Value-Based Purchasing in Medicare May Hurt Patients

Published July 15, 2011


As the Centers for Medicare and Medicaid Services releases details about its new reimbursement plan under President Obama’s health care law, fresh concerns are arising regarding the concept of value-based purchasing of health-care services, which may affect patients across the country.

Under the CMS proposal, value-based purchasing will be used to provide bonuses to hospitals that exceed average scores on several measures. To implement this system, Medicare will withhold 1 percent of the money for its payments to hospitals, starting in October 2012, resulting in approximately $850 million for the bonus pool in the first year of the program.


Three Thousand Hospitals Affected

CMS’s proposal refers to value-based purchasing as “an important step to revamping how care and services are paid for, moving increasingly toward rewarding better value, outcomes, and innovations instead of merely volume.”

According to CMS, this plan will affect about 3,000 hospitals across the United States. The performance measures will be based 30 percent on patient scores, with clinical measures for quality making up the other 70 percent. The CMS proposal explains the measures the organization wants to adopt are a subset of those already in effect under the Medicare Hospital Inpatient Quality Reporting Program.

Hospitals currently collect data on patient satisfaction by giving surveys to discharged patients, both on and off Medicare rolls, but CMS concedes data collection could become a burden for providers as the program moves forward.

“The collection of information should minimize the burden on providers to the extent possible,” CMS administrators write in their proposal. “As part of that effort, CMS will continuously seek to align its measures with the adoption of meaningful use standards for health information technology (HIT), so the collection of performance information is part of care delivery.”


Metric Difficulties

While some consumer groups applaud the proposal, others worry about the effects it may have on hospitals. Devon Herrick, a senior fellow at the National Center for Policy Analysis, says there are several problems associated with value-based purchasing,

“Value-based purchasing is difficult to achieve without the appropriate metrics to measure value. Unfortunately, medical experts have not been able to agree on an appropriate set of metrics,” Herrick said. “It is easy to imagine interest groups weighing in on the design of a system to measure performance. The design of the metrics used to measure performance could affect hospital revenue.”

Herrick notes it is more difficult for certain types of hospitals to achieve high scores, such as teaching hospitals or those that treat multiple aliments. Satisfaction levels also vary widely based on geographic location. For example, people on the east coast rate their satisfaction with hospitals as lower than those in the Midwest.

“Everyone agrees on the need to reward value and punish low-quality care. Consumers do this based on their preferences and priorities. However, a bureaucratic system that is capable of measuring and rewarding quality under all circumstances is a difficult goal to achieve,” adds Herrick.


Bureaucrats Defining Value

Kate Nix, a research associate at the Heritage Foundation, notes value-based programs are essentially an artificial, top-down replacement for market disciplines ordinarily provided by consumer choices.

“Value is subjective and can only truly be defined and rewarded by patients, not by bureaucrats. The value-based purchasing program in Medicare carries the risk of several unintended consequences that will harm, rather than help, patients,” Nix says.

Nix points out the essence of the approach is a top-down selection of “good” plans and providers by third party payers, as opposed to consumer empowerment.

“This one-size-fits-all approach will not succeed at defining the highest quality of care for each individual, and while studies show that measuring certain processes can increase adherence to what is measured, there is not necessarily a causal link between greater compliance and improved quality of care,” Nix says. “Health care providers should be rewarded for providing the highest quality of care for the lowest price—in other words, for achieving better value. This approach, however, is the wrong way to do it.”


Sarah McIntosh, Esq. ([email protected]) is a constitutional scholar writing from Lawrence, Kansas.


Internet Info:

CMS Proposed Rule: Hospital Inpatient Value-Based Purchasing Program: