Research and Policy Analysis


Society of General Internal Medicine. 2014.

The National Physician Payment Commission Recommendation to Eliminate Fee-for-Service Payment: Balancing Risk, Benefit, and Efficiency in Bundling Payment for Care

Harry P. Selker, Richard L. Kravitz and Thomas H. Gallagher

BRIEF SUMMARY: The National Commission on Physician Payment Reform wants to eliminate fee-for-service method of paying for care – drives high costs and lacks focus on quality of care. Financial incentives should encourage high quality, coordinated cost effective, patient centered care. However, as healthcare providers (physicians, hospitals, and other care organizations) assume financial responsibility for the overall health and medical care of groups of people, they will essentially be undertaking health insurance functions. In this way, needs of individual patients could be compromised by efforts to limit overall costs or underuse of necessary care is a risk for the imperative for efficiency and cost-containment. Other risks include of consolidation of health care systems and potential conflicts of interest

JAMA. 2014;312(3):231-232.

Professional Organizations’ Role in Supporting Physicians to Improve Value in Health Care

Leah Marcotte, MD; Christopher Moriates, MD; Arnold Milstein, MD, MPH

BRIEF SUMMARY: The Affordable Care Act (ACA) strives to encourage health care value by simultaneously improving quality of care and slowing the rate of increase of health care costs. Some of the law’s provisions, such as the Physician Value-Based Modifier (PVBM), will include financial incentives that directly affect individual clinicians, thus providing an external force for engaging physicians in efforts to improve health care value.1,2 Despite this looming mandate—PVBM will go in effect in 2015 for large physician groups and in 2017 for all physicians—some physicians may lack the tools and motivation necessary to improve the value of their individual care delivery. Notably, the current system does not compel high-value care. Not only is mitigating waste and judiciously ordering tests and referrals disincentivized in the fee-for-service system, doing so is more cognitively taxing and there is a perceived increased risk of legal repercussions. Therefore, physicians will require adequate direction and dedicated specialty-specific support to successfully overcome considerable resistance to providing high-value care. Given the role of professional organizations as liaisons between physicians and policy, they are in a unique position to help physicians succeed in efforts to improve the value of health care.

RAND 2014

Measuring Success in Health Care Value-Based Purchasing Programs

Cheryl L. Damberg, Melony E. Sorbero, Susan L. Lovejoy, Grant Martsolf, Laura Raaen, Daniel Mandel

BRIEF SUMMARY: Value-based purchasing (VBP) refers to a broad set of performance-based payment strategies that link financial incentives to providers’ performance on a set of defined measures. Both public and private payers are using VBP strategies in an effort to drive improvements in quality and to slow the growth in health care spending. Nearly ten years ago, the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) began testing VBP models with their hospital pay-for-performance (P4P) demonstrations, known as the Premier Hospital Quality Incentive Demonstration (HQID) and the Physician Group Practice (PGP) Demonstration, which provided financial incentives to physician groups that performed well on quality and cost metrics. The use of financial incentives as a strategy to drive improvements in care dates back even further among private payers and Medicaid programs, which began experimenting with P4P in the mid-1990s and early 2000s.112 These early private payer P4P programs generally focused on holding providers accountable for their quality performance and targeted physician groups, individual physicians, and hospitals.1–3

ATKearney Sept. 2013

Building Value-Based Healthcare Business Models

Axel Erhard, Jonathan Anscombe, Giorgio Ortolani, Eva de Bres-Riemslag, Tim Wintermantel

BRIEF SUMMARY: The pharmaceutical and medical technology industries survived the recent financial crisis relatively unscathed, but they are being transformed nonetheless as healthcare systems switch their reimbursement model from paying for products or services to rewarding clinical and health-economics outcomes. The task the industries face—demonstrating value based on a product focus—is far from simple. For one thing, there are inherent limitations to the value a single drug can bring to the management of complex, chronic diseases, where therapeutic success is determined not only by the molecule but by a combination of drugs, physician intervention, home assistance, and lifestyle changes. Moreover, providing better health outcomes in exchange for fewer resources means that medications and interventions must be targeted to the right patients. However, personalized medicine has yet to significantly permeate the operating models of the pharmaceutical and medical technology industries.

