Participation and performance in Medicare's physician value-based reforms

Encouraging physician practices to participate in value-based reforms is now a national priority. Following Medicare’s Access and Children's Health Insurance Program Reauthorization Act, providers will soon elect to join one of two value-based pathways: (1) the Alternative Payment Model program, where automatic 5% bonuses will be awarded to providers participating in accountable care organizations (ACOs) and other alternative delivery systems and (2) the new Merit-Based Incentive Payment System, which consolidates three existing reforms — Physician Quality Reporting System (PQRS), Physician Value-Based Payment Modifier, and EHR Meaningful Use Incentive Program — and adjusts payments according to composite performance on quality, resource utilization, meaningful use, and clinical practice improvement activities. However, lackluster physician participation in these current initiatives highlights the importance of understanding the factors that lead to participation and success in these programs.

Using data from a unique survey of 1,398 practices in the United States, we examined whether greater exposure to performance incentives, including both financial incentives and public reporting, was related to increased participation and improved performance in Medicare value-based reforms. Our study outcomes were ACO participation, PQRS participation, PQRS quality performance, and participation in Meaningful Use. We used multivariate regression analysis to examine practice-level relationships between prior exposure to performance incentives and participation and performance in Medicare’s value-based reforms (computed as average marginal effects). To assess whether these relationships vary across organizational characteristics, we included interaction terms for practice characteristics and patient factors and computed differences in marginal effects across 75th and 25th covariate percentiles (“delta marginal effect”).

We found relatively low levels of performance incentives: fewer than half of practices (45.3%) participated in public reporting and only 0.43% and 0.22% of practices’ income related to financial incentives for quality and efficiency, respectively. Practices with greater exposure to performance incentives demonstrated increased participation in Medicare ACOs (average marginal effect=0.033; SE=0.004), particularly among practices with greater use of health information technology (delta marginal effect at 75th versus 25th percentile = 0.041; SE=0.014) and larger shares of patients with limited English proficiency (delta marginal effect at 75th versus 25th percentile = 0.016; SE=0.005). Exposure to performance incentives was not related to PQRS participation (average marginal effects = 0.009; SE=0.016). Among PQRS participants, however, greater incentives were related to significantly worse quality performance (average marginal effect = -1.659; SE=0.706); this relationship was particularly negative among practices with greater shares of Medicare revenue (delta marginal effect=-1.407; SE=0.398) and patients with limited English proficiency (delta marginal effect = -1.751; SE=0.868). Although the average marginal effect of incentives on Meaningful Use participation was not significant (delta marginal effect=0.0141; SE=0.013), this relationship varied positively across responsive organizational culture (delta marginal effect=0.021; SE=0.009) and Medicare revenue (delta marginal effect=0.016; SE=0.008) and negatively across limited English proficiency (delta marginal effect=-0.019; SE=0.004). We conclude that increasing performance incentives and complementary efforts to improve technological infrastructure represent powerful levers to enhance participation in value-based reforms. At the same time, performance incentives alone appear insufficient to drive subsequent quality improvement among participants in value-based reforms.