The Road To Value Can't Be Paved With A Broken Medicare Physician Fee Schedule.

Value-based payment has been promoted for increasing quality, controlling spending, and improving patient and practitioner experience. Meanwhile, needed reforms to fee-for-service payment (the Medicare Physician Fee Schedule) have been ignored as policy makers seek to move payment toward alternatives, even though the fee schedule is an intrinsic part of Alternative Payment Models. In this article, we show how value-based payment and the fee schedule should be viewed as complementary, rather than as separate silos. We trace the origins of embedded flaws in the fee schedule that must be fixed if value-based payment is to succeed. These include payment distortions that directly compromise value by overpaying for certain procedures and imaging services while underpaying for services that add value for beneficiaries. We also show how the fee schedule can accommodate bundled payments and population-based payments that are central to Alternative Payment Models. We draw two conclusions. First, the Centers for Medicare and Medicaid Services should correct misvalued services and establish a hybrid payment for primary care that blends fee-for-service and population-based payment. Second, Congress should alter the thirty-five-year-old statutory basis for setting Medicare fees to allow CMS to explicitly consider policy priorities such as workforce shortages in refining fee levels.

Variation in processes of care for total hip arthroplasty across high-income countries.

Total hip arthroplasty (THA) is among the most commonly performed elective surgeries in high-income countries, and wait times for THA have frequently been cited by US commentators as evidence that countries with universal insurance programs or national health systems "ration" care. This novel qualitative study explores processes of care for hip replacement in the United States and 6 high-income countries with a focus on eligibility, wait times, decision-making, postoperative care, and payment policies. We found no evidence of rationing or government interference in decision-making across high-income countries. Compared with the 6 other high-income countries in our study, the United States has developed efficient care processes that often allow for a same-day discharge. In contrast, THA patients in Germany stay in the hospital 7-9 days and receive 2-3 weeks of inpatient rehabilitation. However, the payment per THA in the United States remains far above other countries, despite far fewer inpatient days.

The Medicare Physician Fee Schedule and Unethical Behavior.

This Viewpoint discusses the Medicare Physician Fee Schedule and its flaws, including how they might be remedied by severing CMS dependence on Relative Value Update Committee estimates of time and intensity.

Beyond demonstrations: implementing a primary care hybrid payment model in Medicare.

The National Academies of Sciences, Engineering, and Medicine's (NASEM's) 2021 report on primary care called for a hybrid payment approach-a mix of fee-for-service and population-based payment-with performance accountability to strike the proper balance for desired practice transformation and to support primary care's important and expanding role. The NASEM report also proposed substantial increases to primary care payment and reforms to the Medicare Physician Fee Schedule. This paper addresses pragmatic ways to implement these recommendations, describing and proposing solutions to the main implementation challenges. The urgent need for primary care payment reform calls for adopting a hybrid model within the Medicare fee schedule rather than engaging in another round of demonstrations, despite legal and practical obstacles to adoption. The paper explores reasons for adopting a roughly 50:50 blend of fee-for-service and population-based payment and addresses other design features, presenting reasons why spending accountability should rely on utilization measures under primary care control rather than performance on total cost of care, and proposes a fresh approach to quality, emphasizing that quality measures should be parsimonious, focused on important outcomes with demonstrated quality improvement.

How Denmark, England, Estonia, France, Germany, and the USA Pay for Variable, Specialized and Low Volume Care: A Cross-country Comparison of In-patient Payment Systems.

BACKGROUND: Diagnosis-related group (DRG)-based hospital payment can potentially be inadequately low (or high) for highly variable, highly specialized, and/or low volume care. DRG-based payment can be combined with other payment mechanisms to avoid unintended consequences of inadequate payment. The aim of this study was to analyze these other payment mechanisms for acute inpatient care across six countries (Germany, Denmark, England, Estonia, France, the United States [Medicare]). METHODS: Information was collected about elements excluded from DRG-based payment, the rationale for exclusions, and payment mechanisms complementing DRG-based payment. A conceptual framework was developed to systematically describe, visualise and compare payment mechanisms across countries. RESULTS: Results show that the complexity of exclusion mechanisms and associated additional payment components differ across countries. England and Germany use many different additional mechanisms, while there are only few exceptions from DRG-based payment in the Medicare program in the United States. Certain areas of care are almost always excluded (eg, certain areas of cancer care or specialized pediatrics). Denmark and England use exclusion mechanisms to steer service provision for highly complex patients to specialized providers. CONCLUSION: Implications for researchers and policy-makers include: (1) certain areas of care might be better excluded from DRG-based payment; (2) exclusions may be used to incentivize the concentration of highly specialized care at specialized institutions (as in Denmark or England); (3) researchers may apply our analytical framework to better understand the specific design features of DRG-based payment systems.

