Outcomes in Medicare Pay-for-Performance Programs

V. Key Issues: Population Health >> H. Quality/Satisfaction >> General Approaches >> Pay-for-Performance >> Pay-for-Performance in Medicare >> Outcomes in Medicare Pay-for-Performance Programs (last updated 12.24.17)

Transitioning from Fee-for-Service Reimbursement

  • HHS Reaches Goal of Tying 30 Percent of Medicare Payments to Quality Ahead of Schedule. “In January 2015, the Administration announced clear goals and a timeline for shifting Medicare reimbursements from quantity to quality, setting a goal of 30 percent of Medicare payments through alternative payment models by the end of 2016.  With the January 2016 announcement of 121 new ACOs as well as greater provider participation in other models, HHS today estimates that it has achieved that goal well ahead of schedule.” (Department of Health and Human Services, 3.3.16)
  • Obama Is Killing Fee-For-Service Medicine, With The Job 30% Complete. “U.S. Secretary of Health and Human Services Sylvia Burwell said 30 percent of Medicare payments are now tied to alternative payment models that ‘reward the quality of care over quantity of services provided to beneficiaries.’ This is in stark contrast to the traditional fee-for-service approach that is based on volume of healthcare delivered… This comes a year after the Obama administration said it would push Medicare payment rapidly away from fee-for-service medicine, outlining a plan to have half of all Medicare dollars paid to doctors and hospitals via ‘alternative’ reimbursement models by the end of 2018.” (Forbes, 3.5.16)

Hospital Penalties

  • Medicare Reduces 2015 Payments for Hospitals. “Payments for inpatient services at about 3,400 acute-care hospitals will be cut about 0.6 percent in 2015, the Centers for Medicare and Medicaid Services said in a regulatory filing, including reductions in funding for hospitals who provide care for many low-income patients, those with too many patients who contract infections while admitted and higher penalties for readmissions within 30 days… The program’s actuaries have warned the payment cuts may not be sustainable as hospitals struggle to improve their efficiency.” (Bloomberg News, 8.4.14)

Hospital Re-admissions

  • Hospitals Question Medicare Rules on Re-admissions. “It is no longer enough for hospitals to make patients healthy enough to leave. Now, as part of the Obama administration’s health care overhaul, they are spending millions of dollars to keep those patients from coming back, often acting like personal assistants to help them manage their post-hospital lives. While federal statistics show the effort is beginning to reduce costly and unnecessary readmissions, a growing chorus of critics is asking whether the government policy, which penalizes hospitals that have high readmission rates, is unfair. They are also questioning whether hospitals should be responsible for managing the personal lives of patients once they are released — or whether they should focus on other ways to improve care. ‘It’s consumed a lot of resources,’ said Dr. J. Michael Henderson, who focuses on quality and patient safety for the Cleveland Clinic, which attributes its relatively high readmission rate to the fact that it successfully treats a high number of severely ill patients. Under the new federal regulations, hospitals face hefty penalties for readmitting patients they have already treated.” (New York Times, 3.29.13)
  • Evaluation of Hospital Readmissions in Surgical Patients: Do Administrative Data Tell the Real Story? “The Centers for Medicare & Medicaid Services has developed an all-cause readmission measure that uses administrative data to measure readmission rates and financially penalize hospitals with higher-than-expected readmission rates. Administrative billing data, as used by the readmission measure, do not reliably describe the reason for readmission. The readmission measure accounts for less than half of the planned readmissions and does not account for the nearly one-third of readmissions unrelated to the original hospital stay. Implementation of this readmission measure may result in unwarranted financial penalties for hospitals.” (JAMA Surgery, August, 2014)
  • Patient Characteristics and Differences in Hospital Readmission Rates. “Medicare penalizes hospitals with higher than expected readmission rates by up to 3% of annual inpatient payments. Expected rates are adjusted only for patients’ age, sex, discharge diagnosis, and recent diagnoses… Patient characteristics not included in Medicare’s current risk-adjustment methods explained much of the difference in readmission risk between patients admitted to hospitals with higher vs lower readmission rates. Hospitals with high readmission rates may be penalized to a large extent based on the patients they serve.” (JAMA, 9.14.15)
  • Readmission Rates After Passage Of The Hospital Readmissions Reduction Program: A Pre–Post Analysis. “Objective: to evaluate whether passage of the [Medicare Hospital Readmissions Reduction Program] HRRP was followed by acceleration in improvement in 30-day RSRRs after hospitalizations for acute myocardial infarction (AMI), congestive heart failure (CHF), or pneumonia and whether the lowest-performing hospitals had faster acceleration in improvement after passage of the law than hospitals that were already performing well… After passage of the HRRP, 30-day RSRRs for myocardial infarction, heart failure, and pneumonia decreased more rapidly than before the law’s passage. Improvement was most marked for hospitals with the lowest prelaw performance.” (Annals of Internal Medicine, 12.27.16)
  • Pay-For-Performance: Does It Really Work? “Are hospitals fairing any better with pay-for-performance? A range of different pay-for-performance programs has shown that the impact has been ‘really disappointing,’ according to Ashish Jha, MD, MPH, a physician, health policy researcher, and advocate for global health care reform. Dr Jha noted that ‘reducing readmissions is not the same as actually making care better. We don’t understand what has happened to allow the readmissions to drop. Are we doing a better job of care coordination or are we just denying people admission to the hospital if they come back to the emergency department within the first 30 days?’” (Managed Health Care, 3.17.17)
  • Study: CMS Penalties Unfair, Lower Readmission Rates Don’t Correlate with Improved Outcomes. “Since the Centers for Medicare & Medicaid Services rolled out the Hospital Readmissions Reduction Program (HRRP) in 2012, federal penalties have led to lower readmission rates. Results of a study published in JAMA Cardiology found no correlation between those lower readmission numbers and the level of care delivered, nor did they find a correlation with improved outcomes. ‘The current CMS readmission metric does not correlate with long-term clinical outcomes,’ said the study’s first author, Ambarish Pandey, M.D., cardiology fellow at the University of Texas Southwestern Medical Center, in an announcement accompanying the study’s publication. The study also suggested CMS failed to make appropriate adjustments for certain relevant metrics, particularly a patient’s race or ethnicity.” (Fierce Healthcare, 4.28.17)
  • Association of the Hospital Readmissions Reduction Program Implementation With Readmission and Mortality Outcomes in Heart Failure. “A key question is whether the HRRP implementation had unintended consequences for mortality. In this study, we found that the 30-day and 1-year mortality rates among patients with HF increased with the implementation of the HRRP. Previous studies examining the association between hospital 30-day readmission rates and mortality rates in patients with HF have raised concerns that those hospitals with lower 30-day risk-standardized readmission rates may have higher mortality rates. In cross-sectional studies of fee-for-service Medicare beneficiaries, there was an inverse, although weak, association between 30-day readmission rates and both short-term (30-day) and long-term (1-year) mortality following discharge with HF. Similarly, a study within the Veterans Affairs health care system found divergent temporal trends in 30-day mortality and readmission rates following HF hospitalizations. A recent analysis of Medicare beneficiaries hospitalized with HF along with other conditions covered by the HRRP from 2008 to 2014 reported on hospital 30-day readmission and 30-day mortality rates after discharge using claims data for risk adjustment.With the HRRP implementation, 30-day risk-adjusted postdischarge mortality increased from 7.9% in 2008 to 9.2% in 2014 for patients with HF, a 1.3% absolute increase. These findings are consistent with the results of our study.” (JAMA Cardiology, 11.12.17)