Health Aff July 2014 vol. 33 no. 7 1115-1122

Creating Value In Health Care Through Big Data: Opportunities And Policy Implications

Joachim Roski1,*, George W. Bo-Linn2 and Timothy A. Andrews3

BRIEF SUMMARY: Big data has the potential to create significant value in health care by improving outcomes while lowering costs. Big data’s defining features include the ability to handle massive data volume and variety at high velocity. New, flexible, and easily expandable information technology (IT) infrastructure, including so-called data lakes and cloud data storage and management solutions, make big-data analytics possible. However, most health IT systems still rely on data warehouse structures. Without the right IT infrastructure, analytic tools, visualization approaches, work flows, and interfaces, the insights provided by big data are likely to be limited. Big data’s success in creating value in the health care sector may require changes in current polices to balance the potential societal benefits of big-data approaches and the protection of patients’ confidentiality. Other policy implications of using big data are that many current practices and policies related to data use, access, sharing, privacy, and stewardship need to be revised.

Health Aff April 2014 vol. 33 no. 4 723

Value-Based Purchasing’s Effect On Quality And Costs

Winnie Chia-hsuan Chi*, Sze-jung Wu and Andrea DeVries

BRIEF SUMMARY: James Robinson and Timothy Brown (Aug 2013) demonstrated how a value-based purchasing design (VBPD) program can lower costs by influencing patients’ choice of surgical facility and driving price competition among providers. In 2011 Anthem Blue Cross of California, the administrator of the VBPD program for the California Public Employees’ Retirement System (CalPERS), requested that our research team carry out an analysis evaluating the program, including an examination of health outcomes and use of services after surgery. Robinson and Brown noted that they did not explore the possibility of cost shifting as a result of the VBPD program. To address this limitation, we compared 180-day costs following total joint replacement (TJR) surgery before and after the VBPD program was implemented for the same patient population. We found no increases in the use of acute rehabilitation centers or follow-up care, such as physical therapy and orthopedic surgeon visits, during implementation. Robinson and Brown also specified that acceptable quality was a selection criterion for VBPD facilities. However, an important element that is not within their scope of analysis was whether a VBPD program that saves money for payers has any unintended health consequences for plan members. In our claims analysis, we found no increase in rates of TJR-related complications, such as pulmonary embolism and sepsis, during the implementation period and no increase in emergency department admissions or hospital readmission rates following surgery.1 Combining our analysis, which found no evidence of cost shifting or negative health consequences, with the cost reduction reported by Robinson and Brown, the CalPERS experience demonstrates that the VBPD program is an effective way to curb rising health care costs while maintaining the quality of care.

Health Aff January 2014 vol. 33 no. 1 132-139

The Population Value Of Quality Indicator Reporting: A Framework For Prioritizing Health Care Performance Measures

David O. Meltzer1,* and Jeanette W. Chung2

BRIEF SUMMARY: The Agency for Healthcare Research and Quality (AHRQ) National Healthcare Quality and Disparities Reports contain more than 250 quality indicators, such as whether a patient with a suspected heart attack received an aspirin. The Department of Health and Human Services National Quality Measures Clearinghouse identifies more than 2,100 such indicators. Because resources for making quality improvements are limited, there is a need to prioritize among these indicators. We propose an approach to assess how reporting specific quality indicators would change care to improve the length and quality of life of the US population. Using thirteen AHRQ quality indicators with readily available data on the benefits of indicator reporting, we found that seven of them account for 93 percent of total benefits, while the remaining six account for only 7 percent of total benefits. Use of a framework such as this could focus resources on indicators having the greatest expected impact on population health.

National Commission on Physician Payment Reform 2013

Report of the National Commission on Physician Payment
William Frist, M.D., Steven Schroeder, M.D., JudyAnn Bigby, M.D., Lisa Latts, M.D., Troyen A. Brennan, M.D., Kavita Patel, M.D., Suzanna Delbanco, Ph.D., Meredity Rosenthal, Ph.D. Thomas Gallagher, M.D., Amy Whitcomb Slemmer, Jerry Kennet, M.D., Michael Wagner, M.D., Steven Weinberger, M.D., Richard Kravitz, M.D.

BRIEF SUMMARY. The report released by the National Commission on Physician Payment highlights several solutions to the problems facing Medicare through twelve detailed recommendations focused on solving the issues that are part of fee-for-service reimbursement, the transitioning from Fee-for-service to value-based payments, and the improvement of the physician payment within the Medicare program. The Commission’s recommendations surrounding the problems in the fee-for-service model center around the concept of integrating fee-for-service and value-based purchasing into one system that encourages behavior to improve quality and cost which would be implemented over a five-year test period. The recommendations also include further recalibration of the fee-for-service model to include quality metrics, the increased value for preventative care, and the freezing of updates for procedural diagnosis codes for three years. In addition, the recommendations include the elimination of the Sustainable Growth Rate and increased transparency of the Relative Value Scale Update Committee.

Health Affairs 2010; 29:11

Applying Value-Based Insurance Design to Low-Value Health Services

A. Mark Fendrick, Dean G. Smith, and Michael E. Chernew

BRIEF SUMMARY: The design of Value-based insurance creates improved health care quality and efficiency through the reduction of cost sharing for services that show strong indicators of clinical benefits. The authors argue in this paper that the health care industry needs to invest in processes to define low-value care, conduct research and identify services that provide negligible benefit to patients and use technology to implement findings and apply value-based healthcare.

New England Journal of Medicine 2007; 356:486-96

Public Reporting and Pay for Performance in Hospital Quality Improvement

Peter K. Lundenauer, M.D., Denise Remus, Ph.D., Sheila Roman, M.D., Michael Rothberg

BRIEF SUMMARY. The research conducted by Lunderauer et al. attempts to explain the benefits of pay-for-perfomance models of healthcare and public reporting through an analyzation of public reported data by 207 facilities that were operating under the pay-for-performance model in a pilot project funded by the Center for Medicare and Medicaid Services. Researchers found that pay-for-performance models, when compared to a control group, showed great improvement in quality, including measures for heart failure, acute myocardial infarction and pneumonia. After the baseline performance measures were adjusted for facilities that participated in a pay-for-performance model had improvements in a range of 2.6 – 4.1% over 2 years.

Health Affairs 2012; 31:9

Michigan’s Physician Group Incentive Program Offers A Regional Model For Incremental ‘Fee For Value’ Payment Reform

David A. Share, Margaret H. Mason

BRIEF SUMMARY. This article by Share and Mason highlights the efforts of Blue Cross Blue Shield of Michigan who created what they termed as a “fee for value” program, which rewards physician organizations based on the number of quality and utilization measures adopted by the membership. These measures included utilizing generic prescriptions and developing medical home capabilities. The authors estimated that $155 million was saved in 2011 through these efforts.

Health Affairs 2012; 31:12

Hospital Pay-For-Performance Programs In Maryland Produced Strong Results, Including Reduced Hospital-Acquired Conditions

Sule Calikoglu, Robert Murray, and Dianne Feeney

BRIEF SUMMARY. Calikoglu et al. examine Maryland’s two pay-for-performance programs in the context of Medicare’s October 2012 move towards value-based purchasing. In the first program, all clinical process-of-care measures improved over the three-year time span, and variations among hospitals decreased substantially. Within the second program, conditions acquired in the hospital declined by 15.26 percent over two years resulting in an estimated cost savings of $110.9 million. If these results were extrapolated nationally an estimated $1.3 billion would be saved by instituting a similar hospital-acquired conditions program.

International Society of Pharmacoeconomics and Outcomes Research Draft Report 2012

The Rise of Value Based Health Care: A Report

Fleurence RL, Sorenson C, Naci H, Spackman DE, Chambers J, DeSouza J, Kim E

BRIEF SUMMARY. The researchers of this report examine the feasibility of creating a system where provider interests are aligned with achieving the best healthcare possible – value-based health care. A value-based health care system is defined as a system “intent on creating and delivering high value for its patients” and where value is defined as “the health outcome per dollar achieved.” Throughout the report, an analysis is conducted on various arenas of healthcare in North America, Europe and Australia in particular what was the process for these organizations to move to value-based health care and conclusions are drawn that value-based health care has the potential to provide some solutions to health care reform.

The Commonwealth Fund Commission on a High Performance Health System 2007

Aiming Higher: Results from a State Scorecard on Health System Performance

Cantor J, Belloff J, Schoen C, How S, McCarthy D

BRIEF SUMMARY. The State Scorecard offers a framework of data on five key factors (access, quality, potentially avoidable use of hospitals and costs of care, equity, and health lives) to assessing health care across the United States. The analysis of the range of state performance points to four findings:

1) There is wide variation among states.

