Peter J. Teravskis, MJLST Staffer
The vast majority of payments to medical providers are based on a fee-for-service reimbursement model. The fee-for-service model reimburses providers for every test, exam, intervention, and procedure they perform, potentially contributing to over-billing, increased health care costs, and waste. On the other hand, value-based care models tie provider reimbursement to efficiency of care and measures of patient wellness and satisfaction. For this reason, in recent years, there has been a nationwide effort to transition provider reimbursement away from fee-for-service towards value-based care.
In line with this effort, the Affordable Care Act contains many provisions designed to encourage the transition to value-based care. In 2015, then-Secretary of Health and Human Services Sylvia M. Burwell tasked the Centers for Medicare and Medicaid Services (CMS) with two goals for 2018: increasing (1) value-based purchasing practices, and (2) use of value-based reimbursement models (called alternative payment models or “APMs”) by Medicare providers. The hospital value-based purchasing program rewards acute-care providers for making purchasing decisions based on quality metrics rather than the volume of services provided while still operating in a fee-for-service framework. On the other hand, the APM adoption plan seeks to discard fee-for-service reimbursement entirely by encouraging the adoption of payment models that reimburse providers based on patient outcomes and efficiency of care rather than volume.
While CMS efforts have resulted in increased adoption of value-based care models, early data suggests that these models may not deliver the health and financial benefits initially promised. For example, recent studies indicate that multiple value-based Medicare reimbursement models in several clinical contexts fail to demonstrate meaningful improvements in hospital readmission rates, health outcomes, quality of care, and patient satisfaction. Nevertheless, some marginal cost savings have been reported. However, cost savings may be even more limited than the studies suggest. Government metrics may overestimate the actual adoption of value-based practices given the loose definition of “value-based care.” Further, the New York Times Upshot reports that CMS may overestimate the adoption of value-based purchasing metrics by miscounting many volume-based purchases as value-based purchases.
CMS’s attempt to implement value-based care through this top-down incentive structure is also ethically fraught. Current value-based care models have been criticized for making assumptions about what patients actually value, rather than adopting a pluralistic understanding of patient values. This “monistic” value system decreases patient autonomy in their health care decisions. Indeed, ethicists contend that it is only ethical to impose value-based decisions on patients if there is “strong and sound evidence” that they deliver “equivalent or greater clinical benefit at lower cost.” This ethical principle greatly limits the number of value-based reforms that can be instituted at the national- or hospital-level. Indeed, all other value-based decisions should be made in consultation with individual patients, taking into account their unique value systems. Furthermore, it is “ethically suspect” to withhold otherwise beneficial treatments based on cost savings alone. Unfortunately, value-based care models favor health care market efficiency and could penalize providers who tailor care to patient values rather than the monistic value structure described above.
Given the ethical limitations of value-based decisions that can be made without patient input, the early empirical shortcomings of Medicare’s value-based care initiatives may be partially explained by the slow process of aligning care to patient values. Specifically, the value-based decisions most likely to improve care and costs require physicians to (1) understand individual patients’ values, and (2) tailor efficient and effective care to align with those values. Unlike the APM adoption initiative which takes a holistic approach to incentivize value-based care, the hospital value-based purchasing plan does not allow for significant patient-provider collaboration, especially in the acute care setting where patient interactions are brief.
Recently, the Trump administration has reoriented value-based purchasing agreements to focus on drug price reduction and signaled it will slow the pace of APM adoption (a move that was criticized for creating uncertainty among health care market stakeholders). This deceleration likely stems, in part, from concerns over mandating the adoption of certain APMs in rural communities. Regardless of the motive, decelerating APM adoption will likely prove beneficial. The process of aligning care with patient values is largely intangible in the short-term; therefore providers and patients alike will benefit from the additional flexibility of a slower, voluntary transition away from fee-for-service reimbursement. Nevertheless, CMS must not lose sight of the goal of providing Medicare beneficiaries high-value-care while still affording providers the time and financial latitude to ensure that long-term benefits are genuinely patient-value-centric.