The Hospital Readmissions Reduction Program (HRRP), one of numerous pay-for-performance (P4P) schemes authorized by the Affordable Care Act, was sprung on the Medicare fee-for-service population on October 1, 2012 without being pre-tested and with no other evidence indicating what it is hospitals are supposed to do to reduce readmissions. Research on the impact of the HRRP conducted since 2012 is limited even at this late date , but the research suggests the HRRP has harmed patients, especially those with congestive heart failure (CHF) (CHF, heart attack, and pneumonia were the first three conditions covered by the HRRP). The Medicare Payment Advisory Commission (MedPAC) disagrees. MedPAC would have us believe the HRRP has done what MedPAC hoped it would do when they recommended it in their June 2007 report to Congress (see discussion of that report in Part I of this two-part series). In Chapter 1 of their June 2018 report to Congress, MedPAC claimed the HRRP has reduced 30-day readmissions of targeted patients without raising the mortality rate.
MedPAC is almost certainly wrong about that. What is indisputable is that MedPAC’s defense of the HRRP in that report was inexcusably sloppy and, therefore, not credible. To illustrate what is wrong with the MedPAC study, I will compare it with an excellent study published by Ankur Gupta et al. in JAMA Cardiology in November 2017. Like MedPAC, Gupta et al. reported that 30-day CHF readmission rates dropped after the HRRP went into effect. Unlike MedPAC, Gupta et al. reported an increase in mortality rates among CHF patients. 
We will see that the study by Gupta et al. is more credible than MedPAC’s for several reasons, the most important of which are: (1) Gupta et al. separated in-patient from post-discharge mortality, while MedPAC collapsed those two measures into one, thus disguising any increase in mortality during the 30 days after discharge; (2) Gupta et al.’s method of controlling for differences in patient health was superior to MedPAC’s because they used medical records data plus claims data, while MedPAC used only claims data.
I will discuss as well research demonstrating that readmission rates have not fallen when the increase in observation stays and readmissions following observations stays are taken into account, and that some hospitals are more willing to substitute observation stays for admissions than others and thereby escape the HRRP penalties.
All this research taken together indicates the HRRP has given CHF patients the worst of all worlds: No reduction in readmissions but an increase in mortality, and possibly higher out-of-pocket costs for those who should have been admitted but were assigned to observation status instead.
Egged on by the Medicare Payment Advisory Commission (MedPAC), Congress has imposed multiple pay-for-performance (P4P) schemes on the fee-for-service Medicare program. MedPAC recommended most of these schemes between 2003 and 2008, and Congress subsequently imposed them on Medicare, primarily via the Affordable Care Act (ACA) of 2010 and the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015.
MedPAC’s five-year P4P binge began with the endorsement of the general concept of P4P at all levels – hospital, clinic, and individual physician – in a series of reports to Congress in 2003, 2004, and 2005. This was followed by endorsements of vaguely described iterations of P4P, notably the “accountable care organization” in 2006 , punishment of hospitals for “excess” readmissions in 2007 , the “medical home” in 2008 and the “bundled payment” in 2008. None of these proposals were backed up by anything resembling evidence.
Congress endorsed all these schemes without asking for evidence or further details. Congress dealt with the vagueness of, and lack of evidence supporting, MedPAC’s proposals simply by ordering CMS to figure out how to make them work. CMS staff added a few more details to these proposals in the regulations they drafted, but the details were petty and arbitrarily adopted (how many primary doctors had to be in an ACO, how many patients had to sit on the advisory committee of a “patient-centered medical home,” how many days had to expire between a discharge and an admission to constitute a “readmission,” etc.).
New rule, new culture
This process – invention of nebulous P4P schemes by MedPAC, unquestioning endorsement by Congress, and clumsy implementation by CMS – is not working. Every one of the proposals listed above has failed to cut costs (with the possible exception of bundled payments for hip and knee replacements) and may be doing more harm than good to patients. These proposals are failing for an obvious reason – MedPAC and Congress subscribe to the belief that health policies do not need to be tested for effectiveness and safety before they are implemented. In their view, mere opinion suffices.
This has to stop. In this two-part essay I argue for a new rule: MedPAC shall not propose, and Congress shall not authorize, any program that has not been shown by rigorously conducted experiments to be effective at lowering cost without harming patients, improving quality, or both. This will require a culture change at MedPAC. Since its formation in 1997, MedPAC has taken the attitude that it does not have to provide any evidence for its proposals, and it does not have think through its proposals in enough detail to be tested. Over the last two decades MedPAC has demonstrated repeatedly that it believes merely opining about a poorly described solution is sufficient to discharge its obligation to Congress, taxpayers, and Medicare enrollees. Continue reading…
“[T]his is tough. I don’t know how to proceed…. Lord help the staff who must bring all this together.”
That was how Dr. Francis Crosson, chairman of the Medicare Payment Advisory Commission (MedPAC), reacted to the commission’s baffling discussion at its January 11 meeting moments before it voted 14-2 to replace the Merit-based Incentive Payment System (MIPS) with something called the “voluntary value program” (VVP) (pp. 167-169 of the transcript ). MedPAC’s staff must now summarize the January 11 discussion and prepare a report for inclusion in MedPAC’s March 2018 report to Congress.
MIPS is a pay-for-performance (P4P) scheme imposed on the traditional fee-for-service Medicare program by an act of Congress known as MACRA. MIPS requires that CMS measure performance on cost and quality at the level of the individual doctor, something MedPAC recently acknowledged can’t be done after spending 13 years claiming it could be done.
The portion of the commission’s January 11 discussion that focused on the repeal of MIPS was not hard to understand. The commissioners agreed that MIPS cannot work for multiple reasons, the most important being that the pools of patients treated by individual doctors are too small to permit accurate measurement of cost and quality. “MIPS will not succeed in helping beneficiaries choose clinicians, helping clinicians … improve value, or helping the Medicare program to reward clinicians based on value,” explained MedPAC staffer Kate Bloniarz. (pp. 116-117) Only one of the 16 commissioners present (Dr. Alice Coombs) disagreed with that statement.
Zen and the art of summarizing doubt
It was the commissioners’ discussion about what to replace MIPS with that will be very difficult to summarize. That’s because the discussion consisted largely of expressions of doubt about the VVP, which is essentially a proposal that all doctors who treat Medicare patients either join a “group” (aka ACO) or lose 2 percent of their Medicare payments. The discussion, which followed a vague opening presentation by two MedPAC staff members, consisted of numerous questions posed to the staff that neither the staff nor Dr. Crosson could answer. Because so many issues remained unresolved, ten of the 16 commissioners (one was absent) expressed reservations about voting for the VVP. How does the staff or anyone else summarize a discussion like that? How does the staff explain why the commission voted to recommend the VVP to Congress when a majority of commissioners have multiple concerns about it?Continue reading…