Topic Suggestion
1. What is the decision or change you are facing or struggling with where a summary of the evidence would be helpful?
As is widely recognized the cost of health care is increasingly unaffordable. This is due in part to paying for services that are unnecessary. For example, the Senate HELP Committee heard expert testimony last year that unnecessary care or waste equals between one-third to one-half of total health care spending, or in excess of $1 trillion annually. There is also wide variation in health care pricing. As documented by Uwe Rinehardt and numerous others the difference between what Medicare pays for health care products or services compared to what commercial payers reimburse can vary by more than 1,000%. Most recently, a study published by RAND found hospital prices covering 25 states in 2017 showed that prices paid to hospitals for privately insured patients averaged 241% of what Medicare would have paid. In addition, 29 million Americans remain uninsured and for those with insurance out-of-pocket costs frequently cause patients to choose between foregoing care or incurring overwhelming debt.
These problems are largely the result of a failure to measure and reward for spending efficiency or value. More specifically, we do not measure for health care outcomes achieved relative to spending. As Harvard’s Michael Porter argued in 2010 in The New England Journal of Medicine, "The failure to adopt value as the central goal in health care and to measure value are arguably the most serious failures of the medical community.” This has "resulted in," Porter stated further, "ill-advised cost containment, and encouraged micromanagement of physician practices which impose significant costs of its own."
This may seem surprising since health care reform over the past decade has been largely consumed by efforts to, as CMS phrases, “pay for performance” or “pay for value.”
For example, payments to Medicare hospitals are determined in part by the Value-Based Purchasing (VBP) Program. Physician reimbursement under the Medicare Access and CHIP Reauthorization Act (MACRA) financially rewards, CMS explicitly states, “high value.” The word “value” is used nearly 100 times in the latest Medicare Advantage (MA) Call Letter to describe the program’s 2020 regulatory rules and the word is used over 50 times in the recent HCPLAN (Health Care Payment Learning Action Network) publication describing advances in value-based, otherwise termed alternative payment models (APMs). Among related efforts, MedPAC is currently recommending Medicare’s four current hospital quality incentive programs be consolidated into what MedPAC terms the “Hospital Value Incentive Program.”
Despite claiming to measure and reward value we instead measure quality and spending separately. Alternatively, we confuse quality with value. The words are not synonymous. The current approach, that again fails to correlate quality and spending or measure simultaneously or jointly, has produced counterproductive or perverse effects.
For example, as Anup Das and his colleagues found, the VBP program rewards low spending hospitals despite having demonstrated poorer quality performance. In a recently published essay in STAT, Stephen Soumerai and Kip Sullivan summarized Hospital Readmissions Reduction Program (HRRP) research that shows the program has disproportionately levied financial penalties on safety net hospitals (creating a reverse Robin Hood effect) while causing hospital death rates for some chronic conditions to rise. With quality only loosely related to spending, Accountable Care Organizations (ACOs) receive shared savings payments despite demonstrating comparatively poor quality while high quality performing ACOs that do not spend below their financial benchmark receive no financial reward or can be financially penalized. Though MA neither measures nor rewards for spending efficiency, star quality ratings have been compromised or gamed by contract consolidation or so-called cross walking. (Though CMS has recently made efforts to address this problem, MedPAC persists in recommending further remedies.) The Centers for Medicare and Medicaid Innovation’s (CMMI’s) MA Value-Based Insurance Design (VBID) demonstration does not measure for value. (As a related aside, though one program, Medicare incentives vary: VBP has no quality performance threshold; the MSSP does though weak; and, unlike ACOs MA plans receive a financial bonus for comparative superior quality performance.)
Paying bonuses independent of value achieved means these programs, as Michael Porter argued, are de facto cost containment efforts. This is problematic because, as Lawrence Casalino and his colleagues demonstrated, these programs require participating providers to spend tens of billions on collecting and reporting, effectively futilely, quality measures. Administrative burden along with the absence of outcome measures, for example there are none in the current ACO measure set, led MedPAC to state bluntly in its June 2014 report, “Medicare’s current quality measurement approach has gone off track.”
Worse still, it is insincere to expect providers to participate in financially at-risk value-based payment arrangements when there is at best only a loose or tenuous connection between performance and reward. Paying for what amount to false or random savings has caused ACO providers to sarcastically define the program as “benchmark bingo.” At-risk payment models, particularly when termed value-based, need to be designed to allow for the predictive and persistent demonstration of spending efficiency or value.
In sum, Americans are forced to pay at least twice per capita what other countries spend for frequently inferior outcomes, or for low value health care.
2. Why are you struggling with this issue?
Here are six reasons:
Because we vastly overspend for health care, the Medicare hospital insurance trust fund is rapidly going bankrupt. The fund will reach a zero balance in 2026. In addition, as E. Eugene Steuerle recently noted in Health Affairs, Medicare and Social Security spending “now impinge on almost everything else the government does.” That is health care spending crowds out spending on education, infrastructure, the social safety net and other essential government services.
For patients, health care, even for those with insurance, is again increasingly unaffordable. For example, employee-based coverage premiums increased by 5% between 2017 and 2018. Once again, this annual increase dwarfed wage increases that averaged 2.6% and inflation at 2.5%. In addition, employee plans with deductibles increased from 57% to 81% and by 212% in dollar value over the past ten years. This largely explains why the average worker has experienced stagnant wages over several decades.
