Where's the Value?

TMA Warns Value-Based Purchasing Could Harm Patients' Access

Texas Medicine Logo

Medical Economics Feature – November 2010  

Tex Med. 2010;106(11):25-28.

By Ken Ortolon
Senior Editor

In June 2009, an article in The New Yorker that labeled McAllen as one of the highest-cost health care marketplaces in the country enraged the Rio Grande Valley medical community. According to that article, Medicare spent almost $15,000 per beneficiary in McAllen in 2006, nearly twice the national average.

Physicians in McAllen took issue with the article's characterization of the community's health care system as too costly. They noted that the area has a high poverty level, high numbers of uninsured, less access to physicians, and other cultural issues impacting the general health status of the population.

But now Congress rubbed salt in the wounds of physicians in McAllen and elsewhere across the country where Medicare costs are deemed to be too high and quality of care too low. A provision of the Patient Protection and Affordable Care Act (PPACA) requires the U.S. Department of Health and Human Services (HHS) to create a special modifier within the Medicare physician fee schedule that would adjust physician payments based on a measurement of cost and quality. They're calling it the "value-based purchasing modifier."

While Texas Medical Association officials say paying more for higher quality care "is not an unreasonable idea," they have serious concerns about how quality will be measured. The PPACA gives little detail on what factors will go into the cost and quality measurements, leaving it to HHS Secretary Kathleen Sebelius to make most of those decisions.

TMA is concerned that without some recognition of differences in socioeconomic, cultural, and other factors that contribute to variations in health status across the country, physicians in communities such as McAllen could be unfairly penalized by the value-based purchasing modifier.

Internist E. Linda Villarreal, MD, a member of the TMA Council on Legislation who practices just down the road from McAllen in Edinburg, says lower physician fees from the modifier simply could hasten the exodus of physicians from the Medicare program.

"You're seeing that now without this modifier," Dr. Villarreal said. "This is basically putting a nail in the coffin on access to health care for patients who only have Medicare as their insurance."

Finding Value

Section 3007 of the PPACA requires the HHS secretary to establish a payment modifier under the Medicare fee schedule that would adjust payments to individual physicians or groups of physicians based on the quality of care they furnish compared with the cost.

The provision suggests that quality measures could include those that reflect health outcomes, but leaves it up to the HHS secretary to decide what the "appropriate" quality measures will be.

The act also says costs will be evaluated "based on a composite of appropriate measures of costs established by the secretary." The only guidance it gives to develop those measures is that they should include methodology that eliminates the effect of geographic adjustments in payment rates and takes into account risk factors, such as socioeconomic and demographic characteristics, ethnicity, and health status of individuals.

In comments to HHS and the U.S. Centers for Medicare & Medicaid Services in August, TMA warned that recognizing socioeconomic and cultural differences in patient populations was extremely important to ensure that value-based purchasing does not negatively impact patient care.

"Patients with similar diagnoses can require different treatment methods or intensities because of issues as diverse as living environment, education and income levels, or cultural or familial attitudes about medical care and end-of-life choices," Plano family physician Christopher C. Crow, MD, chair of TMA's Council on Socioeconomics, wrote in those comments. "Methods to risk-adjust or otherwise modify targets must be made in order to avoid creating disincentives for physicians who treat disadvantaged or atypical populations. Measures must be based on factors within physician control, not those that are exclusively results of patient choices."

Winners and Losers 

The law requires the HHS secretary to publish the cost and quality measures, date of implementation, and the initial period for which performance will be measured by Jan. 1, 2012. The modifier could be applied to payments for some services beginning in 2015, but will be in effect for all services beginning in 2017. The secretary also is required to apply the payment modifier in a way that promotes systems-based care. While systems-based care is not defined in the law, TMA officials say it is likely intended to promote accountable care organizations or other practice models that focus on care provided by teams of physicians, hospitals, and other providers.