How Price Regulation Is Needed To Advance Market Competition.

In US health policy, conventional wisdom holds that market competition and price regulation are mutually exclusive strategies to stem high and rising provider prices. This incorrect assumption centers on the belief that robust competition in US commercial health insurance markets must include provider price competition. Other developed countries, however, commonly implement price regulation to support competition over important care delivery components other than prices, including quality of care and patient choice, and to provide stronger incentives for providers to improve operating efficiency. Conventional US policy wisdom also holds that price regulation inevitably will fail because of excessive complexity or succumb to the interests of regulated entities. This analysis challenges conventional wisdom by urging policy makers to consider regulations that limit out-of-network provider prices and establish flexible hospital budgets. Each of these proposals would require less administrative complexity and burden than other proposed approaches. We conclude that it is time to move discussions from whether to regulate hospital prices to determining how best to do so.

Medicare's Stewardship Role to Improve Care Delivery: Opportunities for the Biden Administration.

Medicare initiatives have been instrumental in improving care delivery and payment as exemplified by its role in broadly expanding the use of telehealth during the COVID-19 pandemic. Medicare innovations have been adopted or adapted in Medicaid and by private payers, while Medicare Advantage plans successfully compete with traditional Medicare only because their payment rates are tied by regulation to those in the traditional Medicare program. However, Medicare has not succeeded in implementing new, value-based payment approaches that also would serve as models for other payers, nor has Medicare succeeded in improving quality by relying on public reporting of measured performance. It is increasingly clear that burdensome attention to measurement and reporting distracts from what could be successful efforts to actually improve care through quality improvement programs, with Medicare leading in partnership with providers, other payers, and patients. Although Congress is unlikely to adopt President Biden's proposals to decrease the eligibility age for Medicare or to adopt a public option based on Medicare prices and payment methods in the marketplaces, the Biden administration has an opportunity to provide overdue, strategic direction to the pursuit of value-based payments and to replace failed pay-for-performance with provider-managed projects to improve quality and reduce health disparities.

Home Health Use In Medicare Advantage Compared To Use In Traditional Medicare.

Medicare covers home health benefits for homebound beneficiaries who need intermittent skilled care. While home health care can help prevent costlier institutional care, some studies have suggested that traditional Medicare beneficiaries may overuse home health care. This study compared home health use in Medicare Advantage and traditional Medicare, as well as within Medicare Advantage by beneficiary cost sharing, prior authorization requirement, and plan type. In 2016 Medicare Advantage enrollees were less likely to use home health care than traditional Medicare enrollees were, had 7.1 fewer days per home health spell, and were less likely to be admitted to the hospital during their spell. Among Medicare Advantage plans, those that imposed beneficiary cost sharing or prior authorization requirements had lower rates of home health use. Qualitative interviews suggested that Medicare Advantage payment and contracting approaches influenced home health care use. Therefore, changes in traditional Medicare home health payment policies implemented in 2020 may reduce these disparities in home health use and spell length.

Can Insurance Market Competition Coexist With Provider Price Regulation? Evidence From Medicare Advantage.

Proposals to contain health care costs often draw from 1 of 2 primary policy approaches-price regulation or market competition. These approaches are often viewed as in conflict, even though some health economists have long argued that they may be compatible, and desirable, given the unique characteristics of health care markets. Medicare Advantage (MA) markets provide a real-world example supporting the view that provider price regulation and insurance market competition can be complementary.

Improving The Medicare Physician Fee Schedule: Make It Part Of Value-Based Payment.

Alternative Payment Models (APMs) can address the limitations inherent in fee-for-service payment to support new approaches to health care delivery that produce greater value. But the models being tested are directly layered on top of fee-for-service architecture, specifically the Medicare Physician Fee Schedule. Shoring up that architecture to produce greater value, in combination with APMs, should be considered an integral part of the movement to value-based payment. We propose ending the split within the Centers for Medicare and Medicaid Services between the people managing the Medicare Physician Fee Schedule and those creating and testing APMs, with both groups advised by a revamped Physician-Focused Payment Model Technical Advisory Committee that covers both dimensions of creating greater value.