Community-based Care Transition Program

  • Health-Law Test To Cut Readmissions Lacks Early Results. “Only a small minority of community groups getting federal reimbursement to reduce expensive hospital readmissions produced significant results compared with those from sites that weren’t part of the $300 million program, according to partial, early results. The closely watched program is one of many tests to control costs and improve care being run by the Center for Medicare and Medicaid Innovation, which was created by the Affordable Care Act. Dozens of community agencies on aging, from Ventura County, Calif., to southern Maine were offered money to try to ensure that seniors leaving the hospital received care that reduced their chances of being readmitted within a month. But an early evaluation found that only four groups out of 48 that were studied in the Community-based Care Transition Program significantly cut readmissions compared with those of a control group. At the same time, 29 groups have either withdrawn from the program or been terminated by the Department of Health and Human Services for failing to achieve targets, agency officials said. ” (Kaiser Health News, 1.14.15)

Hospital Value-based Purchasing Program (HVBP)

  • The Early Effects of Medicare’s Mandatory Hospital Pay-for-Performance Program. “Objective: To evaluate the impact of hospital value-based purchasing (HVBP) on clinical quality and patient experience during its initial implementation period (July 2011–March 2012). Principal Findings: Difference-in-differences estimates indicated that hospitals that were exposed to HVBP did not show greater improvement for either the clinical process or patient experience measures during the program’s first implementation period.” (Health Services Research, 7.15.14)
  • Association Between the Value-Based Purchasing Pay for Performance Program and Patient Mortality in US Hospitals: Observational Study. “Evidence shows that pay for performance programs are largely ineffective in improving patient outcomes… We found that the introduction of the US HVBP program was not associated with lower 30 day mortality. This study suggests that we have yet to identify the appropriate mix of quality metrics and incentives to improve patient outcomes. As countries continue to move towards achieving value-based care, these findings hold important lessons and call for a greater understanding of how to achieve better outcomes under this framework.” (BMJ, 4.12.16)
  • Should Medicare Pull the Plug on Value-based Purchasing? “The latest results of Medicare’s Hospital Value-Based Purchasing program were dismal but unsurprising. The program’s use of financial sticks and carrots to motivate 3,000 U.S. hospitals to provide better care resulted in more hospitals getting dinged for poor performance in 2017, not fewer. Now some policy experts are beginning to wonder if the program should be shelved. Weigh all the evidence on the Hospital Value-Based Purchasing program, and ‘you almost wonder, is it time to retire it?’ said Francois de Brantes, executive director of the Health Care Incentives Improvement Institute. ‘We actually have a good amount of evidence on this. We know that the value-based purchasing program has had very little, if any, effect,’ said Dr. Ashish Jha, a professor of health policy at the Harvard School of Public Health… If the program barely has an impact, then why keep it? ‘I think it allows us to feel like we’re doing something on trying to improve patient outcomes,’ said Jha, who favors revising it by condensing its measures to those that matter to patients. ‘We want to be able to say we’re paying for quality.’” (Modern Healthcare, 11.4.16)
  • Value-Based Purchasing: Time for Reboot or Time to Move On?  “Although critics and advocates might disagree about the cause of the poor performance of VBP, there is broad agreement that VBP, as currently structured, is not living up to the promise advocates originally envisioned. Given its cost, this national program should be retooled or stopped. Its critics would argue that it is time to stop the VBP program and move on, that P4P in general and VBP in particular have failed because these programs fundamentally cannot succeed. They argue that our quality measurement enterprise is woefully inadequate and produces performance measures that are deeply flawed so that hospitals are more likely to respond by gaming the system than by trying to improve underlying care. Although there is little doubt that the quality measurement enterprise needs work, it is still possible to salvage VBP and other P4P programs. This is a policy issue for the Trump administration, and it will need to decide whether to redesign VBP to improve patient outcomes or to abandon it altogether.“ Jha, Ashish K. (JAMA, 2.1.17)
  • Pay-For-Performance: Does It Really Work? “If pay-for-performance is to succeed, Dr Berenson said improved policies are needed on measures. For example, use measures strategically as part of a major quality improvement initiative, and invest more in the basic science of measurement development. ‘To a large extent, we’re proceeding with performance measurement and pay-for-performance without establishing the validity of what we’re doing.’… ‘But, they realized that improving quality cannot solely rely on pay-for-performance. There has to be a much broader strategy.’ Dr Jha believes stakeholders need to stop asking if pay-for-performance works. Instead, they should ask: How do we get pay-for-performance to work. ‘The bottom line is that there is broad agreement that the measurement scheme has gone awry. We’re over measuring [and] that has absolutely little to no value. We’re not measuring things that matter enormously to patients. These little incentive programs are somewhere between ineffective and insulting. I think the consensus is coming together that we’re not doing it right.’” (Managed Health Care, 3.17.17)
  • The Game that Shows Why Value-based Pricing is Doomed. “In essence, the plan consisted of CMS and private insurers trying to transfer the actuarial risk of patient care to providers, counting on the new financial incentive to change behavior. Did the global payment regime have a chance of success? Let’s go back to Michael Wheeler’s game. The Obama folks were trying to get doctors and hospitals to play ‘Y,’ but the structure of the business inevitably pushes people to play ‘X.’ Sustainable cooperation is highly unlikely… [V]alue-based pricing, however well-intentioned, is likely to be an energy-sapping distraction, while we fail in the major task of addressing the disenfranchisement of consumers in their treatment decisions.” (athena insight, 4.10.17)
  • Value-Based Purchasing Program Has Little Effect. “So far, some assessments of the program’s effectiveness have yielded disappointing results. Previous studies found no improvement in clinical processes or patient experience in the first 9 months ( Heath Serv Res. 2015;50:81-97) and no mortality benefit during the first 30 months ( BMJ. 2016;353:i2214)… Using composite measures, the analysis found there was not a significant difference in clinical process (0.079 standard deviation [SD]; 95% confidence interval [CI], −0.140 to 0.299) or patient experience (−0.092 SD; 95% CI, −0.307 to 0.122). There was also not a significant reduction in deaths among patients admitted for acute myocardial infarction (−0.282 percentage points; 95% CI, −1.715 to 1.152) or heart failure (−0.212 percentage points; 95% CI, −0.532 to 0.108). The study did find a significant reduction in pneumonia-related deaths (−0.431 percentage points; 95% CI, −0.714 to −0.148) in participating hospitals compared with controls. But the authors doubt this finding, noting the difference was driven by increases in pneumonia deaths at control hospitals.” (Medscape, 6.16.17)
  • Pay-for-performance Program Failures Raise Doubts about Future Success of MIPS. “Medicare’s Value-Based Payment Modifier Program, which was designed to improve value by paying doctors who perform better on measures of quality and spending, was a failure, and, in fact, likely exacerbated disparities in delivery, according to the study published in the Annals of Internal Medicine. The payment system inadvertently shifted money away from doctors who treated sicker, poorer patients to pay bonuses that rewarded practices that treated richer, healthier patients, the study said. The researchers said those findings raise further concerns about the success of MIPS, which has the same basic design as the failed, earlier model. ‘We’ve gone headlong into pay for performance despite study after study showing that it doesn’t improve quality or lower overall spending. We should expect more of the same from the MIPS because the MIPS is more of the same,’ senior study author J. Michael McWilliams, M.D., professor of healthcare policy at Harvard Medical School, said in an announcement.” (Fierce Healthcare, 11.29.17)

