Medicare’s ‘valuable’ pay doesn’t align with what patients value: study

A new study shows that the Medicare program’s “value” payments don’t align with what Medicare beneficiaries value most, leading to an uncomfortable policy challenge.

The study in JAMA network open The study, which involved more than a thousand Medicare beneficiaries, presented a carefully crafted comparison of two fictitious hospitals, with their differences displayed in a simplified version of the star rating system on Medicare’s Compare website.

The six hospital characteristics shown—clinical outcomes, patient experience, safety, Medicare spend per patient, travel distance, and cost of ownership—corresponded to the four quality areas of Medicare’s Hospital Value-Based Purchasing Program (HBVP). These areas are clinical care; personal and community engagement; Security; and efficiency and cost reduction.

The Centers for Medicare & Medicaid Services (CMS) give each area equal weight when paying hospitals participating in the HBVP program, but the patients whose lives were on the line felt very different. Unsurprisingly, the most important thing to them was getting out of the hospital safe and alive. Researchers showed that a high “clinical outcomes” rating was by far the most important factor in selecting a hospital, followed far behind by safety and patient experience, each receiving a little under half the statistical weight of “clinical outcomes.” “Efficiency” was the lowest at about one-sixth of the clinical outcomes.

The authors cited Cynthia Barnard’s PhD thesis (personal disclosure: a friend and colleague) as accurately characterizing Medicare’s value-based payment system as a provider-centric model “without having meaningfully examined patient priorities.”

The researchers acknowledged that Medicare needs to be efficient given resource constraints, but looked at what would happen to hospital payments if Medicare listened to its beneficiaries. The answer, it turns out, is “Not much.”

Despite the ubiquitous rhetoric about moving from “volume to value,” HBVP payments account for just 2 percent of hospital reimbursements, which research suggests is likely why there is limited evidence that the program has improved quality. According to the study’s simulation, which involves the nearly 3,000 hospitals in the HBVP program, only $86 million would be shifted, a tiny tenth of one percent of the total cost of the HBVP program.

Small as that number is, however, the impact would be unequally distributed, as money would be diverted from smaller, more rural hospitals serving less complex patients to larger, high-volume hospitals.

And here lies the political challenge.

The authors conclude that redistribution of resources “may exacerbate inequalities” in care, which they link to concerns about “fairness”. However, this language is somewhat misleading. These are not “disparities” due to racial or ethnic factors, but actual differences (disparities) in the quality of care. But with nearly 30 percent of rural hospitals across the country at risk of closure in the near future, according to a report earlier this year, policymakers still face a difficult choice.

By changing the value-based compensation system to reflect seniors’ values, there is a risk that the subpar care provided by some rural hospitals will be replaced with better care available only from hospitals that are far enough away to be practical are inaccessible. In addition, small hospitals play an important role in the economic health of the community, an issue of great interest to the elected representatives of those affected.

I suspect that both the political question and the political question speak for a consistent politics of inertia: “First: do no harm.”

Leave a Comment