Value-based purchasing programs increase as health care costs escalate

CMS must submit a report to Congress on a payment system based on value, not volume.

The government is looking toward value-based purchasing programs as a means of transforming Medicare from a passive payer of bills to an active purchaser of health care.

At the 24th Annual Meeting of the North American Spine Society, Mark A. Levine, MD, FACP, a chief medical officer for the Centers of Medicare & Medicaid Services (CMS) discussed these demonstrations and future pilots that may impact physician reimbursement.

Levine noted that the Medicare Part A trust fund is estimated to be depleted by 2017.

“That is right around the corner, so we do not have a lot of time to put these ideas into effect,” he said. “But, we are not starting from scratch.”

Competition for the dollar

He noted that the Premier Hospital Incentive Demonstration was one of the first value-based purchasing programs to show a sustained and dramatic growth in quality metrics for myocardial infarction, bypass surgery, pneumonia, heart failure and hip and knee surgery.

“Every quarter the quality metrics improved,” Levine said. “We had never seen that before until there was this competition for the dollar.”

Quality improvements

CMS implemented a similar program consisting of 10 physician group-practices with the major outcome of cost savings generated from improvements in quality. During the first 3 years of the program, half of the groups had significant savings and shared $25 million in incentive payments. In addition, the program resulted in $32 million in savings to the Medicare trust fund.

“That is certainly not a dramatic thing that is going to immediately salvage the Medicare program from its upcoming threat of fiscal demise, but certainly something that is very promising,” Levine said.

Gain sharing, PQRI

A new CMS demonstration in New York and West Virginia is investigating gain sharing as a means of saving costs while improving quality and efficacy.

While the results of this demonstration have yet to be realized, Levine noted, “There are some people who think this is an area of great promise [with] hospitals and physicians working together in a collaborative way to become more efficient.”

Implemented in 2007, the Physician Quality Reporting Initiative (PQRI) initially rewarded physicians for reporting on quality measures.

“Our preliminary results showed that 16% of professionals who were eligible to participate did, with more than half of them succeeding and receiving an incentive payment with a total of $36 million being sent out [by the government],” Levine said. “Now, I will not say it was a total success.”

He stated that the program was hampered by the use of claims-based reporting mechanisms, national provider identification numbers and feedback reports. The program has recently produced results for the 2007 reporting period.

“It did not turn out to be much of a quality improvement program, at least in my mind,” Levine said. “A quality improvement program needs to have rapid return and opportunity to improve upon the results they see as they evolve.”

He noted that the 2010 version of the program will include more than 170 quality measures, add group practice measures, new measure groups and more reporting periods.

MIPPA of 2008

Under the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008, the government called for CMS to submit a report to Congress detailing a new payment system based upon value instead of volume.

“We have not nailed this yet,” Levine said. “We have not made a report to Congress, but we have given this issue a fair amount of thought.”

He stated that a CMS issue paper on the topic included phrases such as, care coordination, preventable hospital admissions, management of chronic diseases and accountability — phrases that Congress has used in recent bills and during the health care debate.

“A large part of what we will be reporting is going to have to be placed in the context of what Congress is going to be expecting from us,” he said.

For more information:

Mark A. Levine, MD, FACP, can be reached at the Centers for Medicare & Medicaid Services, Office of the Regional Administrator, 1600 Broadway, Suite 700, Denver, CO 80202; 303-844-7070; e-mail: Mark.Levine@cms.hhs.gov.

• Reference:

Levine MA. Achieving cost savings with comprehensive services. Symposium: The Great American Health Care Debate: What Does Our Future Hold? Presented at the 24th Annual Meeting of the North American Spine Society. Nov. 10-14, 2009. San Francisco.