Patient Satisfaction

  • Hundreds Of Hospitals Struggle To Improve Patient Satisfaction. “Since Medicare began requiring hospitals to collect information about patient satisfaction and report it to the government in 2007, these patient surveys have grown in influence.  For the past three years, the federal government has considered survey results when setting pay levels for hospitals. Some private insurers do as well. In April, the government will begin boiling down the patient feedback into a five-star rating for hospitals. Federal officials say they hope that will make it easier for consumers to digest the information now available on Medicare’s Hospital Compare website. Hospitals say judging them on a one-to-five scale is too simplistic…But ‘the best they can’ is not good enough for Medicare. In determining how much to pay hospitals, the government only gives credit when patients says they ‘always’ got the care they wanted during their stay, such as their pain was ‘always’ well-controlled. If a patient says that level of care was ‘usually’ provided, it does not count at all. Likewise, the surveys ask patients to rank their stays on a scale of 0 to 10; Medicare only pays attention to how many patients award the hospital a 9 or 10. ‘Sometimes what we see and hear from our patients doesn’t show up on their surveys,’ Rowan’s president Caldwell said.” (Kaiser Health News, 3.10.15)
  • Only 251 Hospitals Score Five Stars In Medicare’s New Ratings. “In an effort to make comparing hospitals more like shopping for refrigerators and restaurants, the federal government has awarded its first star ratings to hospitals based on patients’ appraisals. Many of the nation’s leading hospitals received middling ratings, while comparatively obscure local hospitals and others that specialized in lucrative surgeries frequently received the most stars. Evaluating hospitals is becoming increasingly important as more insurance plans offer patients limited choices.” (Kaiser Health News, 4.16.15)
  • The Problem With Satisfied Patients. “A misguided attempt to improve healthcare has led some hospitals to focus on making people happy, rather than making them well… Beginning in October 2012, the Affordable Care Act implemented a policy withholding 1 percent of total Medicare reimbursements—approximately $850 million—from hospitals (that percentage will double in 2017). Each year, only hospitals with high patient-satisfaction scores and a measure of certain basic care standards will earn that money back, and the top performers will receive bonus money from the pool. Patient-satisfaction surveys have their place. But the potential cost of the subjective scores are leading hospitals to steer focus away from patient health, messing with the highest stakes possible: people’s lives.” (The Atlantic, 4.17.15)
  • Relationship Between Hospital Performance on a Patient Satisfaction Survey and Surgical Quality. “The Centers for Medicare and Medicaid Services include patient experience as a core component of its Value-Based Purchasing program, which ties financial incentives to hospital performance on a range of quality measures… Of the 180 hospitals, the overall mean patient satisfaction score was 68.0% (first quartile mean, 58.7%; fourth quartile mean, 76.7%). Compared with patients treated at hospitals in the lowest quartile, those at the highest quartile had significantly lower risk-adjusted odds of death (odds ratio = 0.85; 95% CI, 0.73-0.99), failure to rescue (odds ratio = 0.82; 95% CI, 0.70-0.96), and minor complication (odds ratio = 0.87; 95% CI, 0.75-0.99). This translated to relative risk reductions of 11.1% (P = .04), 12.6% (P = .02), and 11.5% (P = .04), respectively. No significant relationship was noted between patient satisfaction and either major complication or hospital readmission.” (JAMA Surgery, 6.24.15)
  • Does The Hospital Compare 5-Star Rating Promote Public Health? “As currently constructed the scores are unlikely to achieve this goal for the following reasons: roll-up scores across conditions/procedures obfuscate quality at the level of the condition or procedure where gains in quality could happen; grading on a curve fails to identify whether quality is good or bad; and measurement is incomplete and/or imbalanced both in terms of the application of existing measures across hospitals and the absence of important measures in the set. In other words, the current scores don’t help consumers pick a high-quality hospital for specific conditions or procedures and don’t promote meaningful quality improvement across hospitals. In fact, in a value-based market where financial rewards are given only to the highest performers rather than providers that achieve high quality, defining quality based on a curve rather than a meaningful threshold will prevent some high-quality hospitals from being rewarded and could discourage hospitals from sharing best practices.” (Health Affairs, 9.8.16)
