September 10, 2014 - Based on a detailed analysis showing "serious problems...that could harm the most vulnerable Medicare beneficiaries while failing to achieve Congressional goals of promoting higher quality, more affordable healthcare," the Center for Healthcare Quality and Payment Reform (CHQPR) is urging the Centers for Medicare and Medicaid Services (CMS) to drop its plans to use cost measures in the Value-Based Payment Modifier in 2015. Rather than cutting physician payments based on flawed measures of efficiency, CHQPR recommends that CMS use its statutory authority to implement true payment reforms that would enable physicians to improve care delivery in ways that would reduce spending without harming patients.
"At a time when payment reform is urgently needed in the Medicare program, the cost measures in the Value-Based Payment Modifier would make the payment system worse, not better," said Harold D. Miller, President and CEO of the Center for Healthcare Quality and Payment Reform. "Penalizing physicians for costs they cannot control and making it more difficult for seniors with health problems to obtain the care they need is not what Congress meant by 'value-based payment.' Instead, CMS should be implementing the kinds of payment systems physicians need to deliver higher-quality, lower-cost care."
In detailed comments submitted to CMS on its proposed regulations for the Value-Based Payment Modifier, CHQPR described how the cost measures CMS is planning to use would:
"These problems are caused by serious flaws in the attribution and risk adjustment methodologies CMS is using for assigning patients and costs to physicians," said Miller. "In fact, the methodology violates the requirements established by Congress for adequate risk adjustment in the Value-Based Payment Modifier. Since Congress has not required implementation of the Value-Based Payment Modifier until 2017, we urge CMS to delay implementation of at least the cost measurement components of the Value-Based Payment Modifier, if not the entire Modifier program, until then."
Although CHQPR provided CMS with methods of solving the most serious problems with the cost measures, it emphasized that no matter what improvements are made to the methodology, the Value-Based Payment Modifier will do relatively little to improve quality or reduce costs because it does not solve the fundamental problems in Medicare's current methods of paying physicians and other providers.
"The Value-Based Payment Modifier merely adjusts payment amounts rather than fixing the underlying fee-for-service system. CMS must move more quickly to implement completely different payment systems - bundled payments, warrantied payments, episode payments, condition-based payments, and global payment - that will enable physicians to deliver better quality care at lower cost," said Miller.
Miller noted that Congress has already given CMS the authority to implement better payment models, not just through the Center for Medicare and Medicaid Innovation, but as voluntary options for physicians and other providers in the regular Medicare program. Section 1899(i)(3) of the Social Security Act authorizes CMS to implement 'any payment model that the Secretary determines will improve the quality and efficiency of items and services furnished under this title' for groups of providers who are 'willing to become accountable for the quality, cost, and overall care' of Medicare beneficiaries assigned to them.
"Unfortunately, CMS has failed to fully implement this provision of the law," said Miller. "The only thing CMS has done to implement Section 1899 is create a shared savings payment system that has the same problems as the Value-Based Payment Modifier. It fails to remove the serious barriers to higher-value care delivery created by the current Medicare payment system and it uses the same flawed attribution and risk adjustment methodologies that CMS is proposing to use in the Value-Based Payment Modifier."
"Instead of adding more and more penalties to the payment system, CMS should work in partnership with physicians and other healthcare providers to design and implement payment changes that will support higher-quality, lower-cost care," Miller said. "By removing the current barriers physicians face in delivering higher-value care, CMS can create a win-win-win: better care for beneficiaries and lower spending for Medicare while maintaining the financial viability of physician practices, hospitals, and other healthcare providers."
Examples of the problems caused by the Value-Based Payment Modifier and methods of solving them are contained in the detailed letter CHQPR sent to CMS Administrator Marilyn Tavenner. Additional information on the problems with the "value-based purchasing" systems being used by Medicare and other payers and a description of how to move to true value-based payment systems are available in the CHQPR report titled Measuring and Assigning Accountability for Healthcare Spending: Fair and Effective Ways to Analyze the Drivers of Healthcare Costs and Transition to Value-Based Payment.
Both patients and healthcare providers could be harmed by the measures of healthcare spending Medicare plans to use in its new Value-Based Payment Modifier for physicians and in the Value-Based Purchasing Program for hospitals. Serious problems also exist with the spending measures that many commercial health plans are using to define narrow networks and that both Medicare and commercial health plans are using in various "shared savings" payment contracts with physicians, hospitals, and Accountable Care Organizations.
