Patient-Centered, Value-Based Health Care Is Incompatible With The Current Climate Of Excessive Regulation

By John O’Shea
Health Affairs Blog, October 3, 2018

Although still a subject of debate, the fee-for-service health care payment system that reimburses providers for individual services is widely indicted for promoting care that is inefficient, uncoordinated, and too often fails to meet the needs of patients. Whether or not fee-for-service is the main culprit, the escalating cost and inconsistent quality of US health care highlights the need for a better system. In discussions about what that system should look like, the terms “patient-centered” and “value-based” have become buzz words for payment and delivery reform in health care.

Unfortunately, many well-intentioned efforts to move to a more effective system are adding to the already substantial administrative and regulatory burden on physicians, hospitals, and other providers. In turn, these cumbersome new initiatives stifle innovation and obstruct meaningful payment and delivery reform. The current administration has appropriately recognized that this over-regulation is impeding the transition to a truly patient-centered and value-based health care system. Recently announced initiatives such as “Meaningful Measures” and “Patients over Paperwork” are promising because they aim to reduce the amount of time physicians spend on record-keeping and administrative tasks, allowing them to re-focus on patient care. However, the administration’s recent refusal to consider new payment and delivery models recommended by the Physician-Focused Payment Model Technical Advisory Committee (PTAC) throws into question whether the Department of Health and Human Services (HHS) is serious about removing barriers to innovation.

The Impact Of MACRA

In 2015, the Medicare Access and CHIP Reauthorization Act (MACRA) became law. In addition to repealing the flawed Sustainable Growth Rate (SGR) payment system and providing a period of payment stability, MACRA seeks to stimulate the transition to a value-based health care system through payment incentives embodied in the Quality Payment Program (QPP). The QPP provides for two payment approaches for physicians and other providers in Medicare: the Merit-based Incentive Payment System (MIPS) and alternative payment models (APMs). While the goals underlying MACRA are sound, the original framework evolved into an overly complex statute, leading to an equally complex set of rules governing implementation, all of which undermine MACRA’s original intent.

The Burden Of MIPS

MIPS links payment to an individual provider’s performance on measures in four categories: quality, advancing care information, clinical practice improvement activities, and resource use. Once MACRA is fully implemented, an individual provider’s performance will be compared to the average performance of all MIPS-eligible providers in the previous year, and the provider will receive a positive, negative, or neutral update to their fee schedule payments two years later.

The Medicare Payment Advisory Commission (MedPAC) has stated that the current iteration of MIPS “is unlikely to clearly identify high-value or low-value clinicians and hence may be of limited utility for beneficiaries (in selecting high-value clinicians), for clinicians themselves (in understanding their performance and what to do to improve), or for the Medicare program (in adjusting payments based on value).” MedPAC recently recommended scrapping MIPS entirely and replacing it with a voluntary program.

The program needs no less than a major overhaul. It is increasingly clear that equitably measuring the performance of individual providers from different specialties, practice settings, and geographic regions on a national scale is not only unrealistic, it is inconsistent with many of the basic tenets of payment and delivery reform, such as team-based care, coordination of services, and the aggregation of payments to incentivize these principles.

APMs, The PTAC, And Barriers To Innovation

The underlying goal of the QPP is to incentivize providers to transition out of fee-for-service and into APMs. However, current Advanced APM options are limited to Centers for Medicare and Medicaid Services (CMS)-approved initiatives. These initiatives have excessively stringent requirements, which have contributed to disappointing early results and exits of a number of early adopters.

MACRA established the PTAC as a forum for practicing physicians to develop innovative ideas about Medicare payment and delivery reform. However, even though the current committee members comprise a veritable “dream team” of dedicated payment and delivery reform experts, the complex regulations governing the application process and CMS’s rules about testing and implementing recommended models prevent the committee from realizing its original intent.

Given the excessive regulatory requirements and resultant sluggish start of the CMS-sanctioned initiatives, combined with the restrictions placed on the PTAC process, MACRA (as currently structured) is unlikely to realize its potential as a catalyst for transitioning to patient-centered, value-based health care.

Recently HHS released its response to comments and recommendations from the PTAC regarding 12 models submitted to the HHS secretary between October 2017 and May 2018. Citing HHS criteria for evaluating proposed models, the secretary declined to consider any of the models for implementation or further testing, listing several considerations that the agency used to support this decision.

Looking Ahead

Transitioning to a patient-centered and value-based health care payment and delivery system is a good idea. However, initiatives that divert physician time away from clinical care are not patient-centered, and investing precious resources on administrative and reporting requirements without any improvement in the quality of care is anything but value-based. The administration has promised to address the excessive regulations that have so far hindered meaningful payment and delivery reform. Now, the administration and Congress need to follow through on that promise. Otherwise, the terms “patient-centered” and “value-based” will remain largely hollow buzz words.


Published Comment:

By Don McCanne, M.D.