  • Patient Hospital Experience Improved Modestly, But No Evidence Medicare Incentives Promoted Meaningful Gains. “The Centers for Medicare and Medicaid Services (CMS) has played a leading role in efforts to improve patients’ experiences with hospital care. Yet little is known about how much patient experience has changed over the past decade, and even less is known about the impact of CMS’s most recent strategy: tying payments to performance under the Value-Based Purchasing (VBP) program. We examined trends in multiple measures of patient satisfaction in the period 2008–14. We found that patient experience has improved modestly at US hospitals—both those participating in the VBP program and others—with the majority of improvement concentrated in the period before the program was implemented. While certain subsets of hospitals improved more than others, we found no evidence that the program has had a beneficial effect. As policy makers continue to promote value-based payment as a way to improve patient experience, it will be critical to ensure that payment is structured in ways that actually drive improvement.” (Health Affairs, January, 2017)

Pain Measurement

  • Will Physicians Get Relief on Medicare’s Pain Questions? “Medicare is proposing to give physicians pain relief on a patient satisfaction survey that gets some of the blame, rightly or wrongly, for the nation’s opioid abuse epidemic. The Centers for Medicare & Medicaid Services (CMS) says it wants to remove the survey’s controversial questions on pain management from its calculations of hospital reimbursement. However, some physicians say the CMS simply should eliminate the questions from the survey, called the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS). The HCAHPS poses 32 questions to discharged patients about their stay, three of them on how well their pain was dealt with. The CMS factors the survey score into its calculations of how much a facility should be paid in its Hospital Value-Based Purchasing (VBP) program. Many physicians say they feel pressured to overprescribe opioids to boost their hospital’s survey scores and, in turn, their hospital’s revenue.” (Medscape Medical News, 7.15.16)
  • CMS Drops Pain Questions From Satisfaction Surveys. “A federal agency is removing questions from hospital patient satisfaction surveys that some say may have given hospitals incentives to overprescribe opioids, taking the action at the request of Sen. Susan Collins of Maine and 25 other senators. The U.S. Centers for Medicare and Medicaid Services said Wednesday that removing the questions was done to ‘eliminate any financial pressure clinicians may feel to overprescribe medications.’ In the future, CMS may come up with new survey questions regarding how hospitals managed patients’ pain, the agency said in a news release. The pain questions have been included in patient satisfaction surveys given to discharged patients for many years. Survey responses are factored into hospital reimbursement rates from the federal government. Collins, a Republican, has argued that the questions may give hospitals an incentive to overprescribe pain medication, knowing that failing to do so could affect survey responses and result in lower reimbursements.” (InExecutive, 11.3.16)

Advanced Primary Care Initiatives

  • The Transition of Primary Care Group Practices to Next Generation Models: Satisfaction of Staff, Clinicians, and Patients.  “Typically, organizational cultures are difficult to change, especially in health care. The extensive restructuring that took place in these 2 clinics coupled with the turnover and then some retrenching could be expected to influence the cultural dimensions. Unfortunately, we do not have pretransition culture data for comparison. However, if the transition had an influence on the cultures of these practices, it seems that it was largely negative. Respondents gave lower ratings for management style, degree of practice cohesion/integration, and organizational trust. Clinic A was in the first wave of change, was actively involved in crafting the new model with consultants, and sustained the changes for 2 full years before financial viability forced regression. Second-wave Clinic B, restructured rapidly, employed the team-based model that was handed to them with some latitude to innovate. As a result, they did not own the changes in the same way that Clinic A did. Then after 1 year they had to retrench. The lesson learned here may be that ownership of the change makes the changes more palatable and a sustainable payment model is imperative.” (Journal of the American Board of Family Medicine, January/February, 2017)

