There is not, and there will never be, a perfect system for paying health care providers. Capitated payments, which are upfront, regardless of the number and cost of services physicians deliver, creates an incentive for providers to avoid treating people with costly conditions. Fee-for-service, which pays physicians for services they deliver, creates an incentive for them to deliver more care than necessary. Paying physicians a salary can lead them to be lazy, since they will get paid anyway, or not.
Medicare Advantage, Medicare benefits offered through private health insurers, was an experiment to see whether paying insurers a capitated fee offered any value. To date, it has cost taxpayers and people with Medicare more and there is no evidence that the for-profit health plans deliver as good care as traditional Medicare. In fact, the evidence, to the extent it is available, should elicit grave concern. How can we think a health insurance model like Medicare Advantage for older and disabled Americans, which does not compete to attract members with complex and costly conditions, has any worth?
The federal government also has been testing ways in traditional Medicare to incentivize physicians and hospitals to deliver better care at lower cost and move away from fee-for-service payments. Some of its experiments reward providers financially. To date, there is little evidence that these financial incentives lead to improved quality or lower costs. New research shows that they might be harming some patients. The post below is reprinted from the Health Justice Monitor.
Time and Financial Costs for Physician Practices to Participate in the Medicare Merit-based Incentive Payment System: A Qualitative Study, JAMA Health Forum, May 14, 2021, By Dhruv Khullar, Amelia M. Bond, Eloise May O’Donnell, Yuting Qian, David N. Gans, and Lawrence P. Casalino
“Participating in the MIPS program results in substantial financial and time costs for physician practices. We found that, on average, it cost practices $12 811 per physician to participate in MIPS in 2019. We found that physicians themselves spent a considerable amount of time to participate in MIPS. In 2019, physicians spent more than 53 hours per year on MIPS-related activities, which translates to nearly $7000 per physician. If physicians see an average of 4 patients per hour, then these 53 hours could be used to provide care for an additional 212 patients a year—equal to more than a full week’s work for a physician.”
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Comment by Adam Gaffney
Pay-for-performance (P4P) is an increasingly central part of the American healthcare landscape. The Affordable Care Act added a multitude of new P4P programs to Medicare, including the Hospital Readmissions Reductions Program (HRRP) and the Hospital Value-Based Purchasing Program (HVBP). Then, the Medicare Access and CHIP Reauthorization of 2015 gave us the Merit-based Incentive Payment System (MIPS), a new P4P program that imposes financial sticks and carrots on individual clinicians across the country based on a slew of complicated performance metrics.
Much research suggests that these programs have little effect on patient outcomes. The HRRP was much lauded for apparently reducing readmissions, but later research attributed much (or all) of this apparent reduction to changes in diagnostic coding. There is also some evidenceHRRP may have harmed some cardiac patients. Meanwhile, studies of the HVBP have found virtually no impact. Fewer studies, however, have examined the costs of such programs.
That’s what makes this study, led by Dr. Dhruv Khullar at the Weill Cornell Medical College, so valuable. The researchers interviewed the leaders of 30 physician practices across the nation who participated in the MIPS, and quantified the costs of participation in the program. Overall, they found that we spend more than $12,000 per physician annually to cover the administrative costs of participation in MIPS. Additionally, “MIPS-related activities” suck up over 200 hours of labor per year from practice staff, including 53.6 hours from frontline clinicians. And this is merely for a single P4P program.
There is little evidence, in other words, that P4P programs substantively improve care — and growing evidence that they further inflate our already enormous administrative costs while sapping the time and energy of practicing doctors. For these reasons, P4P should not be included in a Medicare for All reform. Notably, the House Medicare for All Bill excludes this payment mechanism. The underlying political idea of P4P is a fundamentally neoliberal one: the idea that we are all motivated only by pursuit of the dollar. Instead, doctors want to provide the best care they can. That it is not to say that there isn’t room for quality improvement in our healthcare system — far from it — but a paucity of profit incentives is not the culprit. Further, an increasing number of studies show that P4P is redistributive — shifting funds from providers that care for poorer patients (who tend to have worse outcomes) to the providers of the wealthy.
Here’s more from Just Care:
