Value-based purchasing: whose values?

In October, hospitals around the country will begin having their payments from Medicare affected by the Value-Based Purchasing Program (VBP). The plan is that a portion of the money that hospitals would have received (beginning at 1% and rising gradually to 2% by 2017) will be withheld and then re-distributed based on a variety of performance measures, with low-performing hospitals losing money and high-performing hospitals getting bonuses. The measures that will be used in federal FY 2013 (which starts in October 2012) are “clinical process” and “patient satisfaction” indicators; they will be expanded the next year to include also patient mortality, hospital-acquired conditions, and patient safety measures. These are succinctly portrayed in a helpful “box” within the short Perspective “Making the best of hospital pay for performance” by Andrew Ryan and Jan Blustein in the New England Journal of Medicine, April 26, 2012.

Ryan and Blustein review the history of previous “pay for performance” efforts by Medicare, noting that a demonstration project begun in 2004 that required hospitals to report their quality data and paid money to those hospitals that did well had initial success. However, this success was not replicated in the second phase of the project beginning in 2006; while there was “…an increase of nearly 50% in the total amount of incentives paid out…these changes did not catalyze additional quality improvement…improvement relative to comparison hospitals actually declined.” Moreover, a similar “…program implemented by Medicaid in Massachusetts with incentives approximately 5 times the size…also showed that pay for performance had no effect on quality.”

They go on to observe that this is not necessarily a completely fair comparison because, for example, the economy was different in the two 3-year periods (always a problem for research in the real world; it changes!). But they remain guardedly optimistic about, or at least resigned to, VBP; their final line, scarcely a rousing call to action, is “It will be critical to ensure that VBP is as good as it can be.” They call for the Patient-Centered Outcomes Research Institute (PCORI, see Patient-centered research: answering the questions that matter to people, April 22, 2012) to study it.

The other thing that will be important is how well the quality measures actually measure quality. Of the initial two, “clinical process”, which accounts for 70% of the withhold, are the same ones that have been in place for several years (such things as getting a beta-blocker after a heart attack and getting antibiotics within a certain period of time if you are diagnosed with pneumonia). “Patient satisfaction” is also a good thing; clearly we all want hospitals to be clean and quiet and to have doctors, nurses and others communicate with us clearly and completely. Keeping people out of pain in the hospital is also the right thing to do, but sometimes (although more often in outpatient settings) it comes into conflict with efforts to monitor how often doctors prescribe narcotics. In an interesting piece in the “Science Times” section of the NY Times on May 1, 2012, E.R. Doctors Face Quandary on Painkillers by Catherine Saint Louis, an emergency room doctor notes this conflict and observes “If you’re going to criticize me for not giving out narcotics, and you never praise me for correctly identifying a drug-seeker, then I’m going to give out narcotics.” Indeed. While this stimulus-response (known as the Hawthorne effect – behavior changes depending on what is being measured) is the basic idea behind VBP (along with monetary incentives), it illustrates that sometimes incenting a desired behavior can have an unintended negative impact.

In general, hospitals, especially the more financially successful ones, are very good at modifying their behavior in response to economic incentives. While we can hope that this results in higher-quality care for patients, all too often it appears that they are just “gaming the system”, seeking to do only those things that make them money and avoiding patients who may put them at risk. The problem is that not all hospitals are starting off with equal resources, and those with the biggest challenges (in terms of unreimbursed patients) will probably do worse under such a system. While Ryan and Blustein note that “CMS has pledged to monitor whether VBP leads to ‘changes in access to [care] and the quality of care furnished to beneficiaries, especially among vulnerable populations’”, the also observe that impact on hospital bottom lines is likely to precede any significant quality changes and that the impact may be particularly great on “…safety net hospitals, which operate of very small margins.”

This is, to me, very important, because these are the hospitals that provide disproportionate care to poor, uninsured, and generally medically underserved people. Because such hospitals are often located in poor neighborhoods or rural areas, or because they depend on (almost constantly decreasing) public funding, they are not among those that already have a robust bottom line and will be able to invest in the equipment and process changes needed to be the “winners” in VBP. They are also likely to have a lower percent of Medicare patients, in part because once people, even poor people, receive Medicare they are no longer uninsured, they can and sometimes do go to hospitals perceived as “better”, and because the proportion of people who are sick enough to be in the hospital despite being younger (under 65) rises as socioeconomic status decreases (see “social determinants of health”, discussed in several previous blogs, including Michael Marmot, the British Medical Association, and the Social Determinants of Health, November 1, 2011 and Social Determinants, Personal Responsibility, and Health System Outcomes, September 12, 2010).

When I first heard of value-based purchasing my initial reaction was both pleased and confused. Wow, I thought, they are actually going to pay for medical care based upon values? I almost immediately realized my mistake – that their main “value” was paying less money. It is possible that the “other kind” of values do play a part; if Medicare is going to pay more for higher quality, or less for lower quality, that is something. But there is another value that is still missing, and that is the value of ensuring that access is high-quality is available to and provided for everyone. Hospitals (the “high end” ones) are already trying to figure out how they can divest themselves of Medicare patients, on whom they already make less money, and replace them with patients with better insurance. To the extent that they are successful, it will just add Medicare recipients to the growing list of “less desirable” patients.

Maybe we need to move to a program in which no people are “less desirable”. Where everyone is covered. Where hospitals that care for the most needy do not suffer as a result; where hospitals that cater to the least needy do not profit from this decision.

Then, perhaps, Medicare – for all – could really base its payments on value, and on values.