Value-based purchasing may not be encouraging much improvement

To improve the Value-Based Purchasing (VBP) program CMS should address four concerns, according to a report by David Muhlestein, Ph.D., J.D., of Leavitt Partners. CMS should (1) empirically evaluate whether penalties are large enough to lead providers to make changes across the four domains; (2) structure quality measures so that only meaningful differences in performance lead to meaningful differences in payments; (3) decrease the measurement volatility by increasing the number of cases for each of the metrics and creating an alternative VBP program for low-case volume hospitals; and (4) consider urging Congress to reconsider combining the VBP program with the readmission and hospital-acquired conditions (HAC) reduction to better align measures across programs, the report recommended.


The VBP program was implemented by CMS in 2013 under Section 3001 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-14) as one of three value-based programs for hospitals. The VBP program is different from its counterparts in that it is structured to be revenue neutral, allowing some hospitals to receive bonus payments while others receive penalties for inpatient payments. It also evaluates performance across four weighted domains: clinical process of care (10 percent), patient experience of care (25 percent), clinical outcomes (40 percent), and efficiency (25 percent).

Estimated impact on financial performance

For hospitals involved in the VBP program, an average of 35.4 of discharges are paid for by Medicare, and 46.1 percent of revenue comes from inpatient care. Because the VBP modifier only affects Medicare inpatient care, the modifier can only affect about one-sixth of hospital revenue. The report estimates that, for FY 2016, the VBP modifier will affect a hospital’s income with a maximum 0.35 percent decrease in total revenue or a maximum 0.8 percent increase in total revenue. However, the report estimates that only 4.9 percent of hospitals will see a penalty or bonus payment that exceeds 0.25 percent of net revenue. Of those hospitals, only 8.3 percent will be penalized.

Performance over time

Hospitals may improve their performance each year. The report shows that, between 2015 and 2016, 45 percent of hospitals received bonuses in both 2015 and 2016, while 30 percent were penalized both years. About 25 percent of hospitals made a change between the two categories, with 11 percent moving from bonus to penalty and 14 percent moving from penalty to bonus. The report also classified hospitals into quintiles based on their 2015 and 2016 performance and found a surprising amount of movement between the quintiles, with 40 percent moving up or down one quintile, 13 percent moving two quintiles, 4 percent moving three quintiles, and 1 percent moving four quintiles.

Policy implications

While the VBP program is intended to give incentives for hospitals to improve their quality of care, the relatively small financial incentives may not be sufficient enough to justify the high investment required to implement significant changes for many hospitals, especially considering that the potential for return is unknown. More work needs to be done, the report stated, to determine whether hospitals that had higher penalties improved more than those with smaller penalties or bonuses. To encourage improvement, the report suggested moving toward measures that have clear pathways for improvement, with such measures weighted higher than those with a more nebulous pathway toward improvement. To allow hospitals clearer performance benchmarks, the report also suggested limiting measures used in the program to those where there is a meaningful distribution of performance, limiting the number of potential scores in each category to those that are substantially different.


High levels of volatility in VBP program results may indicate that the program is not adequately measuring true underlying quality and that program measures may be susceptible to random variation, as opposed to a hospital actually alternating between worsening and improving every year. Because smaller facilities tended to be more volatile, the report suggested creating an alternative program for those smaller hospitals to allow better monitoring of changes in quality.

Overlap with other Medicare initiatives

Measures within the VBP program, the Hospital Readmissions Reduction Program (HRRP) and the Hospital Acquired Conditions (HAC) reduction program are not fully coordinated, the report noted. Rather than administering separate programs, the report suggested urging Congress to combine the programs into one to better align all quality and performance measures across programs, allowing hospitals to be better-positioned to prioritize their efforts.

CDC and HRET team up to combat hospital infections

The Centers for Disease Control and Prevention (CDC) estimates that, on a given day, one in 25 hospital patients suffers from at least one health care-associated infection (HAI). In the attempt to prevent such infections, the CDC is teaming up with the Health Research and Educational Trust (HRET), an affiliate of the American Hospital Association (AHA), for a three-year initiative to strengthen infection control practices at hospitals. The initiative is focused on reducing central line-associated bloodstream infections (CLABSIs), catheter-associated urinary tract infections (CAUTIs), Clostridium difficile (C. diff.) infections, and methicillin-resistant Staphylococcus aureus (MRSA) infections.


HAIs are infections that are acquired when an individual receives treatment for another condition in a health care facility. HAIs can be acquired at any health care facility, including acute care hospitals, and can be caused by any infectious agent.


