Physician Advocates for Equity See Built-In Problems in ACO Incentives
Two physician healthcare policy leaders are offering an examination of the value-based delivery and payment movement in healthcare from a health equity perspective, and have concluded that, while healthcare reimbursement reform can provide one element in moving the needle on health equity, it alone cannot provide a vehicle that will transform the U.S. healthcare system towards becoming more equitable. In their critique, they take direct aim at some of the benchmarks and other elements built into accountable care organization (ACO) alternative payment model (APM) contracts, and make very pragmatic suggestions as to how to improve such programs in order to advance health equity goals.
Amol S. Navathe, M.D., Ph.D., and Joshua M. Liano, M.D., MSc, discuss the intersection of value-based payment and health equity concepts in their “Viewpoint” article, published online on Aug. 15 in the JAMA Network, under the title “Aligning Value-Based Payments With Health Equity.” Dr. Navathe is an Assistant Professor of Health Policy and Medicine, and a Commissioner of the Medicare Payment Advisory Commission (MedPAC), a non-partisan agency that advises the US Congress on Medicare policy. As a practicing physician, health economist, and engineer, Navathe has expertise in policy analysis and design, physician and hospital economic behavior, and application of informatics and predictive analytics to health care. Dr. Liao is a board-certified internal medicine physician, the Associate Chair for Health Systems in the Department of Medicine, and the Medical Director of Payment Strategy at UW Medicine. He is also an Associate Professor of Medicine within the UW School of Medicine and Adjunct Associate Professor of Health Systems and Population Health within the UW School of Public Health.
From the beginning of the article, Navathe and Liao get straight to the point. Their first statements are thus: “A decade of value-based payment policy has done little to reduce health inequity in the US. Despite modest successes in improving quality and cost efficiency, value-based models and alternative payment models can also unintentionally exacerbate inequities encountered by historically marginalized communities. Although consensus about the need to reform payment policy around equity has grown, effective reforms must reconcile existing tensions between financial incentives and equity goals. For instance, holding clinicians accountable for total spending (a core mechanism for achieving cost-efficiency through value-based payment) could inadvertently discourage clinicians from caring for historically marginalized populations for whom spending can be more challenging to control.” Indeed, they write, “Policy makers must systematically address such issues to translate moral imperative into policy reform. This Viewpoint presents a potential guiding framework of strategies that align payment model components with equity goals.”
The physician leaders take aim at ACO models as an example of unfulfilled potential, writing that “Accountable care organizations (ACOs) have demonstrated evidence of quality improvements and small but significant cost savings. However, early physician participation was higher in affluent communities than in communities with more Black individuals and those who were poor, uninsured, less educated, or had disabilities. Limited participation by safety-net centers and rural organizations has also restricted access to model-associated improvements among lower-income and nonurban populations.”
So what’s the solution? “One approach,” the authors write, “is to require participation. Mandating that certain organizations enroll in payment models can address selective participation and ensure that models encompass different populations within and across regions. For example, communities with higher proportions of individuals from racial and ethnic minority groups were more likely to be included in mandatory joint replacement bundles.”
Indeed, they write, “Requiring participation may sometimes be infeasible, such as when payment models target less-common conditions or involve highly specialized services that are geographically regionalized (eg, bariatric surgery). Mandates may also be undesirable if they require extensive financial investments from safety-net organizations or force them to compete against other organizations. These issues have been observed in mandatory hospital readmission penalty and joint replacement programs, in which safety-net organizations have shouldered disproportionate penalties vs other organizations. Mandatory participation should be considered, implemented with appropriate safeguards and monitoring, and closely coupled with other payment model reforms to support rather than disadvantage safety-net institutions,” they insist.
What’s more, the authors note, “Spending targets designed to drive cost efficiency should encourage participating health care organizations and clinicians to take actions that support, rather than undercut, equity. Doing so may require acknowledgment that lower spending, particularly for marginalized groups, is not always desirable. Lower spending may reflect underuse and insufficient access, rather than appropriate cost-efficiency efforts.”
Further, when it comes to measuring quality outcomes, the authors note that “Value-based payment arrangements invariably involve quality, but seldom involve measurement of inequities in quality. Despite long-standing racial disparities for conditions such as hypertension, organizational performance has not been race-stratified to measure disparities nor how they change under payment incentives. Future policy could rectify this issue, building on early work from states and private payers to measure and report quality metrics for conditions stratified by race, ethnicity, and indicators of socioeconomic status.” They also note that the social determinants of health have not yet systemically been included in metrics that measure outcomes. Payment models, they note, could use quality metrics to complete social needs screening and to complete processes around referrals to community-based organizations.
The authors also argue forcefully that value-based payment models can directly undercut equitywhen they force clinicians caring for marginalized populations to compete directly with other clinicians without employing stratification methods to address, for example, disproportionate readmission penalties on safety-net hospitals. They also argue that performance-based incentives could involve standard performance thresholds across all participants but reward relative improvements towards those thresholds for each participant, or could vary the size of incentive pools based on the population served.
In the end, the authors assert firmly that “Payment reform alone cannot overcome the root causes of health inequity, but it is nonetheless an important tool for helping to achieve health equity. Because no strategy is a panacea, progress will require the collective effects of systematic reforms enacted under a guiding framework to align payment and equity goals.”
