Medicare Value-based Payment Modifier Does Not Improve Performance

November 28, 2017

When risk adjustment is inadequate and incentives are weak, pay-for-performance programs like Medicare’s Value-based Payment Modifier (VM) may contribute to health care disparities without improving performance on average.

In their paper published in the Annals of Internal Medicine, Eric Roberts, Alan Zaslavsky, and J. Michael McWilliams used regression discontinuity analysis and 2014 and 2015 Medicare claims to estimate differences in practice performance associated with exposure of practices with ≥100 clinicians to full VM incentives (bonuses and penalties) and exposure of practices with ≥10 clinicians to partial incentives (bonuses only).  They also assessed differences in performance between practices serving higher-risk vs. lower-risk patients after standard Medicare adjustments vs. after adjustment for additional patient characteristics

They found that there were no statistically significant discontinuities at the ≥10 or ≥100-clinician thresholds in the relationship between practice size and performance on quality or spending measures.  Thus, exposure to the VM was not associated with differences in performance on program measures.  Performance differences between practices serving higher-risk vs. lower-risk patients were affected considerably by additional adjustments, suggesting potential for Medicare’s pay-for-performance programs to exacerbate health care disparities.

Because the Merit-based Incentive Payment System (MIPS) is similar in designed to the VM, these findings do not bode well for the MIPS.

This study can be viewed on the Annals of Internal Medicine website, and a press release for the study can be found here.