Value-based Payments Must Address Patient Mix

John Commins, December 5, 2017

New research suggests that Medicare’s pay-for-performance measures, including the Merit-based Incentive Payment System, unfairly penalize providers who serve older, sicker, poorer patients.  

Eric Roberts
Eric Roberts

A study recently found that Medicare's Value-based Payment Modifier program inadvertently shifted money away from physicians who treated sicker, poorer patients to pay for bonuses that rewarded practices treating richer, healthier populations.

Study lead author Eric Roberts, an assistant professor of health policy and management at the University of Pittsburgh Graduate School of Public Health, says that if changes aren’t made, value-based payment models will continue to shortchange the poor.

Roberts spoke with HealthLeaders Media about his findings. The following is a lightly edited transcript.  

HLM: Why did you do this study?

Roberts: We wanted to take a critical look at the implications of this earlier iteration of pay for performance for physicians, quality of care and spending which were the key outcomes that CMS used to judge physicians, and implications for how practices were paid and whether payment adjustments in the Value-based Payment Modifier really reflected differences in the value of care delivered by different practices or unmeasured differences in the characteristics of patients served.

This has big implications for whether physicians who are treating sicker and poorer patients are going to be treated fairly in payment models like the Value-based Payment Modifier and MIPS, and whether they will have the appropriate resources to address the needs of disadvantaged patients as Medicare continues to implement value-based purchasing initiatives.

It’s very hard to distinguish what is variation in provider quality, who are good and bad providers, from differences in the patients that they serve. Value-based Payment Modifiers and MIPS are one example where the case mix adjustment is particularly inadequate and may contribute over time to healthcare disparities.

HLM: What did you conclude?

Roberts: Our article very clearly crystalizes this argument that, with value-based purchasing models, policymakers need to think carefully about incentives and unintended outcomes to ensure that the goals of the policy are being achieved while the policy itself is not being undercut by the fact that providers serving sicker poorer patients are more likely to be penalized provided that risk adjustment is inadequate.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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