Should Physician Payments Be Tied to Value? An AJMC® Commentary Explores an “Appropriateness Modifier”

Business Wire

If the same procedure brings high value to some patients and less value to others, should reimbursement reflect the difference? Authors led by Harvard’s Zirui Song, MD, PhD, introduce the idea of a modifier to adjust payments based on indication and appropriateness in The American Journal of Managed Care® (AJMC®).

CRANBURY, N.J.--(BUSINESS WIRE)-- Typically, the cost of a good or service fluctuates with its value: ticket prices for the same seats in a football stadium soar during the playoffs compared with preseason, and a person selling cold drinks on a hot beach can charge more than someone hawking them in the snow.

But authors writing in The American Journal of Managed Care® say that’s not so in healthcare, where a coronary stent for unstable angina is reimbursed at the same rate as one for stable angina, even though the first case likely brings higher value. Of course, each patient and situation is different, and there’s the challenge: how can the current trend toward value-based care create incentives for essential tests and procedures while not simply discouraging procedures across the board?

In the current issue, Zirui Song, MD, PhD, of Harvard Medical School and Massachusetts General Hospital introduces the idea of the “appropriateness modifier” with co-authors Amol S. Navathe, MD, PhD; Ezekiel J. Emanuel, MD, PhD; and Kevin G. Volpp, MD, PhD, all from the Department of Medical Ethics & Health Policy at Perelman School of Medicine at the University of Pennsylvania.

An appropriateness modifier would be based on both the indication and a patient’s characteristics, such as comorbidities. The authors acknowledge the concept has advantages and limits, but it has one clear plus: it can co-exist with both fee-for-service (FFS) and alternative payment models as the healthcare system transitions to new forms of reimbursement, which most experts say is taking longer than expected. And cost-sharing for patients could go up and down, too, with patients paying less if a procedure was highly appropriate.

The authors outline four elements: (1) the appropriateness modifier could start with services “for which clear differences in appropriateness are observable and supported by guidelines,” (2) the modifier could be built into FFS models without downside risk, (3) unlike bundled payments and steps that limit use, the appropriateness modifier doesn’t limit treatment options, and (4) specialists retain control rather than relying on referrals from primary care.

Despite the challenges, the authors write the conversation is worth having. “Moving American medicine toward value for populations, yet precision for individuals, will require innovations in payment and delivery. Incorporating a clinically nuanced measure of appropriateness into payment and benefit design could offer a meaningful next step,” the authors write.

About The American Journal of Managed Care^®:

The American Journal of Managed Care^® (AJMC^®) is a peer-reviewed, MEDLINE-indexed journal that keeps readers on the forefront of health policy by publishing research relevant to industry decision makers as they work to promote the efficient delivery of high-quality care. AJMC.com is the essential website for managed care professionals, distributing industry updates daily to leading stakeholders. Other titles in the AJMC^® family include The American Journal of Accountable Care^®, and two evidence-based series, Evidence-Based Oncology™ and Evidence-Based Diabetes Management™. These comprehensive offerings bring together stakeholder views from payers, providers, policymakers and other industry leaders in managed care. To order reprints of articles appearing in AJMC^® publications, please contact Jeff Prescott at 609-716-7777, ext. 331.