Quality is all the rage in health care these days. It rolls off the presidential tongue and is at the heart of robust targets set by Health and Human Services Secretary Sylvia Burwell. (No less than half of all Medicare payments to be quality based by the end of 2018!)
“We’re moving Medicare toward a payment model that rewards quality of care instead of quantity of care,” President Obama declared at a March 2015 summit dedicated to alternative payment models that move away from volume-based, fee-for-service payment
Industry is on the rhetorical bandwagon too. A quick search for the word quality on THCB turns up 277 entries – including “Zen and the Quest for Quality,” “An F for Quality” and the very earliest entry dated Aug. 18, 2003, “Performance-based pay in health care?”
Don’t get me wrong. We at the Alliance of Community Health Plans (ACHP) were into quality way before quality was cool. (We were there at the creation of today’s HEDIS quality measures.) So perhaps that’s why it’s a little disheartening to see policymakers slow to match the speeches with action by fixing a glitch in the pay-for-quality movement.
The hiccup comes in implementing two provisions in the Affordable Care Act: one aimed at controlling costs by capping total payments to Medicare Advantage plans and another that rewards the highest-quality plans, scored on a scale of 1 to-5 “stars.” Remember the goal is to incentivize and reward quality.
The problem is in how the government mixes up the calculation of the quality bonuses with the calculation of the payment caps. By including the quality bonus in the total cap, many high scoring plans do not derive the most benefit. Indeed, under this flawed math, a 3-star plan can collect the same payment as a 5-star plan literally down the street. So where’s the incentive for plans to up their game and score a 5?
And it’s even worse than that. Quality payments must be used to enhance benefits or reduce beneficiary fees, typically copayments. So the losers in all of this are America’s seniors, who increasingly enroll in high-quality 4- and 5-star Medicare Advantage plans because they’ve been told that they will be getting better value for their health dollar. (Value is another hot one in health today.)
The impact is sizable. Analysis by our team at ACHP shows seniors nationwide are missing out on close to half a billion dollars in benefits such as dental, vision and exceedingly important care coordination. This translates into $82 million in lost benefits in Pennsylvania, $60 million in Ohio and $36 million in California, $23 million of which would go to Kaiser Permanente members. The loss per beneficiary in Wisconsin is about $91, while in Maine the effect is $195 per beneficiary. States with some of the lowest incomes and worst health status are among the biggest losers in the current situation.
It’s worth noting that nowhere else in Medicare payment policy are quality incentives arbitrarily cut in this manner. Even in cases where Congress requires “budget neutrality,” quality payments are added after any overall reimbursement limits are set.
Even the most skilled health plans can’t forecast from one year to the next how they might fare in the fuzzy math of benchmark cap calculation. In many places, implementation has reduced – or entirely eliminated – the quality incentive payments.
An array of experts has highlighted the problem, including the independent MedPAC (Medicare Payment Advisory Commission), Margaret O’Kane, president of the National Committee for Quality Assurance, and a bipartisan group of House members who overwhelmingly passed a Sense of Congress resolution last year. Indeed, President Obama, in his most recent budget, proposed fixing the cap to ensure high-performing plans get the full quality payment they’ve earned.
Happily, this is one glitch that can be fixed and with broad, bipartisan support. Under the ACA, Secretary Burwell is directed to “take into account” the quality incentives when calculating the cap. In plain English this gives the secretary the discretion to achieve the twin goals of cost containment and rewarding quality. While many would like to eliminate the cap altogether, we at ACHP appreciate the need for controlling health care costs. Our proposal is more modest: adjust the calculation so that quality incentives are paid after the cap is applied—just as it is done elsewhere in Medicare.
To reiterate, this issue is the rare one in Washington these days that everyone agrees should and can be fixed.
As any political science student knows, we’ve entered the period in an administration’s tenure when the focus shifts to the L-word. This administration can rightly claim expanded health care coverage as part of its legacy. There’s still time to add to its legacy—affecting almost a third of Medicare beneficiaries—by paying for quality.