Thousands of preventable deaths each year are attributable to CLABSIs. A central line is a central venous catheter, which is a tube that is placed in a large vein in the neck, chest, groin or arm, to allow for the administration of fluids, blood, or medications. A central line can also be used for performing quick medical tests. Central lines can remain in place for weeks or months and some patients receive treatments through such lines several times a day, especially in intensive care units.


The CDC states that urinary tract infections (UTIs), which involve infections of the urethra, bladder, ureters, and kidney, are the most common type of health care-associated infection that is reported to the National Healthcare Safety Network (NHSN). It is estimated that 75 percent of health care-associated UTIs are associated with urinary catheters.

C. diff.

C. diff. is a bacterium that causes the colon to be inflamed and usually results in a fever and diarrhea. C. diff. is estimated to cause almost half a million infections in the U.S. in 2011, with 29,000 individuals dying of the infections within 30 days of diagnosis. The elderly are at most risks for contracting infections and the CDC states that overuse of antibiotics is the most important risk factor associated with such infections.


MRSA is bacteria that is resistant to many antibiotics and can show up in the form of skin infections. In medical facilities, MRSA can cause life-threatening infections and pneumonia. Last year, the president signed an Executive Order to implement measures to control prevent and control illnesses caused by antibiotic-resistant infections. The Order directed the development of a five-year National Action Plan for Combating Antibiotic-Resistant Bacteria. The president also convened a White House Forum on Antibiotic Stewardship to promote the responsible use of antibiotics.


The CDC-AHA initiative will be conducted through a close partnership with state hospital associations, state health departments, and the CMS’ Quality Improvement Networks—Quality Improvement Organizations (QIN-QIOs), and will provide assistance to at least 300 selected hospitals.

HRET will also work closely with the American Society for Healthcare Engineering (ASHE), to develop resources to design and renovate hospitals in ways so as to reduce infection risks. The project will also include assistance from the Association for Professionals in Infection Control and Epidemiology, the University of Michigan, Michigan Health & Hospital Association Keystone Center, Health Insight QIN, and the Society of Hospital Medicine.


As part of the initiative, HRET will be offering technical assistance to hospitals and will be developing concise reports to provide guidance on the design and layout of health care facilities in order to improve infection control. HRET will also accelerate current strategies for infection reductions by building on the resources of its project partners to work together to improve patient safety.

Dr. Carolyn Gould, CDC Team Lead for Hospital Infection Prevention, said in a released statement, “Combining the expertise of CDC and HRET, we can better coordinate and align healthcare-associated infection prevention efforts at both a national and local level, accelerating prevention and improving sustainability.” Gould stated, “This is a unique opportunity to make a difference in preventing infections and improving patient safety across the nation.”

Big pharma gets bigger: Pfizer and Allergan in $160B deal

In one of the largest corporate deals ever, valued at approximately $160 billion, U.S pharmaceutical giant Pfizer Inc. and its Irish rival Allergan plc announced a merger that would create the world’s largest pharmaceutical company. Under the terms of the proposed transaction, the businesses of Pfizer and Allergan will be combined under Allergan plc, which will be renamed Pfizer plc. According to both companies, the deal is expected to be completed by the end of 2016 and predicted to have more than $25 billion in operating cash flow beginning in 2018.

Pfizer, based in New York, has the blockbuster cholesterol-lowering drug Lipitor® and erectile dysfunction drug Viagra® amongst its many offerings. Allergan, based in Dublin, Ireland, is best known as the manufacturer of the cosmetic drug Botox®. The merger will create some angst amongst politicians, as the combined company’s headquarters will be in Dublin. In a process known as corporate tax inversion, where bigger American companies buy smaller foreign ones and then relocate their headquarters to the location of the smaller company, the move would slash the combined company’s U.S. corporate tax bill substantially.

The U.S. Treasury Department recently unveiled new rules to make it harder for companies to do inversions. However, the Treasury rules alone will likely not stop the merger because former Pfizer stockholders will hold approximately 56 percent of the combined company and Allergan shareholders will own approximately 44 percent of the combined company. The Treasury rules require that an inverted company be tax-resident in its new home country under that country’s rules, not just U.S. law, to pass a test of whether it has 25 percent of its business activity in the new country. A company can be recognized as foreign-based by passing the threshold percentage.