Multi-payer Advanced Primary Care Practice (MAPCP)

  • Mixed Results For Obamacare Tests In Primary-Care Innovation. “Another innovation-lab model, the multi-payer primary care demo, or MAPCP, did produce a small savings for Medicare — $4.2 million — after counting extra patient-management fees, according to an evaluation by RTI International. MAPCP payers reimbursing primary doctors for care management also include state Medicaid programs and numerous insurance companies. Although private insurers’ results aren’t included in the MAPCP evaluation, the report said some are unhappy with the program. Commercial insurers may be more impatient than government agencies to see care-coordination money for primary doctors pay off with lower overall costs. ‘Payers are noticeably frustrated with the lack of data showing either a positive return on investment or an improvement in health outcomes for participants,’ said the evaluation. ‘Multiple payers’ have said they intend to quit Pennsylvania’s MAPCP test, it said.” (Kaiser Health News, 1.30.15)
  • Evaluation of the Multi-Payer Advanced Primary Care Practice (MAPCP) Demonstration: Third Annual Report (CMS, April, 2016). “During the 2014 site visit, practices reported having trouble staying motivated to continue making medical home improvements because of their disappointment and concern about the lack of shared savings payments and payer attrition, uncertainty about the continuation of the CCI beyond 2014, and a general sense that state policymakers and other stakeholders had shifted their attention to the pending CMS decision about the state’s SIM grant application.  Overall, interviewees expressed disappointment in the payment model; they had hoped shared savings would be realized and practices would share in the savings. Since shared savings were not realized by most payers and practices, the reductions in PMPM payments hit hard. The lack of Medicaid managed care plan participation in the Northeast and other payer withdrawals from CCI meant fewer payers contributing through PMPM payments. Interviewees from practices felt that these developments resulted in inadequate payments for additional investments in practice transformation and a harder look at the practice changes sustainable with declining payments and revenue.”

FQHC Advanced Primary Care Practice Demonstration (FQHC APCP)

  • PCMH Implementation Assistance Program Has Mixed Results. “A 3-year program to help federally qualified health centers (FQHCs) achieve the highest level of patient-centered medical home (PCMH) status has shown show some positive results, but also some shortfalls researchers did not predict… Demonstration sites… had a relative increase of 1.3 percentage points in eye examinations and 1.6 percentage points in the rate of testing for kidney disease in people with diabetes (P < .001). However, demonstration sites had larger increases in emergency department visits than comparison sites (30.3 more per 1000 beneficiaries per year; P < .001), more hospital admissions (5.7 more per 1000 beneficiaries per year; P = .02), and higher Medicare Part B expenses ($37 more per beneficiary per year; P = .02). The researchers found no significant differences between the groups in other Medicare spending. ‘Demonstration-site participation was not associated with relative improvements in most measures of patients’ experiences,’ the authors write.” (Medscape News, 6.22.17)

Hospital-Acquired Condition (HAC) Reduction Program

  • Hospital-Acquired Condition Penalties, Year 3. (December, 2016). Medicare is reducing payments to 769 hospitals with high rates of potentially avoidable infections and complications such as blood clots, bed sores and falls. This is the third year of the Hospital-Acquired Conditions Reduction Program, and the first to examine the prevalence of two types of bacteria resistant to drugs. Hospitals will lose 1 percent of each Medicare payment during the 12 months that began last October. Chart lists hospitals and indicates the years they were penalized under the program.
  • Hospital Characteristics Associated With Penalties in the Centers for Medicare & Medicaid Services Hospital-Acquired Condition Reduction Program. “In fiscal year (FY) 2015, the Centers for Medicare & Medicaid Services (CMS) instituted the Hospital-Acquired Condition (HAC) Reduction Program, which reduces payments to the lowest-performing hospitals… Among hospitals participating in the HAC Reduction Program, hospitals that were penalized more frequently had more quality accreditations, offered advanced services, were major teaching institutions, and had better performance on other process and outcome measures. These paradoxical findings suggest that the approach for assessing hospital penalties in the HAC Reduction Program merits reconsideration to ensure it is achieving the intended goals.” (JAMA, 7.28.15)

Bundled Payment Demonstrations

CMS will Cancel Major Bundled Payment Initiatives. “CMS has proposed canceling the cardiac and expanded joint replacement bundled payment models. The rule, which was sent to the Office of Management and Budget last week, would cancel the mandatory bundled payment programs for heart attacks and bypass surgeries as well as expansion of the existing Comprehensive Care for Joint Replacement model to include surgical treatments for hip and femur fractures. Those bundled payment initiatives have already been delayed twice. They’re currently slated to take effect Jan. 1, 2018.” (Becker’s CFO Report, 8.14.17)

Bundled Payments for Care Improvement Initiative (BCPI) (Voluntary)

