IOM recommends against adoption of geographic-based value index for Medicare payment rates

A report from the Institute of Medicine recommends against Congress adopting an index based on geographic value for Medicare payment rates because the practice would not make individual physicians or practices more efficient.

“The [Institute of Medicine] IOM committee recommends that Congress not adopt a geographically based value index for Medicare payments because the majority of health care decisions are made at the provider or health care organization level, not by geographic units,” Joseph P. Newhouse, PhD, chair of the committee, and colleagues wrote in the report brief. “Adjusting payments geographically based on any aggregate or composite measure of spending or quality would unfairly reward low-value providers in high-value regions and punish high-value providers in low-value regions.”

The committee recommended CMS consider reforms that would encourage health care providers to “share clinical data, coordinate patient care, and assume some financial risk for the care of their patients,” according to the report brief.

As part of the Patient Protection and Affordable Care Act, Health and Human Services instructed IOM to carry out two studies based on geographically adjustmented Medicare payments. In the first study, IOM made recommendations on how to improve accuracy on how to adjust payments based on geography and in the second study, IOM noted that geographical adjustments are a small part of the Medicare system and that attention should be focused on improving access to care as well as increasing quality and efficiency.

The findings in the latest report mirror an interim report by IOM in March 2013. The committee found one of the key drivers of variation in Medicare spending is differences in post-acute care and acute care spending. Committee members found if there were no differences in post-acute care spending, the variation in total Medicare care spending would decrease by 73%. The percentage increases to 89% when accounting for no difference in acute care spending, according to the brief.

The committee also looked at whether a geographic-based value index was practical for Medicare fee-for-service reimbursement rates. They found hospitals in the same region are not consistently high-cost or low-cost institutions.

“In addition, variation in practice patterns among physicians working in the same group practice—such as primary care physicians referring individuals with knee pain to an orthopedist—is as great as variation among comparable specialists at a state level,” Newhouse and colleagues wrote.

To read the report brief, visit the IOM website or click the link here.

Reference:
www.nap.edu/catalog.php?record_id=18393