Highlight on California: Aid-in-dying law allows patients to be given deadly dose of drugs

On October 5, 2015, California Governor Jerry Brown (D) signed AB2-15, the End of Life Option Act. Effective January 1, 2016, the law will allow an adult who is terminally ill to request and obtain a prescription for an “aid-in-dying drug,” defined as “a drug determined and prescribed by a physician for a qualified individual, which the qualified individual may choose to self-administer to bring about his or her death.”  The law requires several procedural steps and other protections to assure that the patient understands the nature and consequences of the act and that the patient has maintained the intention for a period of time. Specifically, the law requires:

  • attestation by both the patient’s attending (treating) physician and a consulting physician that the patient’s condition is terminal, the patient has the capacity to make the decision, and has done so with informed consent
  • two oral requests for the aid-in-dying drug made by the patient to the physician at least 15 days apart, and a written request. The patient must  make the requests personally, not through a personal representative, attorney-in-fact, guardian, conservator, or health care agent. All three requests must be made to and received by the physician personally, and not through a designee.
  • the written request must be made in a form prescribed by statute and signed in the presence of two adult witnesses, who must attest to the individual’s identity and to their belief in the individual’s voluntary action, the lack of duress or undue influence.
  • before writing the prescription, the attending physician must evaluate the individual’s mental health and make a referral to a mental health professional if there is any indication of a mental disorder and await the determination of the mental health professional that the individual has the capacity to make medical decisions and is not suffering from impaired judgment due to a mental disorder..

The witnesses may not be the attending physician, consulting physician, or mental health specialist. Only one of the two witnesses may be either a member of the individual’s family or entitled to any portion of the estate at death or the owner, operator or an employee of the healath care facility where the individual resides or is receiving care.

The prescription

The attending physician must give the patient the opportunity to withdraw or rescind the request before he or she writes the prescription and must confirm that the individual has the capacity to make the medical decision and understands:

  • his or her diagnosis and prognosis;
  • the risks associated with taking the aid-in-dying drug,
  • the probable result of taking it;
  • the possibility that he or she may choose not to take the drug after receiving it, and
  • all of the other treatment options available, including hospice or palliative care.

In addition, the physician must counsel the patient:

  • to take the drug in the presence of another person;
  • not to do so in a public place;
  • to notify the next of kin of the request;
  • to keep the drug in a safe, secure location until he or she ingests it; and
  • to complete the final attestation form within 48 hours before ingesting the drug.

Interpreters’ services

If the individual makes the requests and has the discussions with a physician or mental health professional in a language other than English, he or she may sign the form in English, but the interpreter must execute a form declaring under penalty of perjury that the interpreter is fluent in both English and the patient’s language and that the individual understood the meaning and significance of the decision and the document he or she signed.  The interpreter may not be a related to the individual by blood, marriage, adoption, or registered domestic partnership and may not be entitled to any portion of the individual’s estate.


The attending physician must maintain records of the patient’s requests in the patient’s medical records. Thirty days after writing the prescription for an aid-in-dying drug, the physician must report the prescription to the state Department of Health. If the patient has used the drug, the attestation form also is to be turned in to the attending physician, who must submit it to the state.

Prohibitions in contracts, wills, and other documents

Under the statute, any provision in a contract, will, or other agreement executed on or after January 1, 2016, that would affect a person’s making, withdrawing, or rescinding a request for an aid-in-dying drug is not valid. No obligation under a contract may be conditioned upon an individual’s making, withdrawing, or rescinding a request for such a drug. The sale, procurement,  issuance, or price of a life or health insurance policy may not be conditioned upon an individual’s making or rescinding a request for an aid-in-dying drug.

An individual’s ingestion of an aid-in-dying drug in accordance with the statute is to be considered a natural death as a result of the underlying disease and not a suicide.

Administration of drug: a fine line?

The law provides that an individual must have both the physical and mental ability to self-administer the drug or to coerce or exercise undue influence to persuade an individual to request the drug. It is a felony to administer the drug to an individual without his or her knowledge and consent. Section 443.18 provides, “Nothing in this part may be construed to authorize a physician or any other person to end an individual’s life by lethal injection, mercy killing, or active euthanasia.”

At section 443.14, the law provides that a person shall not be subject to civil or criminal liability solely for being present when the individual self-administers the drug. Still, the statute also provides that the person who is present may assist the patient in preparing the drug so long as he or she does not assist the patient in ingesting the drug.  it appears the statute leaves open the possibility that assisting with the injection of a drug, even at the request of a patient, could subject the person to civil or criminal liability.