A Physician's Perspective On Vertical Integration.

Vertical integration has been a central feature of health care delivery system change for more than two decades. Recent studies have demonstrated that vertically integrated health care systems raise prices and costs without observable improvements in quality, despite many theoretical reasons why cost control and improved quality might occur. Less well studied is how physicians view their newfound partnerships with hospitals. In this article I review literature findings and other observations on five aspects of vertical integration that affect physicians in their professional and personal lives: patients' access to physicians, physician compensation, autonomy versus system support, medical professionalism and culture, and lifestyle. I conclude that the movement toward physicians' alignment with and employment in vertically integrated systems seems inexorable but that policy should not promote such integration either intentionally or inadvertently. Instead, policy should address the flaws in current payment approaches that reward high prices and excessive service use-outcomes that vertical integration currently produces.

Do accountable care organizations (ACOs) help or hinder primary care physicians' ability to deliver high-quality care?

BACKGROUND: Many view advanced primary care models such as the patient-centered medical home as foundational for accountable care organizations (ACOs), but it remains unclear how these two delivery reforms are complementary and how they may produce conflict. The objective of this study was to identify how joining an ACO could help or hinder a primary care practice's efforts to deliver high-quality care. METHODS: This qualitative study involved interviews with a purposive sample of 32 early adopters of advanced primary care and/or ACO models, drawn from across the U.S. and conducted in mid-2014. Interview notes were coded using qualitative data analysis software, permitting topic-specific queries which were then summarized. RESULTS: Respondents perceived many potential benefits of joining an ACO, including care coordination staff, data analytics, and improved communication with other providers. However, respondents were also concerned about added "bureaucratic" requirements, referral restrictions, and a potential inability to recoup investments in practice improvements. CONCLUSIONS: Interviewees generally thought joining an ACO could complement a practice's efforts to deliver high-quality care, yet noted some concerns that could undermine these synergies. Both the advantages and disadvantages of joining an ACO seemed exacerbated for small practices, since they are most likely to benefit from additional resources yet are most likely to chafe under added bureaucratic requirements. IMPLICATIONS: Our identification of the potential pros and cons of joining an ACO may help providers identify areas to examine when weighing whether to enter into such an arrangement, and may help ACOs identify potential areas for improvement.

Improving Performance, Not Just What's Measured: Does the Inpatient Prospective Payment System Provide Useful Lessons?

The interesting article by Averill and colleagues succinctly makes the case why the aspiration for using payment reform to improve health care value has gotten off track, namely, that instead of focusing on actually getting more value, policy has focused on an increasingly complex attempt to measure value. But instead they undermine that insight by recommending their own favored measures for use in pay-for-performance. Without question, their potentially preventable events concept as the target for measurement not only is an improvement over current and Congressionally mandated ones but also presents undiscussed measurement complexity. I argue that the lessons of the successful Inpatient Prospective Payment System they detail do not support their rationale for endorsing even a better version of pay-for-performance.

Beyond Measurement and Reward: Methods of Motivating Quality Improvement and Accountability.

OBJECTIVE: The article examines public policies designed to improve quality and accountability that do not rely on financial incentives and public reporting of provider performance. PRINCIPAL FINDINGS: Payment policy should help temper the current "more is better" attitude of physicians and provider organizations. Incentive neutrality would better support health professionals' intrinsic motivation to act in their patients' best interests to improve overall quality than would pay-for-performance plans targeted to specific areas of clinical care. Public policy can support clinicians' intrinsic motivation through approaches that support systematic feedback to clinicians and provide concrete opportunities to collaborate to improve care. Some programs administered by the Centers for Medicare & Medicaid Services, including Partnership for Patients and Conditions of Participation, deserve more attention; they represent available, but largely ignored, approaches to support providers to improve quality and protect beneficiaries against substandard care. CONCLUSIONS: Public policies related to quality improvement should focus more on methods of enhancing professional intrinsic motivation, while recognizing the potential role of organizations to actively promote and facilitate that motivation. Actually achieving improvement, however, will require a reexamination of the role played by financial incentives embedded in payments and the unrealistic expectations placed on marginal incentives in pay-for-performance schemes.