VBMs: Coming Soon to Either Increase or Lower Your Income

Kenneth J. Terry, MA


February 06, 2014

In This Article

Plenty of Disadvantages

In a recent New England Journal of Medicine (NEJM) article,[7] health policy experts Alyna Chien and Meredith Rosenthal said that one disadvantage of the VBM for doctors is that they have no way of knowing how much they must improve to get a bonus or avoid a penalty.

Last September, CMS gave Quality and Resource Use Reports (QRURs) to groups of 25 or more EPs.[8] The agency will do the same for groups of 10 or more EPs this summer.[3] These feedback reports provide comparisons with peer groups and in-depth information on provider quality and efficiency that could be used in improvement projects. The QRURs don't provide information, however, on how much physicians must improve their quality scores and lower their costs to qualify for bonuses.[9]

The NEJM article also criticized the VBM in other respects, including CMS's lack of experience with physician-level measurement and reporting; the program's heavy reliance on quality measures oriented to primary care; problems in the attribution of care to individual providers; and uncertainty about whether to incentivize groups or individual clinicians.

"The VBM cannot be effective until a broader base of physicians is fully engaged, potentially controversial issues related to accountability and attribution are addressed, and stakeholders gain the necessary experience in improving care quality and cost in real-world settings," the authors concluded.[7]

Robert Berenson and Deborah Kaye, in another NEJM article,[4] said that CMS "cannot accurately measure any physician's overall value, now or in the foreseeable future." Noting that primary care physicians manage 400 conditions in a given year, they pointed out that these doctors report to PQRS on as few as 3 measures. Many of the PQRS measures, especially those for specialists, have little relevance to the competence of individual doctors, they said.

In addition, they noted, pay-for-performance incentives must be well above 2% to motivate physicians. However, Berenson told Medscape, the 8%-12% bonuses and cuts contemplated in the SGR replacement bills would be enough to incentivize most doctors to improve their scores.

What Effect on Patient Care?

That kind of reaction might actually harm patient care if physicians focus too much on the VBM measures, observed Berenson, a senior fellow at the Urban Institute. Citing research by economists, he said pay-for-performance "converts doctors from professionals acting in the best interests of their patients to people responding to incentives. As a result, the overall quality of care might go down."

This might not happen if big groups or ACOs are held accountable for performance, he said. But when CMS starts measuring the performance of small and solo practices, the effects could be counterproductive. "There's a fundamental difference between how organizations respond to incentives and how individual physicians respond to incentives," he said. "Holding a group of 200 physicians accountable for performance is a whole different story from holding an individual doctor accountable."

Berenson also dismissed CMS's claim that its risk adjustment method is reliable. Even in the Medicare Advantage plans for which the methodology was developed, he said, "There's a significant risk selection that is not detected by the risk adjustor." CMS's approach to cost comparisons, he said, is good enough to feed back data to physicians so they can see where they stand in relation to other doctors. "For payment purposes, it makes no sense and is unfair," he averred.

Berenson believes the SGR replacement bills will pass Congress, despite the problems with the VBM. "Capitol Hill believes in pay-for-performance; they call it "value-based purchasing." It's non-evidence-based policy-making, but it has bipartisan support."


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