2) Leading states consistently outperform lagging states.

3) Across states, better access is closely associated with better quality.

4) There are significant opportunities to reduce costs as well as improve access to and quality of care. Higher quality is not associated with higher costs across states.


Annals of Internal Medicine 2003; 138:273-287

The Implications of Regional Variations in Medicare Spending Part 1: The Content, Quality, and Accessibility of Care

Elliott S. Fisher, MD, MPH; David E. Wennberg, MD, MPH; Therese A. Stukel, PhD; Daniel J. Gottlieb, MS; F.L. Lucas, PhD and Etoile L. Pinder, MS.

BRIEF SUMMARY. This studies examines the potential health effects of regional variances in Medicare and whether higher Medicare spending results in better quality healthcare. This cohort study examines the data from patients who were hospitalized between 1993 and 1995 for hip fractures, colorectal cancer or acute myocardial infarction, as well as a sample from the Medicare Beneficiary Survey. End-of-life spending was utilized to reflect the regional variances in Medicare spending and then broken down into 306 hospital referral regions of residence. Outcomes in the study were measured by the content of care, quality of care and access to care. It was found that patients in higher-spending regions are given approximately 60% more care normally consisting of more frequent physician visits, greater amount of tests and minor procedures and increased use of specialists and hospitals. The study also found that the quality of care was for the most part equal in high-spending regions as low-spending ones and was worse in multiple preventive care methods. The authors concluded that the higher-spending in certain regions is due to “more inpatient-based and specialist-oriented pattern of practice” without any increase in quality or access to care.

Health Policy Outlook 2010; No. 2

Addressing Geographic Variation and Health Care Efficiency: Lessons for Medicare from Private Health Insurers

Darius Lakdawalla, Tomas J. Philipson, and Dana Goldman

BRIEF SUMMARY. Lakdawalla, Philipson, and Goldman present a study conducted where they examine spending and utilization of services for Medicare compared to private health insurers. The authors sample population was created using data from private-sector records and the Medicare Current Beneficiary Survey and narrowed down to individual-level data on patients with ischemic heart disease and who also have a history of heart disease. Correcting for the smaller public-patient size, 24,800 public-sector versus 240,028 private-sector, the study examines the Metropolitan Statistical Area for utilization and spending of services between the two sub-groups on treatment of ischemic heart disease. Lakdawalla et al. found that in utilization, the geographic variance for public-sector patients exceeds that of the private-sector patients by 2.8 times for outpatient visits and 3.9 times for hospital stays. In spending, the study shows that Medicare patients spend on average 20 percent more than private-sector patients for total healthcare spending. The authors also recommend reducing spending and more appropriately limit geographic variation in utilization among Medicare beneficiaries by adapting the utilization-management techniques employed in the private sector for Medicare.

Medicare Payment Advisory Commission Report to Congress

Measuring Regional Variation in Service Use

Elliott Fisher, Jack Hadley, Karen Milgate, Solomon Mussey

BRIEF SUMMARY. The Medicare Payment Advisory Commission (MEDPAC) report is a collection of data on the difference between regional variation in Medicare spending and regional variation in the use of Medicare-covered services. To compile the data, MEDPAC adjusted program spending for differences in Medicare payment rates due to regional variations as well as adjusting for health status. Through these adjustments, MEDPAC found that 30-percent difference between the highest and lowest service use areas. However, the service use areas are not correlated to growth areas meaning some low-use regions have high growth and vice versa.

Health Affairs 2010; 29:3

Prices Don’t Drive Regional Medicare Spending Variations

Daniel J. Gottlieb, Weiping Zhou, Yunjie Song, Kathryn Gilman Andrews, Jonathan Skinner, Jason Sutherland

BRIEF SUMMARY. With Medicare per-capita spending more than twice as high in some places compared to others the question that Gottlieb et. Al attempt to answer is the difference in Medicare payments for specific areas due to the higher cost of goods and services in such areas. The authors analyzed Medicare spending after adjusting for local prices differences and fount that minimal variation existed due to local price differences and that Medicare payment difference are based on utilization rather than price variances.

MIPS Proposed Rule Measures

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