Paying for 'Value' By Defining 'Quality' and 'Cost'

Paying for 'Value' By Defining 'Quality' and 'Cost'
Paying for 'Value' By Defining 'Quality' and 'Cost'

ORLANDO, FL—The use of financial incentives to encourage value is proliferating through Medicare, yet many questions remain about how outcomes are interpreted and what definitions are used, said Andrew Ryan, PhD, MA, of the University of Michigan in Ann Arbor, MI, in a presentation during the 57th American Society of Hematology (ASH) Annual Meeting.

He provided a brief evidence overview in value-based purchasing, describing the good, the bad, and the ugly.

The good: Public reporting has raised the profile of hospital quality issues and has seemingly improved process performance, including some evidence that the hospital readmission reduction program has reduced readmissions.

The bad: Public reporting has not improved outcomes or impacted consumer choice.

The ugly: The validity of many performance metrics are questionable, and there are disparities in payments from hospital incentive programs.

“Value can be defined as the ratio of quality to cost: but how do we define quality and cost?” Dr Ryan asked the audience. “Quality” may include clinical performance (ie, evidence-based medicine), patient experience, and patient outcomes (eg, mortality, complications, or functional status), while “cost” is physician, drug, and total per capita costs as well as episode cost.

“Most quality measures derived from the Physician Quality Reporting System (PQRS) are related to effective clinical care,” he said. To date, quality is measured for hematologists in the PQRS by four clinical process measures:

#67: Baseline Cytogenetic Testing Performed on Bone Marrow (for patients with myelodysplastic syndromes)

#68: Documentation of Iron Stores in Patients Receiving Erythropoietin Therapy (for patients with myelodysplastic syndromes)

#69: Treatment with Bisphosphonates (for patients with multiple myeloma)

#70: Baseline Flow Cytometry (for patients with chronic lymphocytic leukemia)

The PQRS is transitioning toward penalties for not reporting quality measures, Dr Ryan said, with a penalty of -1.5% for 2015, and -2% for 2016 and 2017.

The question of whether or not value-based payment makes sense for hematologists remains, however. Dr Ryan posed four questions for attendees to ponder:

  • Are the measures in PQRS taking us where we want to go?
  • What is the role of hematologists in larger systems of accountable care?
  • How should drug prescribing and drug costs be accommodated in value-based payment systems?
  • What would the optimal accountability system look like for individual hematologists and practices?

Clinical practice improvement will take on added importance with the Medicare Access and CHIP Reauthorization Act of 2015. Signed into law on April 16, 2015, the act repeals the 1997 Sustainable Growth Rate Physician Fee Schedule Update, effectively changing how physicians will be paid under Medicare. Physicians will be able to select one of two tracks for Medicare, one an Alternative Payment Model and the other a Merit-Based Incentive Payment System.


1. Ryan A. Pay-for-Performance: Reviewing the Evidence.  Oral presentation at: 57th American Society of Hematology (ASH) Annual Meeting; December 5, 2015, Orlando, FL.

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