A report from the Center for Healthcare Quality and Payment Reform - Measuring and Assigning Accountability for Healthcare Spending - explains how the spending measures used in so-called "value-based purchasing" programs can:
The report details multiple, serious weaknesses in the simplistic "attribution" methodologies Medicare and other payers are currently using to retrospectively assign accountability to a single physician, hospital, or other provider for all of the spending on all of the healthcare services received by a patient over a period of time, regardless of which providers actually delivered those services. For example, under current approaches:
The report also describes how the "risk scores" currently used to adjust spending measures fail to recognize important differences in patient needs and can thereby mislabel physicians and hospitals as "inefficient" if they care for patients who have acute illnesses or complex problems.
In addition to documenting the many serious problems with current approaches, Measuring and Assigning Accountability for Healthcare Spending shows how they can be solved. A detailed methodology is presented for assigning accountability to providers for the services they actually can control or influence. The methodology also explicitly identifies which services might be changed in order to achieve the same or better outcomes for patients at a lower cost. In addition, methods are described for comparing providers' performance in treating patients with similar needs rather than trying to use a single, simplistic risk score to "adjust" spending. The report shows how these improved methodologies can use existing data to produce more valid, reliable, comprehensive, and actionable measures than those currently being used.
Better ways of measuring and assigning accountability for spending are necessary but not sufficient for achieving a higher-value healthcare system. Even if they use better spending measures, value-based purchasing, pay for performance, and shared savings payment systems do not remove the fundamental barriers to better care that are created by the current fee-for-service system. Measuring and Assigning Accountability for Healthcare Spending shows how better ways of measuring spending can help payers and providers move more quickly to true payment reforms such as bundled payments, warranties, condition-based payments, and global payments.
On February 14, 2013, Harold Miller, Executive Director of CHQPR, gave invited testimony at a hearing of the Subcommittee on Health of the House Energy and Commerce Committee of the U.S. Congress. Key points in the testimony include:
On May 5, 2011, CHQPR Executive Director Harold D. Miller gave invited testimony to the U.S. House of Representatives' Committee on Energy and Commerce at its hearing on how to replace the Sustainable Growth Rate formula.
Miller urged that Congress focus on three major ways to control costs in the Medicare and Medicaid programs without having to deny care that patients need:
Miller noted that all of those things not only save money but improve outcomes for patients. But he said that current payment systems drive the healthcare system in exactly the opposite direction. Doctors and hospitals lose money when they reduce infections and readmissions; doctors and hospitals lose money when they help patients avoid unnecessary hospitalizations; and nobody in health care gets paid at all when patients stay well. He emphasized that those things can't be fixed by changing fee levels or by adding regulations; the payment system itself is broken and has to be fundamentally changed.
He called for two major kinds of payment reforms:
Miller said that paying in these ways provides the flexibility that physicians need to deliver better care as well as accountability for costs. He noted that where these payment systems have been used, they have improved quality and lowered costs. He said that a myth that has developed is that only large, integrated delivery systems can manage such payments and deliver higher-value care, but he said that small, independent physician practices can also do so. Indeed, he emphasized that just like in every other industry, small healthcare providers can often be more efficient and innovative than large systems can, if they are given the opportunity to do so without imposing unnecessary and expensive regulatory requirements.
Miller noted that he had talked to physicians all over the country about these payment reform concepts, and had found that once physicians understand them, they were willing to embrace them. But he said that physicians need assistance to implement new payment models successfully, and they need a reasonable transition period. He said physicians need four kinds of help:
Miller said he felt the best way to organize this help was not through a one-size-fits-all federal program, but through community-level efforts, because healthcare is delivered in very different ways in different parts of the country. He noted that in a growing number of communities around the country, there are non-profit, multi-stakeholder organizations called Regional Health Improvement Collaboratives that are working to provide the data and technical assistance that physicians, hospitals, employers, health plans, and consumers need to design and implement better payment and delivery systems that are customized to the needs of their communities. He said that Congress could help these Regional Health Improvement Collaboratives and other community efforts to support payment reforms for physicians in several ways: