V is for Value

Ten years ago, Michael Porter, a professor at Harvard Business School, began shaking up the health policy world when he published, together with his colleague Elizabeth Teisberg, the book Redefining Health Care: Value-Based Competition. The concept became the official mantra of the American health policy establishment in 2010, when Porter summarized his ideas in the New England Journal of Medicine, asserting: “Achieving high value for patients must become the overarching goal of health care delivery, with value defined as the health outcomes achieved per dollar spent. This goal is what matters for patients and unites the interests of all actors in the system. If value improves, patients, payers, providers, and suppliers can all benefit while the economic sustainability of the health care system increases.”

Over time, this has been taken to imply the necessity for “value-based payment,” or VBP, also known as "pay for performance" (PFP). Just how pervasive this thinking is can be seen in a series of editorials published in JAMA and taken from the National Academy of Medicine’s “Vital Directions.” From the piece called “Tailoring Complex Care Management for High-Need, High-Cost Patients,” to the piece on “Improving Benefit Design to Promote Effective, Efficient, andAffordable Care,” VBP is assumed to be the answer. Even the article on “Preparing for Better Health and Health Care for an Aging Population” sneaks in mention of VBP. But will a reimbursement scheme that rewards “high value” care more than “low value care,” and presumably somewhat more than care that is somewhere between “high” and “low” on the value spectrum, really solve the problems of today’s health care system?

Underlying the fervent belief in the value of value is the assumption that in the bad old days—and still today in many places—when physicians and hospitals were reimbursed for the volume of services, it was this system that created over-use. Of course doctors order too many tests and prefer expensive procedures over cheaper ones, according to this reasoning, because what drives their behavior is reimbursement. It was the payment system that created the monster in the first place, and it’s the payment system that must be reformed today. But is this an accurate description of why tests and medicines and procedures are over-used today, let alone a plausible explanation of how the status quo arose in the first place? Isn’t it at least possible that the economists have it backwards—that the payment system reflected prevailing practice?

The trouble with the current ideological insistence that VBP is The Answer, aside from the fact that supposedly value-based reimbursement systems haven’t so far produced the desired result, is that it totally discounts the role of culture, of advertising, of popular expectations. When a physician orders an expensive test instead of relying on a cheaper one or, God forbid, on history and physical exam, maybe the reason is that the patient expects and wants the test—and may even be willing to pay a little extra to get it. Perhaps the physician, too, believes the expensive test is superior to the alternatives and doesn’t believe the calculation of “outcomes per dollar spent” accurately reflects the true value of the test. Perhaps the physician has been barraged with "information" by the producer of the machine used to perform the test and has come to accept the evidence and arguments of the device manufacturer as legitimate. Maybe the members of the group practice in which the physician works are collectively persuaded by the claims of the medical device industry. Maybe the physician gained experience with a particular type of device during residency and prefers this one, even though it is more expensive, because he is convinced that the outcomes in his hands will be superior if he uses the familiar equipment. Physicians are professionals who make decisions based on their education and training, not just based on their financial self-interest.

I don’t want to suggest that reimbursement has no effect on physician practice. There is compelling evidence that some medical students choose a particular specialty because, overall, it is far better paid than another one. The Medscape Physician Compensation Report for 2016 reveals the large and persistent gap between the earnings of different specialists: orthopedists make $443,000 whereas general internists make only $222,000, with general surgeons in between at $322,000. Geriatricians, incidentally, with the complete absence of procedures, earn less than anyone else. I agree that reimbursement schemes have the potential to influence behavior to some extent, perhaps more so for hospitals than for individual physicians (or even group practices).

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What I mainly want to suggest is that tweaking reimbursement, by itself, is not likely to be enough to dramatically change practice. If we want physicians to change the way they care for patients, we need to modify what they learn in medical school and residency. We need to educate patients to expect something different from what they expect today. And we need to limit the capacity of drug companies and device manufacturers to sway opinion with huge expenditures on marketing.

Everyone wants "value." It's a great word: after all, who wouldn't want something that is valuable? But I'm not persuaded that it is wise for CMS to plan to convert all reimbursement to VBP over the next few years, as it is planning. If we don't make other far more profound changes, modifications of education, training, and cultural expectations, the revisions of the reimbursement system are destined to fail.

You Get What You Pay For—Or Do You?

The Affordable Care Act, as it turns out, isn’t just about providing health insurance coverage for the 40 million previously uninsured Americans. It’s also about reforming Medicare, in part to pay for some of the costs of providing health insurance for everyone, in part to keep Medicare from going bust, and in part to improve the quality of care provided by Medicare. The favorite strategy for modifying Medicare is “value-based purchasing,” which is another name for pay-for-performance. The idea is simple: don’t just pay whatever doctors or hospitals ask for and don’t pay per service (the original fee-for-service model); instead, pay based on results. After all, physicians aren’t supposed to perform tests and procedures just for the sake of doing something; they are supposed to do things in order to improve health. So why not pay physicians only if they make people better? 

The problem, of course, is that not everyone will get better, no matter how state of the art their treatment, and some of them will get better but along the way they will also suffer from all kinds of complications. To deal with the realities of taking care of people who are old and sick, Medicare has adopted a policy that rewards—or penalizes—hospitals based on their performance on a combination of measures: the processes of care, the outcomes of care (specifically 30-day mortality), the patient’s satisfaction, and whether or not patients are readmitted to the hospital within a month of discharge. The big question is, does this approach work?

Previous studies have failed to show any benefit on clinical processes or patient satisfaction. Now, a new study in BMJ suggests that it doesn’t improve mortality either. The authors examined mortality among patients with heart attacks, heart failure, or pneumonia (the 3 conditions for which Medicare “incentivizes” hospitals using its value-based reimbursement scheme). They compared mortality rates for these conditions before and after the introduction of Hospital Value-Based Purchasing. They studied whether changes in mortality in the target conditions differed from changes in a comparable group of patients with other medical conditions. They tested whether the trends were any different at hospitals that didn’t participate in the HVBP system. And to look for trends, they determined mortality rates over a 3-year period before the introduction of Hospital Value-Based Purchasing and over the 3 years after its introduction. The result: nothing changed. 

Not everyone will be satisfied with the authors' choice of the comparison group—either of patients with different medical conditions or of hospitals that participated in a different reimbursement scheme. The risk adjustment process might be flawed. Maybe 3 years wasn’t long enough to see an effect, especially since the incentives have been changing—initially, hospitals were rewarded if they did well, now they are penalized if they do poorly, and the magnitude of the penalty increases annually. So it would be premature to conclude that value-based purchasing is a failure. But surely it isn’t a great success, either, if no one has been able to prove that it does what it’s supposed to.

Medicare has the potential to shape geriatric care in the U.S. There’s no question that strategies invoked in the past such as the introduction of prospective payment for hospital care (ie paying a fixed amount for a given condition, rather than a fixed amount per day in the hospital) have made a huge difference in both costs and outcomes. But it’s not at all clear that the prevailing enthusiasm for pay-for-performance is the answer to providing better, more cost-effective care to older people. 

Maybe we need to go back to the drawing board and analyze the weaknesses of our current system. Perhaps what we will find is that the weaknesses are not just fragmentation, lack of coordination, and the triumph of high tech over high touch, although these are all important. Perhaps what we will find is that the weaknesses include a focus on disease rather than function, on individuals rather than families, and on the values of physicians rather than patients.