US pay-for-performance scheme fails to perform

A programme by the US public health insurance organisation Medicare, designed to improve value of care by paying more to doctors who perform better on measures of health care quality and spending, has failed to deliver on its central promise and in the process appears to have exacerbated disparities in health care delivery.

The Value-based Payment Modifier programme, which ran between 2013 and 2016, inadvertently shifted money away from physicians who treated sicker, poorer patients, to pay for bonuses that rewarded practices treating richer, healthier populations.

The unintended consequence stemmed from the programme’s failure to properly account for differences across various patient populations in clinical and social risk factors for poor outcomes, according to researchers at the Department of Health Care Policy at Harvard Medical School and the Department of Health Policy and Management at the University of Pittsburgh Graduate School of Public Health.

The researchers say that these findings bode ill for the programme’s successor, launched in early 2017, because its basic design is similar.

The study adds to a growing body of research questioning the merits of pay-for-performance and demonstrating unintended consequences of the approach for vulnerable populations.

“As long as these programmes do not account adequately for patient differences, which is very difficult to do, they will further deprive practices serving low-income populations of important resources,” said Eric Roberts, assistant professor of health policy and management at the University of Pittsburgh Graduate School of Public Health and lead author of the study.

The Value-based Payment Modifier was phased out in January 2017, when it was replaced by the similar Merit-based Incentive Payment System, known as the MIPS, the largest pay-for-performance programme ever enacted by Medicare.

“We’ve gone headlong into pay for performance despite study after study showing that it doesn’t improve quality or lower overall spending,” said Michael McWilliams, professor of health care policy at Harvard Medical School and senior author of the study. “We should expect more of the same from the MIPS because the MIPS is more of the same.”

The Value Modifier offered bonuses for the top-performing physicians and practices, and penalties for practices that performed the worst. In theory, these incentives would encourage doctors and providers to find ways to deliver better care that improves outcomes. The measures included how often patients were hospitalised for preventable reasons, how often hospitalised patients were readmitted within a month of discharge, annual rates of mortality, and total Medicare spending per patient.

The researchers compared these performance metrics between practices that were part of the programme and those that were not, finding there were no differences in performance as a result of the incentive programme. The researchers concluded that weak incentives for performance improvement in the Value Modifier might have contributed to its ineffectiveness, and noted that many of these weaknesses were not corrected in the MIPS.

Not only did the programme fail to deliver hoped-for performance improvements, it also may have inadvertently worsened health care disparities, the researchers said.

To accurately measure care delivery across different patient populations, it is important to adjust for the fact that different populations have different health outcomes depending on a number of factors, such as pre-existing chronic illness and socioeconomic status. The Value Modifier adjusted for only a limited set of risk factors.

When the researchers recalculated practices’ performance measures after accounting for additional demographic and clinical differences, the performance gap between practices serving sicker or poorer patients and those serving wealthier or healthier patients narrowed.

If the programme had accounted for differences in patient populations, up to a quarter of practices would not have been eligible for bonuses provided through the programme, while a similar proportion of practices would probably not have been penalised, the study found.

Since the programme was designed to be budget-neutral, this means that bonuses for physicians and practices that treated healthier, wealthier patients were paid for by penalties applied to those treating poorer, sicker people. Over time, such transfer of resources could make it more difficult for practices serving many low-income and medically complex patients to invest in resources and services that could improve care for disadvantaged populations.

Journal Reference: Annals of Internal Medicine

DOI: 10.7326/M17-1740