Practices with high-risk patients are vulnerable to value-based payment penalties

The use of pay-for-performance payment models could drive providers to turn away low-income patients with complex care needs, a new study suggests.

The report, published this week in Annals of Internal Medicine, found practices that cared for high-risk patients were more likely to receive financial penalties under the CMS' Value-based Payment Modifier program because their patients had higher rates of hospitalization, mortality and Medicare spending. The mandatory program penalized or rewarded physicians based on their quality outcomes and cost of care. The program was a precursor to and was replaced by the Medicare Access and CHIP Reauthorization Act (MACRA). "These penalties are disproportionately affecting practices serving sicker and poorer patients," said Eric Roberts, an author of the study and assistant professor of health policy and management at the University of Pittsburgh. "This could send providers the wrong signal that if they want to avoid penalties, treating more complex patients isn't advantageous for them." The study also found that outcomes didn't improve among practices after the program went into effect even though they were financially penalized if their performance didn't improve. Roberts said there could have been several reasons for the lack of improvement, including a relatively low-penalty of up to 4% under the program as well as uncertainty among practices about how their performance compared to their peers. "There were weak incentives for behavior change," he said. The study adds to a growing debate among health policy experts regarding the value of pay-for-performance payment models. Concerns have been raised that such models don't motivate providers to improve and financially penalize providers who treat low-income patients. In an editorial in response to the Annals study, Dr. Ashish Jha, a professor of health policy and management at the Harvard School of Public Health, along with other colleagues wrote, "It is high-time to abandon (the standalone pay-for-performance) model." Under MACRA, the Merit-based Incentive Payment System, or MIPS, is a pay-for-performance model that bases physician pay on success in various categories like quality and clinical practice improvement. Although it will take a few more years before the impact of MIPS can be evaluated, the program probably also disproportionately penalizes safety-net providers just like the Value-based Payment Modifier Program because it's set-up similarly, Roberts said. The incentives under MIPS to improve care practices also aren't very strong, according to Dr. Michael McWilliams, a co-author of the study and professor of healthcare policy at Harvard Medical School. Practices can choose which quality measures they want to be judged on, opening up an opportunity to "game" the system, he said. Risk-adjustment, a statistical process the CMS uses to help level the playing field among physician practices in pay-for-performance models like MIPS, is also limited, McWilliams said. Information on patient's education level, income and even zip code can help paint a better picture of the social risk factors a patient might be facing. But that information isn't readily accessible to the CMS through claims data. "It's not like the CMS has a whole lot of additional information," McWilliams said. Considering the flaws in pay-for-performance models, McWilliams said "we need to rethink our approach to incentivize quality improvement fundamentally." One way to lower costs while improving care is to promote more competitive healthcare markets, he said. Providers will be motivated to provide high-quality, low-cost care because consumers have more options. "We need a more competitive marketplace," he said. "We are going in the opposite direction, patients have very little choice anymore."