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Why do physician practices join value-based payment initiatives?

Written By: Jason Shafrin - Oct• 02•17

Are physicians ready for value-based payment? That is the question a recent paper by Markovitz et al. (2017) attempts to answer. This question is not hypothetical as the Medicare Access and Children’s Health Insurance Program Reauthorization Act (MACRA) requires physicians to choose between the current fee-for-service structure under the Merit-Based Incentive Payment System (MIPS) or move to value-based payment under the Alternative Payment Model (APM) framework.

To entice physicians to join APMs, the Centers for Medicare and Medicaid Services(CMS) will award APM participants an unconditional 5 percent incentive payment between 2019 and 2024, and, from 2026 onward, a permanently higher fee schedule growth rate (0.75 percent per year) than MIPS (0.25 percent per year).

The authors examine the relationship between physician practice characteristics–in particular, previous exposure to value-based payment–and their decision to participate in an alternative payment model: namely (i) the Medicare Shared Savings Program (MSSP)–Medicare’s version of an Accountable Care Organization (ACO)– (ii) Physician Compare–public reporting of quality metrics–, and (iii) Meaningful Use participation–for use of electronic health records. Physician practice characteristics come from the 2012-2013 third National Survey of Physician Organizations 3 (NSPO3). This survey is nationally representative of U.S. physician practices.

Using this approach, the authors find that a:

1 percentage point increase in the percent of revenue linked to financial incentives for quality or efficiency was associated with approximately a 1 percentage-point increase in the probability of ACO participation (Marginal Effect [ME], 0.009…p < .001) and a 1 percentage-point increase in Meaningful Use participation (ME, 0.008…p < .001)…Financial incentives were not significantly related to Physician Compare participation…

Not only did exposure to value-based financial incentives affect participation in Medicare value-based purchasing programs, so did exposure to public quality reporting programs.

Practices with prior exposure to public reporting were approximately 4 percentage
points more likely to participate in ACOs (…ME, 0.036,…, p < .05), 12 percentage points more likely to participate in Physician Compare (ME, 0.120, p < .001), and 14 percentage points more likely to participate in Meaningful Use (ME, 0.136, p < .001).

Unsurprisingly, physicians practices that had more previous exposure to value-based reimbursement and public quality reporting were more likely to join one of Medicare’s value-based purchasing programs.  It is likely that there will also be significant selection bias in the practices that choose APM over MIPS as part of MACRA going forward.

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