Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Value-Based Care News

Are Federal Value-Based Care Programs Truly Promoting Value?

AHA recently told lawmakers that Medicare value-based reimbursement initiatives fall short of improving care quality and reducing costs.

By Jacqueline LaPointe

- In a statement to the House Ways and Means Health Subcommittee, the American Hospital Association (AHA) argued that Medicare value-based reimbursement programs, particularly pay-for-performance initiatives, do not have effective and fair financial incentives that promote performance improvement.

Federal value-based reimbursement programs need to reward value, improvements to quality of care, the AHA says

The industry group scrutinized Medicare quality reporting requirements for its misalignment across other alternative payment models and payers as well as its lack of prioritization of quality measures. Existing quality reporting programs have unfairly penalized some providers that treat disadvantaged populations and create more burden on providers.

CMS uses quality measures to determine value-based reimbursement amounts and publishes the data on its Hospital Compare website. But, by 2019, the AHA stated, hospitals will have to report on more than 90 measures across various quality reporting programs.

“Hospitals continue to strongly support transparency on quality,” the organization explained. “However, there are significant concerns that the explosion in measure reporting requirements is limiting the effectiveness of efforts to improve quality and causing confusion for the public.”

Rather than encourage performance improvement, the AHA noted that the additional measures increase administrative burden on providers, especially since many have to report to multiple payers and regulatory bodies on different measures. Providers end up spending time on gathering and reporting data that could be used on improving care delivery.

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The AHA advised lawmakers to better align quality measures with other Medicare value-based reimbursement programs and prioritize measures that will bring the most value to providers and care delivery.

The organization identified 11 measurement priority areas that CMS should consider for improving quality reporting programs, including patient safety outcomes, readmission rates, risk-adjusted mortality, effective patient transitions, diabetes control, obesity, and cost per case or episode of care.

Lawmakers should also use the following principles when developing “measures that matter,” the AHA added:

• Provider behavior should impact the outcomes being assessed

• Include measures that have evidence that their use will result in better care and outcomes

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• Measures should be used in initiatives only if they illustrate meaningful differences in performance among providers, although some measures can be kept or re-introduced to reconfirm their importance

• Quality reporting should be as administratively simple and should primarily relay on EHR data

• Measures should address the efforts of hospitals and providers along the care continuum and align data collection efforts of other providers

• Measures should be aligned across public and private payers to decrease unnecessary data collection and reporting efforts

• Risk adjustment should be strictly upheld to account for all factors beyond the provider’s control, such as socioeconomic factors, and adjustment methodologies should be transparent to all stakeholders

READ MORE: Post-Acute Care Network Key to Value-Based Purchasing Success

In addition to quality reporting, the AHA criticized Medicare hospital pay-for-performance programs. The value-based reimbursement models focus more on cutting Medicare spending rather than improving care delivery.

For example, the Hospital Readmissions Reduction Program should “incorporate socioeconomic adjustment to ensure that hospitals caring for our nation’s most vulnerable patients are not disproportionately penalized,” the industry group stated. As the program currently stands, it does not account for community determinants outside the control of hospitals, such as availability of primary care, mental health services, access to medications, and availability of healthy foods.

As a result, about 86 percent of hospitals in the highest quartile of disproportionate patient percentage faced a financial penalty, whereas only 60 percent in the lowest quartile was penalized.

The organization also advised CMS to exclude hospital readmissions unrelated to the initial reason for admission. While the Affordable Care Act mandated that CMS ignore unrelated readmissions, the AHA stated that it was not fully implemented the provision.

Similarly, the AHA explained that the Hospital-Acquired Conditions Reduction Program unfairly penalizes hospitals that care for the sickest patients. Since the program penalizes one-fourth of participants each year regardless of performance improvement, the program scores do not reflect meaningful differences in quality. The program also uses claims-based patient safety indicators that have been shown to be unreliable, especially since small providers may not have enough data to report on certain measures.

Additionally, pay-for-performance programs for post-acute care providers should be redesigned to foster innovations in care delivery, the AHA stated. Last year, House representatives proposed to replace the market-basket value cap with the Medicare Post-Acute Care Value-Based Purchasing Program (H.R. 3298), but the AHA criticized the program’s foundation.

“In concept, the AHA agrees with the potential for pay-for-performance to accelerate improvements in post-acute care,” the organization said. “However, we urge a number of improvements to H.R. 3298, as we are concerned that the bill too narrowly focuses on reducing provider payment rather than promoting ‘value’ – that is, the delivery of consistently high-quality care at a lower cost.”

To better align the value-based purchasing program with value, the AHA advised Congress to make the initiative budget neutral. The program is designed to hold back a percentage of post-acute care reimbursements and providers can earn back some or all of the payments based on performance. However, since the program is not budget neutral, only 50 to 70 percent of the withheld payments would be repaid to providers and the rest would be retained by CMS.

The withheld payments should also follow the provisions of other Medicare value-based purchasing programs, the AHA noted. Post-acute care providers already face a number of reimbursement reductions, such as site-neutral payments, so CMS should only hold back a maximum of two percent of payments like in other programs.

“The AHA does not support utilizing VBP [value-based purchasing] to achieve reductions in the Medicare program; the PAC [post-acute care] VBP program should be budget neutral,” the group added.

Measures used to determine provider payments in the program should also reflect quality of care and not just healthcare costs, stated the AHA. The organization urged lawmakers to incorporate more quality measures in the value-based purchasing program to “ensure that the reward system encourages both high-quality care and lower costs.”

Improving pay-for-performance programs is key to promoting high quality and affordable care, the AHA stated. By aligning financial incentives with value-based care goals, federal agencies have the opportunity to alter physician behavior and progress with tying payments to value.

“By streamlining and focusing on ‘measures that matter,’ enhancing the fairness of pay-for-performance and aligning improvement across the care continuum, we believe our nation can greatly accelerate improvements in outcomes and health,” the statement concluded.

Dig Deeper:

Preparing the Healthcare Revenue Cycle for Value-Based Care

Value-Based Care Implementation Delays for Most Hospitals


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