More Cents in Value-Added Care

While health policy experts of all political backgrounds agree that moving to a value-based (rather than volume-based) payment is worthwhile, there are many problems with this that were alluded to in the previous post. As an aside, I would like to see sports teams move to a value-based system so that I don’t have to hear that my team is paying its worst-performing players gobs of money.

Due to the potential pitfalls in transitioning to a value-based care system, an alternative strategy of working on the relative-value units (RVUs) has been advocated (NEJM 2013; 369: 2176-79).  RVUs has provided a “uniform, formulaic metric for myriad clinical services” and serve as the method for setting fee-for-service payments for both Medicare and private insurance.

“Ideally, physicians’ work would be reimbursed on the basis of metrics that signal whether their clinical services efficiently improve patient outcomes and that use effective clinical risk adjustment. In reality, using patient outcomes as a basis for payment can work well at the health-system level, but small samples and inadequate risk adjustment limit their use for individual physicians and many group practices.”

Advantages of using an RVU-based system over other pay-for-performance benchmarks:

  • Long experience with RVUs (developed in 1988)
  • RVUs influence care delivery.  “RVU distortions drove the development of …(ambulatory) procedural centers and the movement of cardiac imaging from physicians’ offices to hospital outpatient units.” This was “associated with a tripling of the proportion of cardiologists employed by hospitals.”
  • RVUs can be weighted towards activities that improve patient outcomes and high-value clinical services.  Proposed examples: increased RVUs for smoking cessation counseling, and increased RVUs for stenting within 60 minutes for ST-segment elevation myocardial infarction
  • To start, “RVU levels for cognitive clinical work could be increased and those for procedural work could be decrease to create incentives for primary care services.”

Disadvantages of RVUs:

  • RVU levels are set  by the American Medical Association’s Relative Value Update Committee; the process for setting RVUs is secretive and proprietary (though these can be modified by Medicare or other insurance companies)
  • RVU levels are not designed for team-based care

Bottomline: “Ultimately, refining this durable, well-entrenched system may be preferable to replacing it with unproven alternatives.”

Update -Last week I overestimated cost of sofusbuvir for hepatitis C (only $84,000 rather than $90,000), each pill is $1000, :

Gilead said the wholesale cost of Sovaldi, which is known generically as sofosbuvir, would be $28,000 for four weeks — or $1,000 per daily pill. That translates to $84,000 for the 12 weeks of treatment recommended for most patients, and $168,000 for the 24 weeks needed for a hard-to-treat strain of the virus.