The Medicare Payment Advisory Commission (MedPAC)’s value incentive program (VIP) seeks to standardize the many value-based purchasing programs that are available to different care settings, including skilled nursing.
In its most recent report on Medicare payment policy, MedPAC devoted a chapter to the design of a VIP for post-acute care (PAC) in order to highlight challenges a unified program might pose, while offering solutions that would make such a program more viable.
MedPAC’s efforts to develop a unified PAC VIP coincides with comments from Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure in a discussion last August with Health Affairs.
Value-based care has “too many models in too many places,” Brooks-LaSure said, with little to no coordination between setting-specific programs. CMS will strive to make sure future VBC programs will work for their intended populations, she added.
MedPAC said a standardized PAC VIP would be a multi-year process relying on the implementation of a prospective payment system (PPS) across all post-acute care settings until “setting-specific practice patterns begin to converge.”
At the same time, CMS would need to align regulatory requirements for the program. Until these two steps are complete, MedPAC said, provider performance would need to be compared within settings.
“Practice patterns reflect current regulatory requirements and the payment incentives embedded in the various PPSs,” MedPAC said in its report. “Setting-specific comparisons could be phased out over time, leading up to comparisons across settings.”
In addition to skilled nursing facilities, home health agencies (HHAs), long-term care hospitals (LTCHs) and inpatient rehabilitation facilities (IRFs) would be part of this streamlined value incentive program.
Illustrating the PAC VIP model
Within its report, MedPAC created an “illustrative model” to underscore the many challenges in implementing a more standardized value incentive program.
The model highlighted that there are not consistent empirical relationships across the four settings, and that adjusting for social risk was more needed in SNFs and IRFs.
“Peer groups would counter the disadvantages they face in earning performance points,” MedPAC said. “In contrast, higher social risk was associated with better performances for HHAs and LTCHs.”
Common measures across the four post-acute care settings can help with comparing all providers, but may not be the best ones for a given setting, MedPAC said.
“CMS could consider a mix of common measures and measures tailored to specific patient populations,” MedPAC added. “However, the resulting performance scores may be harder to compare across settings and could run into reliability issues with population-specific measures.”
A payment incentive program isn’t the only way to get providers to improve, the organization said, suggesting public reporting of measures specific to a certain patient population might be a good supplement.
“Further, the set of performance measures is likely to evolve over time,” MedPAC said in its report.
The model found developing accurate risk adjustment is “elusive” in one care setting let alone across the proposed four post-acute settings.
Just like with common measures to gauge performance under the program, there is a trade-off between the ease of a streamlined, uniform risk-adjustment method and more complicated – but more accurate – setting-specific risk-adjustment model.
Value-based program for all PAC settings
The SNF value-based purchasing (VBP) program is the CMS’s current industry-specific iteration of a value incentive program with one measure at its core: hospital readmissions.
Originally designed to improve patient outcomes by awarding financial incentives or penalties based on 30-day hospital readmission rates, VBP set a performance and improvement baseline for SNFs to meet in order to avoid a penalty.
The program withholds 2% of all Medicare fee-for-service (FFS) revenue and redistributes a portion of funds as incentive payments. Depending on readmission rates, a SNF could lose its 2% in withheld revenue, or get an additional 2% bonus on top of receiving its withheld revenue – these two examples are the worst and best-case scenarios.
MedPAC’s report was required under the Consolidated Appropriations Act of 2021 to explore a prototype VBP program that could be implemented using a unified PPS for all post-acute care services.
The following key elements and decisions were suggested in designing the PAC VIP:
- Small set of performance measures
- Strategies to ensure reliable measure results
- System to distribute rewards with minimal ‘cliff’ effects
- Approach to account for differences in patient social risk factors using a peer-grouping mechanism
- Method to distribute the entire provider-funded pool of dollars
PAC VIP would adjust payments based on a small set of performance measures tied to clinical outcomes, patient experience and resource use.
Policymakers would decide if providers would be scored on the same set of measures or if they would be adjusted based on care setting while still trying to standardize measures to reach “as many providers as possible,” MedPAC said in its report.
Selected measures would need to capture differences across providers, MedPAC said, and eventually align with quality incentives tied to Medicare Advantage (MA) and Accountable Care organization (ACO) payments.
“The PAC VIP’s measure results would reflect true differences in performance and not random variation,” MedPAC stated.
The organization did admit trade-offs between common measures across the post-acute care continuum and patient population-specific measures.
The program would also account for patient social risk factors using a peer-grouping mechanism, MedPAC said. Providers serving populations at high social risk would receive larger adjustments to attain quality compared to providers in other peer groups.
PAC VIP and social determinants of health
Groupings based on social determinants of risk addresses a pitfall in SNF VBP – a March JAMA study found only 0.7% of poor-performing facilities were able to improve enough to avoid a financial penalty under the program.
Penalized facilities were more likely to serve vulnerable populations, according to the study.
“The statute that created the program required it to be cost saving to the [Centers for Medicare and Medicaid Services, or CMS], meaning that more SNFs are penalized than given a bonus by design,” JAMA authors noted. “When combined with previous results that indicate penalized SNFs overall are more likely to serve vulnerable populations, this outcome is a serious concern for the future of the program.”
In its mandated evaluation of the SNF VBP program last June, MedPAC suggested Congress eliminate and replace the program “as soon as possible.”
The program was showing “fundamental design flaws” since its implementation in 2018, including a failure to address variations across patient populations related to social risk factors.
“Ideally, a social risk measure should have both conceptual and empirical associations with outcomes,” MedPAC said in its March report. “While the share of dual-eligible beneficiaries as a proxy for income is the best currently available measure of a patient’s social risk, it does not capture all dimensions of social risk.”
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