Program Attrition

  • Medicare’s Voluntary Bundled-Payment Grows, But Many Providers Opt Out. “The initiative, known as the Bundled Payments for Care Improvement initiative (BCPI) and launched under the Affordable Care Act, initially attracted nearly 7,000 providers that agreed to formally review how they could enter bundled-payment contracts with Medicare. The CMS announced on Thursday that 2,100 providers finished that review and entered contracts under which Medicare will bundle the costs of treating various conditions—heart failure, joint replacement, stroke, heart attacks—into a single payment… Medicare has increased the number of ACOs each year since the program launched in 2012. The results from that program, too, have been mixed.” (Modern Healthcare, 8.13.15)
  • Avalere: Participation in the Centers for Medicare & Medicaid Services’ (CMS) Voluntary Bundled Payment for Care Improvement (BPCI) Program. “As of October 1, 2015, 1,500 providers are participating and testing an average of nine unique episodes for a total of about 14,000 clinical episodes. Whereas BPCI’s first phase gave providers free access to new data with no commitment required, beginning in October 2015, CMS requires all participants to accept downside risk for all program bundles. The current participants represent about 25 percent of providers that expressed interest in the program. The decrease in participation raises questions about whether CMS will continue with voluntary demonstrations, such as BPCI, or will move into mandatory programs, such as the Comprehensive Care for Joint Replacement (CJR) program… the fact that many providers that entered the program decided it’s not currently in their financial interest to accept downside risk may cause CMS to consider additional mandatory programs in the future.’” (Avalere Health, 12.14.15)


  • Association Between Hospital Participation in a Medicare Bundled Payment Initiative and Payments and Quality Outcomes for Lower Extremity Joint Replacement Episodes. “Objective: To evaluate whether BPCI was associated with a greater reduction in Medicare payments without loss of quality of care for lower extremity joint (primarily hip and knee) replacement episodes initiated in BPCI-participating hospitals that are accountable for total episode payments (for the hospitalization and Medicare-covered services during the 90 days after discharge)… The mean Medicare episode payments declined by an estimated $1166 more (95% CI, -$1634 to -$699; P < .001) for BPCI episodes than for comparison episodes, primarily due to reduced use of institutional post-acute care. There were no statistical differences in the claims-based quality measures, which included 30-day unplanned readmissions, 90-day unplanned readmissions, 30-day emergency department visits, 90-day emergency department visits, 30-day post-discharge mortality, and 90-day post-discharge mortality… Further studies are needed to assess longer-term follow-up as well as patterns for other types of clinical care.”  (JAMA, September 2016)

Comprehensive Care for Joint Replacement Model (CJR) (Mandatory)

  • U.S. Health Care Is on the Cusp of Bundled Payments.It may be surprising that in the middle of the second decade of the 21st century, the U.S. health care industry is being hampered by 20th-century claims systems. But that is the hard truth. Take, for example, the July 2015 announcement by Medicare to launch a mandatory bundled payment program (Comprehensive Care for Joint Replacement Model) in 75 geographic regions by January 1, 2016. Surely, this seems like the early stage of realizing Solon’s goal. But the program is limited — unnecessarily — by the significant administrative constraints of the vendors who process claims. For example, Medicare insists that all bundles be initiated by hospitals because the claims systems can’t figure out how to start such an episode of care outside a hospital setting. That precludes some of the more efficient providers of joint replacements from participating, thus, significantly limiting the impact of the program.” (Harvard Business Review, 12.11.15)
  • Joint Replacement Payment Plan Favors Risk-Free Patients. “’The whole bundle payment is a massive innovation, and it has the potential to innovate high-readmission hospitals out of business,’ Dr Kurtz explained. What’s more, he said, it could hurt patients who are at higher risk, such as the elderly and the overweight. ‘There’s a dark cloud to this,’ said Dr Kurtz. ‘You might be told “You’re 80 years old, you don’t need a joint replacement.”‘ Patients could be turned away or asked to modify their behavior before surgery… Although they don’t have research yet to support the numbers, Dr Bosco estimates that 60% to 70% of patients work on modifying their habits and come back. ‘There’s about 30% that can’t modify their behavior,’ he added. ‘We’ll do their surgery; we don’t have hard stops — yet. But at some point, when we have more data, we’ll have to say, Listen, you’re too fat, we can’t afford to pay for your complication; society doesn’t want to pay for your complications.’” (Medscape Medical News, 3.4.16)
  • How to Succeed in Bundled Payments for Total Joint Replacement: Case Study. “This early look at one hospital’s experience with Medicare’s bundled payment for total joint replacement shows improvements in both clinical and financial performance. We credit our Complete Care program for the success at Euclid Hospital, which has prompted us to expand the initiative to nine more Cleveland Clinic hospitals. First-year data show that it is possible for a hospital to both improve care and succeed financially under CMS BPCI for total joint replacement, with enhanced financial performance for both the hospital and the insurer. Care redesign across the episode of care is essential to delivering high-quality care and favorable financial value creation underneath an organized bundled payment. A physician champion at the outset and use of a specialty care coordinator throughout the care process are both essential to success.” (New England Journal of Medicine Catalyst, 6.2.16)

Comprehensive Primary Care Initiative (CPC)

