“Volume to Value” Still Needs an Ethics Consult

By Kelsey Berry

Whereas “allocation of scarce resources” is a buzz phrase that inspires a great deal of distress and desire for good ethical argument, “waste avoidance” strikes us as a relatively uncontroversial method for containing health care spending. Perhaps this is because rationing implies a trade-off between two individuals, each of whom have the potential to benefit from a possible intervention, whereas waste avoidance, on the other hand, implies a trade-off between two services – one of which has the capacity to benefit an individual, and the other which does not. Surely the latter trade-off is preferable, and perhaps even imperative, to make before we take up the former. This week U.S. Secretary of Health and Human Services Sylvia Burwell signaled a commitment to making the latter trade-off in her announcement on a complex area of health care financing: Medicare payment & payment reform. Medicare payment is one of the few levers that the federal government has relatively direct control over when it comes to controlling health care spending, and Burwell’s announcement was a welcome change in the policy discourse from the oft-lamented “doc fix”/SGR debacle (a fix for which was just bypassed again).

In her announcement and this perspectives piece in NEJM, Burwell set goals to (1) move 50% of Medicare payments to alternative payment models such as Alternative Care Organizations (ACOs) and bundled payment arrangements by 2018, and (2) tie 90% of all Medicare payments made under the traditional fee-for-service model to quality or value, through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs, by 2018. Notably, these are the first explicit goals for transitioning to alternative payment models and value-based payments that have been set in the history of the Medicare program – though it remains to be seen how these goals will be pursued.

The news cycle (at least the cycle that health policy wonks have on their feeds) has covered the announcement extensively, so I won’t rehash the details here. Instead I’ll refer you to Millman’s piece over at The Washington Post’s Wonkblog, which offers a nice overview while noting two caveats that ought to temper excitement about the bold but under-detailed proposal: (1) there is mixed evidence on whether value-based payment models are an improvement over traditional FFS, and little evidence on how best to design these programs, and (2) getting hospitals and physicians to participate in these alternative payment models is a veritable quagmire. Citing the same challenges but taking a slightly more critical tone, this piece from Suderman cautions that the announcement is simply a bunch of “hype” – how indeed does HHS intend to meet these goals, and even if they do, what reason do we have to believe that the shift will improve care financing and delivery?

What I haven’t seen much of is criticism of the central tagline for the reform — “from volume to value.” And indeed, who would criticize the attempt to strike from the health care menu the many costly services which confer no therapeutic benefit to patients in a particular encounter, while incentivizing practices that do improve health? Waste avoidance like this ideally frees up resources that will then be used to provide valuable care to more people, helping us duck the ethically fraught rationing problems – if not indefinitely, at least for a while.

But, ethicists, don’t count on hanging up your hats while we figure this out. Thinking about the challenges that face those who would seek to implement value-based payment in Medicare, I came across this 2012 NEJM Perspective – aptly named “From the Ethics of Rationing to the Ethics of Waste Avoidance.”  Dr. Howard Brody discusses the context for ethics in an area otherwise believed to be uncontroversial, and I recommend reading the article. Here, I’ll just extend a few of his points for the policy discussion I anticipate unfolding as efforts are made to make Burwell’s Medicare payment reform goals a reality. Ethicists may weigh in on, or pay attention to the following in a shift from FFS to value-based payment:

(1) Selecting the right indicators to measure quality, especially considering the “teaching to the test” phenomenon, and the potential for measures to dictate how responsibility for health is shared between providers, patients, and the community

(2) Assessing the fallout from an incentive structure that may see only certain physicians and hospitals participating in certain alternative payment models, especially if this produces or contributes to disparities in care

(3) Fairness to providers, including ensuring those who already provide high quality, low cost care under the current payment schemes can capture some of the rewards that may be made available to those who show improvement during the shift

(4) Risk adjustment to take into account health status and appropriate demographic information so those providing care to vulnerable populations aren’t unfairly penalized under some quality measures

(5) Ensuring that there is a robust appeals process so that services and practices considered wasteful on a population level are still accessible by individuals during an episode of care, even if their personal physician declines to recommend it — and for that matter, ensuring patients are aware of the risks and rewards their providers and payers face in these alternative payment models (see, for instance, this piece in NEJM from DeCamp and Lehmann on ethics for referrals in ACOs)

(6) Querying the underlying causes of low benefit of certain services and practices in specific population groups before labeling them futile and wasteful – a topic I’ve raised before on this blog

(7) Of course, monitoring the research on design and effects of alternative payment models – along with the rest of the health policy community

These ideas aren’t exhaustive and surely could benefit from some more specificity – I’ll leave this to the comments section to hash out. How will an ethics of waste avoidance play out in Medicare payment reform?


At the conclusion of her fellowship year, Kelsey Berry was a PhD candidate in health policy and ethics at Harvard University. She holds a BA in political philosophy and neuroscience from Princeton University. Kelsey's research interests include theories of justice in global health, partiality and fairness in resource allocation, and ethical issues in the health of vulnerable populations. Kelsey was a 2014-2015 Student Fellow at the Petrie-Flom Center, during which she worked on a research project entitled "Rights and Duties Against Conditional Funding Agreements in Global Aid." The paper presents a normative argument for holding global health development assistance channeled through non-governmental organizations to standards of egalitarian justice, and assesses PEPFAR's "anti-prostitution pledge," which was challenged in a landmark 2013 Supreme Court case, relative to these standards. Kelsey's other work includes empirical research on issues in mental health policy, like assessing progress in achieving equitable insurance coverage for mental health disorders subsequent to the 2008 federal mental health parity law and the Affordable Care Act. She planned to continue such work with the Department of Health Care Policy at Harvard Medical School, and on a 2015-2016 training grant with the National Institute of Mental Health.

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