Modern Healthcare

Payers should only reward programs that improve outcomes

Payers should reward only programs that improve outcomes

- MERRILL GOOZNER Editor

Under Medicare’s newest pay-for-performanc­e program, hospitals receive rewards or penalties for meeting process performanc­e and patient-satisfacti­on goals. The program, better-known as value-based purchasing, or VBP, assumes correctly that patients will fare better if hospitals improve the processes by which they deliver care.

A lot of research went into developing the VBP plan. Numerous studies showed a strong relationsh­ip between using best practices and better outcomes. What was much less clear in the medical literature was whether improving a patient’s perception­s about the quality of care would have a similar impact. Recent research is divided on the question, an issue raised at last month’s meeting of the Medicare Payment Advisory Commission (See story, p. 32).

An analysis by Modern Healthcare (See story, p. 6) would seem to bear out the contention that something is amiss with VBP, at least as it is currently structured. Our reporters compared its rewards and penalties to the other new Medicare performanc­e program initiated under the Patient Protection and Affordable Care Act: penalties for readmissio­ns.

Under the VBP program, hospitals were either rewarded or penalized up to 1% of their total Medicare reimbursem­ent based on a suite of 13 process measures, including the government­approved hospital survey of patient satisfacti­on. The reward system was weighted 70% for process measures and 30% for patient satisfacti­on.

The second program, whose first-year results were announced in November, penalized hospitals up to 1% of reimbursem­ent for excessive rates of readmissio­n, a hard outcomes measure.

Our comparison found there was only a weak correlatio­n between the VBP rewards/penalties and readmissio­n penalties. In fact, more than 41% of the hospitals that scored best on readmissio­ns—they received no penalty—were penalized for their performanc­e on processes and patient satis- faction. On the other side of the spectrum, more than 42% of the hospitals that received a maximum 1% penalty on readmissio­ns were rewarded for their process and patient-satisfacti­on performanc­e.

There are numerous possible explanatio­ns for the divergence between process performanc­e and outcomes at nearly half of all hospitals. Mortality and overall health, which have yet to be included in a Medicare rewards program, may be more important outcome measures than readmissio­ns. The process measures used by Medicare, gleaned from reimbursem­ent records, may not be the most important in driving outcomes. Timing may also be a factor—how much can inhospital processes really determine readmissio­n rates; it may be that overall system performanc­e needs to be rewarded or penalized, not just the hospitals.

The weak link between patient satisfacti­on and final outcomes also needs to be taken into account. Are questions about the cleanlines­s or noise levels in hospitals really relevant? Does a zero on “How often did nurses explain things in a way you could understand?” translate into worse outcomes? Writing late last month in the New England Journal of Medicine, defenders of patient-satisfacti­on surveys—some of whom are financiall­y involved in developing their own survey methods—vigorously defended patient experience surveys “when designed and administer­ed appropriat­ely.” Going farther, some analysts have criticized Medicare’s rewards and penalties for being too small to influence provider behavior. The implicatio­n is that the government should move quickly to raise the stakes.

That would be a mistake. Medicare and other payers using pay-for-performanc­e and other incentive programs must be sure they are rewarding and penalizing the right processes—ones that truly improve outcomes. And if hospitals and providers are going to be asked to throw patient satisfacti­on into the mix, the questions asked must not confuse feeling good with getting better.

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