  • Mixed Results For Obamacare Tests In Primary-Care Innovation. “The CPC initiative cut costs by $168 per participating Medicare beneficiary, thanks largely to declines in hospital admissions and emergency visits, compared with results of practices not part of the initiative. Results were “more favorable than might be expected” in the test’s first year, said a report by Mathematica Policy Research. But that wasn’t enough to cover the extra $240 per patient that HHS paid practices to hire extra nurses, improve electronic records, set up 24-hour call lines and make other adjustments. The goal was to identify high-risk patients, keep them on the right medicines and diets and steer them to lower-cost treatment. ‘As a taxpayer — are we really making a difference?’ said David Nash, dean of Thomas Jefferson University’s School of Population Health and an authority on improving care quality. ‘I can’t tell from this report.’ Nor was there a big change in quality-of-care indicators, such as follow-up visits after a hospital discharge and making sure patients got recommended diabetes tests. The reports gave little information on whether the added resources improved patients’ health, saying it was too soon to tell.” (Kaiser Health News, 1.30.15)
  • Two-Year Costs and Quality in the Comprehensive Primary Care Initiative. “The 4-year, multipayer Comprehensive Primary Care Initiative was started in October 2012 to determine whether several forms of support would produce changes in care delivery that would improve the quality and reduce the costs of care at 497 primary care practices in seven regions across the United States… Midway through this 4-year intervention, practices participating in the initiative have reported progress in transforming the delivery of primary care. However, at this point these practices have not yet shown savings in expenditures for Medicare Parts A and B after accounting for care-management fees, nor have they shown an appreciable improvement in the quality of care or patient experience.” (NEJM, 6.16.16)
  • Wilensky, Gail. “The purpose of the project, part of a large multipayer initiative that used several types of support, is to determine how offering care-management fees affects the cost and quality of care provided in approximately 500 primary care practices taking part in the initiative. Unfortunately, despite having paid the participating practices a median of $115 000 per clinician in care-management fees over 2 years, the midterm assessment found that practices have not demonstrated any net savings after taking the incentive payments into consideration… More surprising was the finding that the practices participating in the Comprehensive Primary Care initiative have not shown many appreciable quality improvements to date. An exception is that patients with high-risk of diabetes were more likely than patients in a comparison group to receive all recommended tests.” (JAMA, 7.5.16)

Comprehensive Primary Care Plus (CPC+)

  • CMS Expands Comprehensive Primary Care Plus to New Regions. “In the initial incarnation of the program, 95 percent of practices serving approximately 376,000 Medicare beneficiaries met their quality benchmarks, resulting in $57.7 million in savings, CMS said in 2016. Patients also experienced slightly higher rates of satisfaction with their care, found a study in the American Journal of Managed Care. Patients receiving care at CPC+ providers were more likely to be satisfied with the timeliness of appointments, provider communication, and patient empowerment than those who visited other facilities.”  (HealthIT Analytics, 5.17.17)

Medicare Advantage Quality Bonus Payment Demonstration

  • Layton, T. J. and Ryan, A. M. (November 2015) Higher Incentive Payments in Medicare Advantage’s Pay-for-Performance Program Did Not Improve Quality But Did Increase Plan Offerings. Health Services Research. doi 10.1111/1475-6773.12409. According to Jason Shifrin, this paper examines the Medicare Advantage Quality Bonus Payment Demonstration (MA QBP) which began in 2012.  In this program, “plans receive bonus payments based on an overall plan quality rating calculated from a set of clinical quality measures and patient satisfaction ratings. These bonuses are quite large, ranging from 3-10% of plan payments, much larger than the 1-2% of revenue typically at risk in hospital and provider group P4P contracts.” Although their differences-in-differences  (DiD) approach found that quality improved in counties where plans were eligible for the larger bonus compared to those that were not, bonus counties already had a positive trend towards quality improvement prior to the start of MA QBP, which may invalidate the parallel trends assumption required by the DiD framework. Instead, the authors use a regression discontinuity and propensity score design and find “…a precisely estimated zero effect of bonus size on quality, suggesting that larger bonuses have no effect on health plan quality.” The authors give two explanations for this lack of improvement.
    • One is that quality improvement has high fixed costs (e.g., training staff) or that effective investment is necessarily “lumpy,” such that it may not be worth it for plans to invest in high-cost quality improvement efforts.
    • Second, plans may face short term constraints. For instance, plans may find it difficult to shift their existing physician network to a higher quality network, particularly if the current provider network has a multi-year contract.”
  • Connolly, Ceci. (11.22.16) “A glitch is causing unintended consequences for millions of seniors, leaving 2.5 million Medicare beneficiaries in 18 states without the improved benefits, reduced premiums and lower cost-sharing Congress intended to provide. Medicare Advantage, the program now enrolling more than 30 percent of seniors and other Medicare beneficiaries in private health insurance options, seeks to improve quality, in part, by offering bonuses to health plans receiving 4, 4.5 or 5 stars in the 5-star rating system. As authorized by Congress, Quality Incentive Payments (QIPs) are designed to serve not only as financial incentives for plans to work closely with providers to increase quality, but also to improve benefits for seniors. Every dollar awarded via a QIP must be returned to beneficiaries in the form of reduced premiums or increased services. These include medication therapy management, case management, care coordination and hospital readmission avoidance. Yet, in some counties, a 5-star plan receives the same payment as a 3-star plan down the street.


