A method may include commanding operation of an engine in a first lift mode. The engine may include a valve lifter system that selectively operates a valve member in the first lift mode and a second lift mode through engagement with a camshaft. A first duty cycle of a cam phaser oil control valve (OCV) may be determined to maintain a first camshaft position corresponding to the first lift mode. The camshaft position may be maintained by a cam phaser that is coupled to the camshaft and in communication with the cam phaser OCV. Engine operation may be commanded to the second lift mode and a second duty cycle of the cam phaser OCV may be determined to maintain a second camshaft position corresponding to the second lift mode. A valve lifter system failure may be diagnosed based on a difference between the first and second duty cycles.