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Medicare Pay-for-Performance Didn't Deliver

By John Commins  
   November 28, 2017

Study finds the Value-Based Payment Modifier program that ran from 2013 to 2016 failed to deliver on its central promise to increase value of care for patients, and may have made things worse.

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, according to a study this week in Annals of Internal Medicine.

In addition, components from that failed pay-for-performance prototype that do not account for patient demographics remain its successor program, and could scuttle its chances for success, researchers said.

"As long as these programs do not account adequately for patient differences, which is very difficult to do, they will further deprive practices serving low-income populations of important resources," said Eric Roberts, assistant professor of health policy and management at the University of Pittsburgh Graduate School of Public Health and lead author of the study.

The research suggests that the Value Modifier may have hit a trifecta of failure. It did not reduce the cost of care, nor improve the quality of the care, nor improve the health of the patients. In fact, it may have made things worse.  

The Value Modifier was phased out in January, and was replaced by the Merit-based Incentive Payment System. Researchers said the new program likely will have no better results.

"We've gone headlong into pay for performance despite study after study showing that it doesn't improve quality or lower overall spending," said J. Michael McWilliams, MD, professor of healthcare policy at Harvard Medical School and senior author of the study. "We should expect more of the same from the MIPS because the MIPS is more of the same."

To accurately measure care delivery across different patient populations, it is important to adjust for the fact that different populations have different health outcomes depending on a number of factors, such as preexisting chronic illness and socioeconomic status. The Value Modifier adjusted for only a limited set of risk factors, researchers said.

When the researchers recalculated practices' performance measures after accounting for additional demographic and clinical differences, the performance gap between practices serving sicker or poorer patients and those serving wealthier or healthier patients narrowed by 9% to 68%, depending on the measure.

If the program had accounted for differences in patient populations, up to a quarter of practices would not have been eligible for bonuses provided through the program, while a similar proportion of practices likely would not have been penalized, the study found.

Since the program was budget-neutral, bonuses for physicians and practices that treated healthier, wealthier patients were paid for by penalties applied to those treating poorer, sicker people.

"The current pay-for-performance approach is costly, ineffective and headed in the wrong direction," McWilliams said. "If we want to improve quality, it is time to rethink our approach."

John Commins is a senior editor at HealthLeaders.

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