HHS spokesperson Melissa Nitti says rulemaking on the modifier is in the early stages, but the agency already has solicited comments on such issues as what beneficiary characteristics and socioeconomic factors should be taken into account in risk adjustment, how to determine which physician is responsible for care provided to which patients, and the appropriate definition of peer groups for comparing physician performance.

She also says HHS likely will use the Physician Resource Use Measurement and Reporting Program (RUR), which Congress created in 2008, as a complementary program to the modifier. The still-under-development RUR requires HHS to give physicians confidential feedback on their patterns of resource use, as well as information that allows them to compare their resource use with that of other physicians.

While the measures and rules to implement the modifier program are still being developed, TMA officials say physicians deemed to be providing high-quality care at a high cost or low-quality care at a low cost probably would not have their payments reduced. Those considered to be providing high quality at a low cost likely would get higher payments, while those providing low quality at a high cost would have their payments cut.

TMA officials say it is unclear whether HHS would apply the modifier to individual physicians or physician groups or to all physicians in a given region.

While even advocates for value-based purchasing and other pay-for-performance programs admit evidence of their impact on cost and quality is mixed, they believe pay-for-performance programs can have an impact.

In July 2009, the Center for American Progress (CAP), a Washington, D.C.-based progressive think tank, issued a report saying pay for performance "can significantly improve the delivery of evidence-based care processes, which is not surprising since we know from experience with the Medicare fee schedule that rewarding some types of care more than others results in a shift in the services physicians and hospitals provide. For example, experts report that payment is more generous for physicians performing spinal injections for chronic pain than for spending time encouraging patients to undertake specific physical training or other self-management approaches."

A more recent report by CAP and The Commonwealth Fund estimates the PPACA will save Medicare $524 billion over the next 10 years. But in a May presentation to the Institute of Medicine, Congressional Budget Office Director Douglas W. Elmendorf said the PPACA would not substantially reduce the pressure of rising health care costs on the federal budget. And, a recent report by Medicare's own chief actuary predicts that total costs for health care in the country will rise modestly as a result of health system reform.

Too Simple? 

While paying for quality sounds like a good way to improve health outcomes and lower overall cost, TMA officials predict the value-based purchasing modifier will turn out to be a very "simplistic" approach that likely will reward low-cost states at the expense of high-cost states.

"Congress wants to know why it costs more to manage a Medicare diabetic patient in Texas than it does in Minnesota," said Darren Whitehurst, TMA vice president for advocacy. "It really is a very simplistic look at the idea that everybody's costs should be the same without much thought given to poverty, disease status, or ethnicity. I think it's going to encourage doctors not to treat difficult-to-manage patients."

Dr. Crow says "we're all for more value," but nationwide implementation of the value-based purchasing modifier is "way, way premature in my opinion."

A better approach, he says, might be small pilot programs that focus on how the use of evidence-based best practices can impact health outcomes.

TMA officials say there is potential for great harm to access to care in Texas, particularly in areas such as the Rio Grande Valley where participation in Medicaid and Medicare is extremely high, if value-based purchasing is not implemented smartly.

"In a geographic area where we already have 30 percent more Medicare patients on average in comparison with the rest of the state and maybe 50 percent higher in comparison with the percentage nationwide, this is just going to make things much, much worse for us, creating less access to that physician and more utilization of emergency room medicine," said Dr. Villarreal. "I don't think they [Congress] get it. They're simply looking to control costs wherever there's a high number or, perhaps, an outlier."

Whether you like value-based purchasing or other pay-for-performance approaches, physicians need to be prepared to deal with them and make sure they have input in how these programs are designed, warns TMA Council on Legislation member Gary Floyd, MD, of Fort Worth.

"Sooner or later, how we get paid is going to be based on those results and outcomes," he said. "And since it is going to be based on those outcomes by people who are going to be looking to save expenses, it's certainly not a time for physicians to be backing away or not being involved in the discussions. We need to be at the table and definitely participating in how the rules are promulgated to govern all this."

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at Ken Ortolon.

November 2010 Texas Medicine Contents
Texas Medicine Main Page