Update on Value-Based Purchasing
Two articles appeared this week reporting analyses of CMS programs to promote “value-based” purchasing. Joynt Maddox and associates looked at the first year of bundled payments for the care improvement advanced model, (BPCI-A). The group of interest was the 832 hospitals who joined the BPCI-A model at inception in October 2018. For control groups they looked at the 334 hospitals that joined the program early after the start and as a second control group, the 2016 hospitals that elected not to participate. Bear in mind the study group is self-selected, not a random group of hospitals. Each hospital was able to choose the clinical problems to be evaluated. Congestive heart failure was most common, followed by sepsis, cardiac arrhythmia, pneumonia, and acute myocardial infarction, all of which have been under study for several years across the country.
Participating hospitals had two-sided financial risk compared to CMS’ predicted cost of care, and reimbursement was adjusted down to 90% if no quality metrics were met and 100% if all of the metrics were met. Since cost-control is a principal objective, the authors studied unadjusted payments per quarter. The participating hospitals the mean baseline payment was $27,315, with a quarterly trend of -$78 per quarter, or a reduction of a little more than 1% for the first year. Non-participating hospitals had a mean baseline payment of $25,994, with a quarterly trend of -$26, which is a reduction of about 0.4% over the year. The difference between the participating and non-participating hospitals was statistically significant. Most of the difference, though, appears to be in the rate of skilled nursing facility transfers, which tended downward in both groups. Quality metrics did not show either improvement or deterioration. CMS has not released data about performance relative to target pricing and its formula is also not public. “CMMI has publicly stated that its target prices were probably too high and thus that more hospitals than anticipated met the spending targets.
I predict CMS will feel it can ratchet down reimbursement without hurting measurable quality of care. Now hospitals are not models of industrial efficiency, but the pandemic has, if nothing else, shown the need to maintain at least some slack in the system under normal conditions. The idea that people can be brought in or laid off as needed to keep daily efficiency maximal is not manageable in the real world.
The second study examined the impact of the quality improvement program mandated for dialysis centers, which penalizes the facilities in the bottom quintile for each metric. The penalties were levied in 2017 for data submitted in 2015. Centers were given their “report cards” in mid-2016, so had several months to decide what, if anything they could do to get out of the dog house. They also looked at clinical results in 2018 to see if there was a lag effect. To sum up their findings, applying reimbursement penalties had no effect on performance comparing 2015 to 2017 and 2018. 19% of units were penalized in 2017. Penalized units tended to be in ZIP codes with fewer white patients, with lower median annual income.
The quality measures in the QIP are all things that experts and clinicians agree are important to patients, but the question is whether or not the data are actionable. In my centers the two big issues were catheter rate and patient-satisfaction scores. Talking someone into a permanent access before they are sick requires a trusting relationship between the nephrologist and the patient/family, and that takes more time than policy people assume. In 2015 we had a surge of patients which continued for several years. Despite a significant home program, we ended up going to third shifts in several locations, which stressed both staff and patients, particularly as in our rural area, public transportation was not available for patients on the third shift. It is hard to know if that was what was really driving the scores, but in both cases, we had less control than is presumed by the policy experts.
What does the Center for Medicare and Medicaid Innovation (CMMI), think? First, equity needs to be a centerpiece of every model. Second, offering too many models is overly complex, particularly when models overlap.
“3. The innovation center needs to re-evaluate how it designs financial incentives in its models to ensure meaningful provider participation. While voluntary models can demonstrate proof of concept, they limit the potential savings and full ability to test an intervention, because participants opt in when they believe they will benefit financially, and opt out (or never join) when they believe they are at risk for losses.
4. Providers find it challenging to accept downside risk if they do not have the tools to enable and empower changes in care delivery. The Innovation Center should ensure providers have options for manageable levels of risk as well as what they need to take on more risk…This will require the Innovation Center to provide strong, consistent signals and expectations about where CMS is headed with value-based care.
Fifth, challenges in setting financial benchmarks have undermined our models’ effectiveness. Sixth, Innovation Center models can define success as encouraging lasting transformation and a broader array of quality investments rather than focusing on each individual model.
If you had any doubt about the truth of my maxim that all conversations between providers and CMS, no matter the stated agenda, are really about money, this list should dispel that notion.
I know this is not good news for organizations continuing to experience severe disruption from pandemic related costs and the consumption of scarce human resources. But hospitals may find they must revamp care models after the pandemic simply because they don’t have the people to do the job the way it used to be done. So far, I have not seen a study of thoughtful effort in this area.
22 August 2021
 Joynt Maddox KE, Orav EJ, Zheng J, Epstein AM. Year 1 of the Bundled Payments for Care Improvement—Advanced Model. NEJM 2021(12 Aug);385(7):618-627. doi: 10.1056/NEJMsa2033678.
 Sheetz KH, Gerhardinger L, Ryan AM, Waits SA. Changes in Dialysis Center Quality Associated with the End-Stage Renal Disease Quality Incentive Program: An Observational Study with a Regression Discontinuity Design. Ann Intern Med 2021(August);174(8):1058-1064. doi: 10.7326/M20-6662.
 Brooks-LaSure C, Fowler E, Seshamani M, Tsai D. Innovation at the Centers for Medicare and Medicaid Services: A Vision for the Next 10 Years. 12 August 2021. Health Affairs Blog. doi: 10.1377/hblog20210812.211558. Accessed 18 August 2021 at https://www.healthaffairs.org/do/10.1377/hblog20210812.211558/full/
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