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Can we pay doctors for quality instead of quantity?

Value-based payment models are meant to shift clinician incentives from doing more to doing better. It sounds simple: Instead of paying clinicians based on the services they provide, why not pay them based on patient outcomes?

In theory, value-based payments should reduce health care costs as well, because doctors would provide fewer unnecessary services, and because doctors would be encouraged to keep patients healthier, avoiding the costly consequences of untreated conditions.

However, as we see again and again, changing patient outcomes and cost of care through clinician payments is easier said than done. 

Too little, too early?

A recent joint report on health care costs from the Healthcare Financial Management Association, Leavitt Partners, and McManis Consulting finds that current value-based payment (VBP) models aren’t curbing health care costs as some policymakers had hoped. 

Researchers looked at hundreds of health care markets across the US to examine the early effects of VBP models on cost of care. Disappointingly, they found no correlation between VBP models and the cost of care, even in health care markets that had a “high saturation” of these models (up to 40% VBP). 

These lackluster results could be because it’s too early to tell if these models are helping or not. The researchers only looked at a 2-year period of time after the models were introduced (2012-2014), so there could be greater effects in years to come. 

Another possibility the authors suggest is that current value-based payment models don’t provide enough incentive to actually change clinician behavior. There isn’t enough “downside risk” embedded in current models, CEO of the Healthcare Financial Management Association Joseph J. Fifer, writes in Modern Healthcare – meaning that clinicians are not getting hit hard enough financially for poor outcomes. 

We should not take this study as an excuse to “hold onto fee-for-service with a clear conscience,” writes Fifer. Instead, Fifer urges policymakers to keep experimenting with different kinds of payment models, to find those that best align payment and outcomes. Clinicians could be paid in episode-based payments, global budgeting, reference-based pricing, or even membership-style payments

Without real financial consequences, clinicians are less likely to change the way they practice. However, we’ve heard from clinicians – especially primary care clinicians – whose practices hinge on fulfilling quality measures to receive Medicare value-based payments. What may be a trivial payment for one doctor could be devastating for another, depending on each clinician’s financial situation. 

There’s one other thing missing from the conversation on value-based payments, that may matter more for outcomes and cost than anything else…

Taking resources from those who need them most

In a recent New York Times op-ed, Dr. Dhruv Khullar, physician at New York-Presbyterian Hospital, highlights a critical problem with current value-based payment models: clinicians are penalized for caring for more socially vulnerable patient populations.

Value-based payment systems pay clinicians based on outcomes such as management of chronic conditions and reducing ED visits and adjusts these payments based on patients’ underlying medical risk. However, Medicare’s value-based system does not adjust payments based on social determinants of health, such as income, education, and community environment – even though these factors greatly influence health. 

This glaring omission means that doctors are paid less due to circumstances beyond their control. Khullar writes, “While it’s hard to dose insulin, it’s harder still for a patient who speaks no English, has no refrigerator and regularly has his medications stolen.”

In a 2017 report on accounting for social risk factors from the National Academies of Sciences, Engineering, and Medicine, researchers found that “providers disproportionately serving socially at-risk populations are more likely to score poorly on performance/quality rankings and more likely to be penalized financially under value-based payment systems.”

Faced with this financial threat, doctors are less likely to take on more vulnerable and marginalized patients, though these patients are often the ones most in need of health care. Making sure clinicians who care for these patients are adequately reimbursed is key to making value-based payment models sustainable and effective.