  • What Obamacare’s Pay-For-Performance Programs Mean for Health Care Quality. “While Obamacare’s pay-for-performance programs for Medicare are either in the early stages of implementation or have already gone into effect, policymakers will continue to debate whether this approach can create the degree of quality improvement needed in the delivery of American health care. In addition to the major issues highlighted above, still others have been noted, including the complexity of the program structure, use of quality metrics that do not reflect aspects of care that matter to patients, and the simple fact that, though measures undergo rigorous review and alteration, they cannot take into account the real-world variability and dynamism of medical practice.” (The Heritage Foundation, 11.20.13)
  • Grading a Physician’s Value — The Misapplication of Performance Measurement. “Although we agree that value-based payment is appropriate as a concept, the practical reality is that the Centers for Medicare and Medicaid Services (CMS), despite heroic efforts, cannot accurately measure any physician’s overall value, now or in the foreseeable future. Instead of helping to establish a central role for performance measurement in holding providers more accountable for the care they provide and in informing quality- and safety-improvement projects, this policy overreach could undermine the quest for higher-value health care… Even if we had better measures, behavioral economists would still challenge the pay-for-performance concept, at least for professionals such as physicians and teachers, who must manage complex situations and creatively solve problems. These critics argue that rewarding professionals on the basis of a particular performance measure has the potential to crowd out the intrinsic motivation to perform well across the board, not just on the few activities being measured.” (NEJM, 11.28.13)
  • Health Law’s Pay for Performance Policy Is Skewed, Panel Finds. “Medicare and private insurers are increasingly paying health care providers according to their performance as measured by the quality of the care they provide. But, the draft report by an expert panel says, the measures of quality are fundamentally flawed because they do not recognize that it is often harder to achieve success when treating people who do not have much income or education.” (New York Times, 4.28.14)
  • Quality Payment Incentives: What’s the Point? “‘We performed well, but not enough for the bonus,’ said Kitchell, a neurologist. ‘My sense of disappointment here is really significant. Why even bother?’ Within three years, the Obama administration wants quality of care to be considered in allocating $9 of every $10 Medicare pays directly to providers to treat the elderly and disabled. One part of that effort is well underway: revising hospital payments based on excess readmissions, patient satisfaction and other quality measures. Expanding this approach to physicians is touchier, as many are suspicious of the government judging them and reluctant to share performance metrics that Medicare requests. ‘Without having any indication that this is improving patient care, they just keep piling on additional requirements,’ said Mark Donnell, an anesthesiologist in Silver City, N.M. Donnell said he only reports a third of the quality measures he is expected to. ‘So much of what’s done in medicine is only done to meet the requirements,’ he said.” (Kaiser Health News, 4.4.15)
  • Large Performance Incentives Had The Greatest Impact On Providers Whose Quality Metrics Were Lowest At Baseline. “Fairview Health Services is a Pioneer accountable care organization in Minnesota. Using publicly reported performance data from 2010 and 2012, we found that Fairview’s improvement in quality metrics was not greater than the improvement in other comparable Minnesota medical groups. An analysis of Fairview’s administrative data found that the largest predictor of improvement over the first two years of the compensation model was primary care providers’ baseline quality performance. Providers whose baseline performance was in the lowest tertile improved three times more, on average, across the three quality metrics studied than those in the middle tertile, and almost six times more than those in the top tertile. As a result, there was a narrowing of variation in performance across all primary care providers at Fairview and a narrowing of the gap in quality between providers who treated the highest-income patient panels and those who treated the lowest-income panels. The large quality incentive fell short of its overall quality improvement aim.” (Health Affairs, April, 2015)
  • Study Finds No Clear Winner Among Medicare Payment Models. “As Congress considers how to make Medicare spending more efficient and cost-effective, a new study has found it won’t be as easy as picking a single payment model. The Medicare Payment Advisory Commission, which advises Congress on Medicare, has filed its annual report. Following up on similar research started last year, the group looked at the performance of the three main payment models: fee-for-service (the standard model tied to the provision of tests and procedures), Medicare Advantage (capitated payments per member), and accountable care organizations (groups of physicians and other providers that share in savings and risk).
    • The commission said it found that no one model performed the best across all 78 markets it studied, with fee-for-service being cheapest in 28 markets, ACOs cheapest in 31 markets, and Medicare Advantage cheapest in 19 markets.
    • Researchers noted there are still few studies comparing the quality and patient satisfaction generated by the three models. The report said that Medicare may need to change its payment rules to encourage recipients to choose the payment model that is cheapest for their market.
    • The commission also continued to express concerns about how Medicare measures care quality, saying it relied too much on clinical processes that didn’t necessarily lead to better health outcomes and sometimes placed a heavy reporting burden on physicians and other providers. Among the commission’s alternatives is a new measure called ‘healthy days at home.’” (Family Practice Management, 6.19.15)
    • Democrats Paid a Steep Price For Ignoring the CBO. Republicans Will Too. “[A]lmost no one has given the CBO credit for accurately predicting that the managed care cost-containment nostrums written into the ACA (including ACOs, ‘medical homes,’ penalties for ‘excess’ hospital readmissions, and lower out-of-pocket costs for preventive services) would save little money and might even raise costs…  The CBO has never said, for example, that prevention or ‘coordination’ or ACOs will cut costs. They have refused to make such statements despite enormous pressure – both direct pressure from politicians and the indirect pressure of groupthink – to do so. They have refused because they insist on basing their decisions on evidence… (For a discussion of the managed care culture and its low regard for evidence, see my comment here).  Let me illustrate how different the culture of the managed care movement is from CBO’s culture by quoting statements made by President Obama and Doug Elmendorf, the CBO’s director from 2009 to 2015, about the myth that prevention saves money.
      • According to a 2009 Politifact article , Obama asserted, ‘Insurance companies will be required [by the ACA] to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies…. That makes sense, it saves money….’
      • Elmendorf replied: ‘The evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.’ Note which of those two men used the word ‘evidence.’ It wasn’t Obama.
      • And what does the research say? A review of the literature by Joshua Cohen et al., published in the New England Journal of Medicine, concluded, ‘Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not.’…
    • Precisely because the CBO relied on research while the liberal critics of the CBO relied on managed care folklore, the CBO’s predictions of how the managed care fads in the ACA would perform were far more accurate than those of Obama, Baucus, Nancy Pelosi, Barbara Boxer, Peter Orszag, et al.
      • The CBO’s December 2008 report estimated ACOs would cut Medicare’s costs by a tenth of a percent (see my discussion of this report in this THCB post ). That was remarkably accurate.
      • Today (almost a decade later) we know CMS’s Pioneer ACOs have cut Medicare’s costs by a magnificent one-tenth to seven-tenths of a percent over their first four years (that’s not counting the costs the ACOs incurred) while the much larger MSSP ACO program has raised Medicare’s costs by about two-tenths of a percent (again, not counting the costs the ACOs incurred) over the same period.” Sullivan, Kip. (The Health Care Blog, 3.21.17)