Considering the current debate regarding drug pricing, Cost Related Non-Adherence (CRNA) in the US is upwards of four times what it is in comparable countries. One-in-four Americans, particularly older Americans, do not fill their prescription medications because they are unaffordable.
Ignoring spending efficiency or value has led or defaulted to other or additional ill- conceived cost containment efforts, for example, site neutral payments. Section 603 of the 2015 Balanced Budget Act and subsequent Congressional and regulatory actions have reduced Hospital Out-Patient Department (HOPD) reimbursement. In theory, reimbursement independent of delivery site appears sensible. In practice, it is not. Research recently published by KNG Consulting found compared to Ambulatory Surgical Center (ASC) patients, HOPD patients are more likely to be minorities, dual eligible, burdened with more severe chronic conditions and previously hospitalized. This explains why MedPAC in its HVIP proposal attempts to account for differences in patient populations by creating ten peer groups rather than adjusting quality measure results in calculating HVIP scores.
Ignoring spending efficiency or value has also defaulted to relying on data transparency as the solution to health care’s woes. See, for example, the White House’s December report, Reforming America’s Healthcare System Through Choice and Competition. The report argues that patients can drive value by behaving as typical, discriminating consumers. However, it is unrealistic to define health care services as a normal market commodity such that the health care industry can credibly compete by making pricing data available thereby allowing patients to shop for value. Over 55 years ago Kenneth Arrow argued compellingly, and the subsequent evidence supports, the complexity and/or uncertainty in medical diagnoses, treatments and quality leave patients, particularly those lying on a gurney, unable to determine to what extent price reflects value. This explains why research by Harvard’s Michael Chernow and others shows that neither price transparency tools, nor the availability of one’s medical record, is associated with lower spending or with lower prices for shoppable tests or visits.
As noted above, providers are struggling when current value-based payment arrangements require providers to expend significant financial resources to report performance measures when, as Anup Das and is colleagues concluded, there is a “weak,” “inconsistent” and “low” relationship between quality and spending. More recently, Tim Doran and others concluded that pay for performance models “have generally had limited impact on the value of care and have not led to better patient outcomes.” A related, largely ignored problem is the size of patient populations in value-based payment arrangements. As Lynn Barr and her colleagues demonstrated in a recent Health Affairs research article, ACO beneficiary populations are generally too small to provide statistically reliable performance measurement year over year. Again, it’s benchmark bingo. As stated above, value-based payment arrangements should be designed to allow for statistically predictive and persistent demonstration of spending efficiency or value.
Despite the desire to improve health care outcomes or demonstrate spending efficiency or value, leaving aside CAHP measures, value-based payment models employ few if any outcome measures. Again the 2019 ACO measure set contain none. (Though outcome measures currently tend to be subject to more random variation than process measures, we believe this presents further opportunity for clinical practice improvement.) Fortunately, there are efforts that are illustrative. For example, the International Consortium for Health Outcome Measures (ICHOMs), largely unknown or unappreciated in the US, has to date built more than 20 outcome-based quality measure sets, that measure full care cycle outcomes and costs covering 45% of the disease burden in high-income countries, created to support payment models that improve value to the patient and payer. Specific to Patient Reported Outcome Measures (PROMs), London-based My Clinical Outcomes (MCO), founded in 2011 and having to date collected outcome data at over 70 hospitals worldwide, was initially developed in collaboration with orthopedic surgeons working in the National Health Service (NHS). These surgeons were seeking a way to systematically follow-up with their patients after joint replacement surgery largely to better economize on their use of clinical resources, or more appropriately or efficiently identify those patients in need of follow-up face-to-face consultations.
3. What do you want to see changed? How will you know that your issue is improving or has been addressed?
First, that health care become substantially more spending efficient or drive increasingly higher value for the health care dollar. Second, that value-based payment models actually drive increasingly higher spending efficiency or value. That they are designed to predictively and persistently demonstrate value, that is they actually award spending efficiency or comparatively greater value.
4. When do you need the evidence report?
Tue, 10/20/2020
5. What will you do with the evidence report?
We are submitting this nomination on behalf of Strategic Health Care’s clients, moreover large hospital or health care systems located throughout the US. Specifically, we note ProMedica, a not-for-profit Ohio-based provider that via its 60,000 employees provides acute care in 13 hospitals, post-acute nursing home, home health and hospice care nation-wide and Medicaid insurance via its Paramount plan.
ProMedica, along with similarly sized providers in six states (AZ, GA, IL, MD, MN and OR) and with Strategic Health Care’s support, is presently soliciting the Senate HELP Committee to include in its cost containment legislative efforts a provision that would address measuring for and rewarding spending efficiency or value. Committee members have expressed support, for example [name redacted], however this issue was not included in the committee’s May 23rd discussion draft. In support of ProMedica’s efforts, Strategic Health Care drafted, and Bloomberg Law published, “Containing Health Costs Requires Measuring, Rewarding Spending Efficiency,” on May 28th. See: https://news.bloomberglaw.com/health-law-and-business/insight-containing-health-costs-requires-measuring-rewarding-spending-efficiency.
Strategic Health Care (at: www.strategichealthcare.net) clients are working to improve both quality or patient outcomes and reduce their spending growth, become more spending efficient or provide their patient populations greater health care value. Working to improve spending efficiency is an underlying strategic concern for all of Strategic Health Care’s clients.
(Optional) About You
What is your role or perspective?
Health Care policy researcher.
If you are you making a suggestion on behalf of an organization, please state the name of the organization.
Promedica and six others
May we contact you if we have questions about your nomination?
Yes
