Medicare P4P Physician Compensation Quality

Does the value-modifier improve quality and reduce health disparities?

In short, no.  That is the answer Roberts, Zaslavsky and McWilliams reach in their 2017 paper in Annals.

Some background on the value modifier program.  In 2013, practices with 100 or more eligible clinicians were rewarded just from reporting quality measures. By 2014, however:

Practices with 100 or more clinicians were subject to upward, downward, or neutral performance-based payment adjustments, those with 10 to 99 were subject to upward or neutral—but not downward—adjustments, and those with fewer than 10 were unaffected. In 2015, all practices with 10 or more clinicians were exposed to full VM incentives (both penalties and bonuses). Base payment adjustments ranged from 2% to 2% on the basis of 2014 performance and from 4% to 4% on the basis of 2015 performance, but high-performing practices have received much higher bonuses (for example, rate increases of 16% to 32% in 2016), because the VM’s budget neutrality provision stipulated that penalties for failing to meet reporting requirements be redistributed as bonuses.

Because of the eligibility cut-offs at 10 and 100 clinicians and the staggered role-out of the design, the authors use a regression discontinuity approach based on practices around the 10 and 100 clinician threshold.  They use 2014-15 Medicare claims data to examine three outcomes: (i) inpatient admissions for ambulatory care–sensitive conditions, (ii) Medicare spending per beneficiary, and (iii) all-cause readmissions within 30 days of hospital discharge.  Using this approach, they find that:

…differences in hospitalization for ACSCs, readmissions, Medicare spending, and mortality between practices above the size thresholds and those below (the adjusted discontinuities) were small in 2014 and not statistically significant…size. Analyses of the threshold of 100 or more clinicians that used 2015 data revealed no statistically significant discontinuities associated with a second year of full exposure to the VM.

In short, no effect was found. In addition, they found that risk adjustment was inadequate.  Adding addition risk adjustment factors narrowed differences in performance between high and low performing groups in particular among practices that served a disproportionately disadvantaged population.  While the value modifier is built from good intentions–pay more for high quality, low cost care–in practice, the results are not overwhelming.



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