Fixation on the concept of value-based health care has led the policy community to craft reform models that inherently increase the administrative inefficiencies in our health care financing system – an approach which bears some of the blame for the oppressive regulatory oversight. MACRA, MIPS, APMs, and, by extension, ACOs thus far have done very little to control costs (especially when including provider compliance costs). In spite of the relatively advanced state of health policy science, it is no wonder that none of the proposals submitted through the Physician-Focused Payment Model Technical Advisory Committee (PTAC) were considered worthy of experimentation since they were developed within the constraints of legislation and regulation defining ACOs and the other alternative payment models.

Rather than blaming excessive regulation, we should ask whether it is the right kind of regulation. Over half a century ago, Kenneth Arrow showed us that deregulating the private health care market was not the answer. Since then, many other industrialized nations, in fact all of them, have shown us that the rate of health care cost increases can be slowed to a sustainable level while providing essentially everyone with comprehensive health care coverage. In all of these nations regulatory oversight has been an essential element, but the right kind of regulation.

In the United States it is looking like a well designed, single payer model – an improved version of Medicare – would be most suited to our politics and culture. The latest polls show that close to one-half of Republicans have now joined a majority of Democrats and Independents in supporting Medicare for all. Though MACRA is another misstep on the way there, we should get past that and move forward with high value, patient-centered care that is affordable for everyone and protected with just the right dose of regulatory oversight through a publicly-financed and publicly-administered system. In such a system patient-centric care, value, and regulation are quite compatible.…


The Secretary of Health and Human Services

June 13, 2018

I am very pleased to respond to the comments and recommendations of the Physician-Focused Payment Model Technical Advisory Committee (PTAC) transmitted between October 2017 and May 2018. Shifting our health care system to one that pays for value rather than volume is one of my top four priorities as Secretary of Health and Human Services (HHS). PTAC can help us make that shift by reviewing promising new ideas, providing expert analysis, commentary, and recommendations, and working collaboratively to realize the promise of new physician-focused payment models (PFPMs).

Considerations for Proposed Model Submissions

Prior to PTAC beginning its work, HHS and CMS set forth 10 criteria for PTAC to use in evaluating proposed PFPMs (as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)). Consistent with these criteria and factors, I also ask that stakeholders take into account the following considerations as they develop new proposed payment models. This information, as well as the 10 established criteria for PFPMs and CMS’ model selection factors, have informed my review of responses to the comments and recommendations transmitted by PTAC on 12 proposed PFPMs.

1. HHS seeks models that demonstrate potential for significant impact on the Medicare population in ways where we can conduct a robust evaluation. PTAC has recommended several proposed models for limited-scale testing. In its Proposal Submission Instructions, PTAC indicates that the limited-scale testing “category may be used when the PTAC determines a proposal meets all or most of the Secretary’s criteria but lacks sufficient data to (1) estimate potential costs, savings or other impacts of the payment model and/or (2) specify key parameters in the payment model (such as risk adjustment or stratification), and the PTAC believes the only effective way to obtain those data would be through implementation of the payment model in a limited number of settings.” To the extent the limited-scale recommendation for a proposed model test precludes robust evaluation, we would be unlikely to implement such a recommendation.

2. Use of proprietary tools or tools that are not already developed in a proposed APM is an obstacle to HHS’ testing of the model. In prior Secretarial responses, HHS has communicated concerns about proposed models that require the use of specific proprietary products. HHS cannot endorse, promote or rely on a unique product.

3. Providing care in accord with current standards of practice or accelerating adoption of emerging standards of care do not require an APM. Although APMs often reward the provision of higher quality care, care that is provided would always meet current standards of care, regardless of the way in which a practitioner is paid. CMS would not implement a model that pays physicians solely for implementing standard practice and following established guidelines for care.

In summary, I look forward to reviewing proposals that present ideas that go beyond the scope of our current model portfolio, bringing in fresh and bold ideas for PFPMs from the field.


Alex M. Azar II

The appendix includes 12 PFPM proposals and the reasons why each one was rejected:…

Please note my comment above that was published on the Health Affairs Blog website.

The letter by HHS Secretary Alex Azar is important because it demonstrates the fallacy that  we can somehow create a new health car financing system that pays for value rather than volume. The process set up by MACRA establishes the Physician-Focused Payment Model Technical Advisory Committee (PTAC) which evaluates new designs for alternative payment models (APMs), as if a new model that converts volume to value could be created. Yet all proposals submitted to HHS were rejected. Pretending that someone, somewhere, sometime will think up a new way to do that is an escape to fantasyland. MACRA, MIPS, and APMs are a failure and need to be dumped.

The goal of reducing volume is to control spending. Models designed specifically to do that either reduce beneficial health care services – an undesirable outcome – or they fail to have a significant impact on costs, as the disappointing results with ACOs demonstrate. On the other hand, the economic tools used in a model that already exists – a well designed single payer system (reduction of administrative excesses, global budgeting, negotiated rates, bulk purchasing, etc.) – do slow spending (value) without eliminating beneficial services (volume). So you can have greater value while maintaining an appropriate volume of services.

We could use the current process and submit to PTAC the PNHP single payer Medicare for all model, but HHS Secretary Azar and CMS Administrator Verma have already said they would reject Medicare for all.

This just demonstrates once again that we must intensify our efforts in educating the public so that we reach a threshold where the people lead and the politicians have no choice but to follow.

As FDR said, “The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country,” and, in another context, “now make me do it.”

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