Thursday, July 25, 2013

IOM Criticizes Geographic Pay Plan in Medicare

Published: Jul 24, 2013

By David Pittman, Washington Correspondent, MedPage Today
WASHINGTON -- Medicare should not adopt a geographic value index that would tie payments to the health benefits and costs of services in a particular region, a congressionally mandated report said Wednesday.
Health decisions are made at the physician or organization level, so a geographic adjustment would be a poor target for encouraging value improvement, the Institute of Medicine said. Furthermore, intra-area variation in spending can be large -- even down to the hospital, single-specialty group practice, and individual physician.
"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 178-page report, titled "Variation in Health Care Spending," said.
While it's long been known that Medicare spending varies greatly across geographic regions, the IOM committee sought to understand if cutting payment to high-cost areas would save money without affecting quality, or would incentivize providers to be more cost-effective.
After reviewing spending and outcomes data, the committee concluded that healthcare involves a wide array of players from solo practitioners to large hospital systems and "opportunities for value improvement exist at all levels of healthcare decision-making."
"Depending on the organizational setting and degree of clinical integration, different decision-makers have varying abilities to maximize efficiencies and improve value," the report stated.
The issue of variation in Medicare spending arose in the 1980s after creation of the Medicare Advantage program. Payments to plans were based on traditional Medicare spending in a beneficiary's county of residence. Because spending varied, payments to plans varied.
Rather than base payments on traditional Medicare spending in an area, a value index would theoretically work by basing spending on an area's value of services, thereby rewarding areas that provide high-quality services at low costs, the report said.
The IOM didn't find a consistent relationship between utilization and quality measures in Medicare. A geographic value index would require that performance be observable via resource use and quality. The committee also found that variation in healthcare spending is reflective of price and utilization, and that utilization is driven largely by post-acute care services.
Committee members studied Medicare and Medicaid data, as well as private insurance, to understand sources of geographic spending variations and quality.
Committee members included former Medicare chiefs Mark McClellan, MD, PhD, and Gail Wilensky, PhD; health reform leaders like Karen Davis, PhD, who is a former Commonwealth Fund president, and Paul Ginsburg, PhD, president of the Center for Studying Health System Change; and others. Joseph Newhouse, PhD, from the Harvard School of Public Health, chaired the committee.
Unlike some other IOM committees, this committee had a substantial research budget, which it used to quantify variation in spending, utilization, and quality across various populations, payers, and geographic units.
The IOM committee recommended that the Centers for Medicare and Medicaid Services (CMS) and Congress take the following steps if they want to lower costs and improve outcomes:
·         Make more easily available necessary Medicare and Medicaid data on spending and outcomes for research purposes
·         Continue to test payment reforms that incentivize the integration of care delivery
·         Conduct ongoing evaluations of reforms' impact on value
·         Accelerate the transition to new payment models if evaluations demonstrate increased value
"To improve value, payment reforms need to create incentives for behavioral change at the locus of care (provider and patient)," the report stated. "Therefore, payment should target decision-making units, whether they be at the level of individual providers, hospitals, health care systems, or stakeholder collaboratives."
Wednesday's final report reiterates the committee's interim findings, which were released in March. Wednesday's report is the latest in the IOM's examination of regional variation in health costs. In 2011, the body said CMS's method to adjust for regional variations in Medicare reimbursements was flawed.
http://www.medpagetoday.com/PracticeManagement/Reimbursement/40669?goback=%2Egde_1026757_member_260590636

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