Paying for Value?


by Heath Mackley, MD, FACRO

Our politicians, fond of catchphrases, have endorsed the latest Medicare reform agenda as a move from “volume to value.” But what is value? A health economist will tell us that value can be quantified as outcomes received per dollar spent. The rest of us non-economists out there might say that value is the usefulness, or worth, of something. So what value do we as physicians bring, exactly? Most of us in medicine don’t think about value on a daily basis. We tend to focus on doing the best we can, on each patient encounter, every day. And as much as we might be tempted to keep focusing on our job and hope these new reforms don’t disrupt our ability to care for patients too much, I think we need to understand how this affects us. Furthermore, I think a rational focus on value can be a positive force for change, beyond patient care and reimbursement, by giving us a paradigm to evaluate where we need to be as a society, both on the county and state (PAMED) level.

As stated previously, value is defined as outcomes divided by cost. So all we have to do is figure out what the outcomes and costs are, and we’ve got it figured out, right? One would think that cost should be the simple part. If only that were true! One can’t use the prices hospitals and physicians charge, as they aren’t similar to what those entities are paid. One could use what Medicare pays, but Medicare pays different prices for the same procedure based on a number of factors, and the approved diagnoses for each procedure differ significantly by region. Furthermore, the process by which Medicare decides what it will pay for each procedure is a highly politicized process akin to a large group of sharks fighting each other as they devour an injured whale. In a rational world, the cost to Medicare would be based on the actual costs of delivering the procedure, with a predetermined profit margin that is uniform across specialties and doesn’t favor one group over another. But it is difficult to see a way to achieve that goal with the system as it now exists.

Defining the other half of our equation, outcomes, is an even more precarious process because the goal of creating a fair system seems even more remote. From quantitative subjective outcomes, such as patient satisfaction scores, to objective outcomes that rely on patient adherence, like hemoglobin A1c levels, hospitals and physicians are forced to focus on the processes that they control, and then hope for the best. Undoubtedly, there will be ways to game the new system, just as the current system has ways to game it. Some physicians will embrace this, but most will not, as physicians tend to focus on trying to do the right thing by the patient. In a rational world, outcomes would not be used to reward or penalize individual physicians, but would be used to value procedures. For example, if one procedure has a global satisfaction rate of 25% and another has a global satisfaction rate of 90%, then giving a higher relative value to the appreciated procedure will reflect the collective will of the patients. If one drug extends survival by one month, but another drug extends survival by six months in the real world, providing differing reimbursement would be logical. Again, it is difficult to see a way to achieve a fair, transparent system.
This essay is not going to solve the problems of health care reform. We must all remain engaged to help influence the system as it evolves. Irregardless, we live in this new world, and there are measures that demonstrate our quality and outcomes, as defined by the MACRA legislation and associated regulation, and data that need to be collected for the federal government. Employers are engaged in this to differing extents, but PAMED has wisely decided to work with all physicians, providing management services and organizing physicians into a clinical integrated network. Just as PAMED created a professional liability insurance company (PMSLIC) during the depths of the malpractice crisis which benefited members and nonmembers throughout the state, PAMED is here to help prevent a crisis in the large segment of Pennsylvania physicians who are either in private practice or work for small to mid-sized physician groups. I encourage all of you to learn more about PAMED’s important practice options initiation.1 PAMED is providing value to Pennsylvania physicians by helping them demonstrate their value.

This value analysis can be applied further to other aspects of PAMED and the county societies as well. The cost is the membership dues. The outcomes are both tangible and intangible. Tangible outcomes for county membership include receiving this magazine, which can be a mouthpiece for any member to communicate with our community. Additionally, one can join us in networking events, engaging our elected officials, or helping to change PAMED policy in the House of Delegates. PAMED has numerous tangible member benefits from practice support, to continuing education, to timely information on statewide political issues and how you can be involved. The intangibles are just as important. Nurse practitioners would have been granted the same license to practice medicine as physicians years ago if it weren’t for PAMED advocacy. How much more time-intrusive would the opioid database be if PAMED wouldn’t have worked with legislators to find a balance between the need to decrease inappropriate prescriptions and the need to eliminate needless inquiries that reduce the amount of time physicians spend with patients even more? At the end of the day, if PAMED and the counties provide enough positive outcomes for each dollar of membership dues spent, they will both thrive. But if not, it will be up to the collective membership to adapt their priorities and cost structure. There is an obvious need for a medical society. The question isn’t whether or not it will survive, the question is whether or not it will be relevant, or an afterthought. We as physicians are committed to building a better future by providing as much value as possible, for our patients, and for our fellow PAMED members. Thanks for staying involved!

Dr. Mackley is a Radiation Oncologist at the Penn State Cancer Institute and 5th District Trustee for PAMED, representing physicians of this county.

1 https://www.pamedsoc.org/tools-you-can-use/practice-options-initiative

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