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IOM Rejects Geography-Based Value Index for Medicare

John Commins, for HealthLeaders Media, July 26, 2013

"Geographies don't make decisions. Providers and provider organizations do," says a member of the Institute of Medicine. The focus should instead be on incentives designed to hold providers accountable for quality outcomes, an IOM committee urges.

The Institute of Medicine spoke out strongly this week against the federal government's use of geographically based value indexes as a way to address the significant variations in Medicare payments across regions of the nation.

"Geographies don't make decisions. Providers and provider organizations do," said Doug Hastings, a Washington, DC-based attorney and a member of the IOM committee that drafted the report: Geographic Variation in Health Care Spending and Promotion of High-Value Care.

"Also, the data showed there is as much variation within any geographical area we looked at including increasingly smaller ones, as there is between them suggesting that the criteria would be unfair because it would reward low-value providers in high-value regions and punish high-value providers in low-value regions," Hastings said at an IOM teleconference.

Committee Chair Joseph Newhouse, a professor of management at Harvard University, said the focus should instead be upon incentives designed to hold providers accountable for quality outcomes.

"We believe [the Centers for Medicare & Medicaid Services] has started down this route with a number of demonstrations that emphasize value, including accountable care organizations and medical homes, and we would encourage them to try to sort out which of these innovations seem to work well, which do not work so well, and proceed expeditiously with those that seem to work well." 

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