Although this study was done on the earlier CMS Value-Based Payment Modifier, the results with the MIPS program under MACRA are expected to be the same because of a similar set-up. This suggests that we would be better off by eliminating the MIPS program.

This does not mean that we should ignore quality. A single payer system is an ideal vehicle in which to achieve quality improvement. The following link is to a classic paper by Gordon Schiff, et al, describing a better-quality alternative under single payer:

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