The Basics of Value-Based Purchasing
Value-based purchasing is different from fee for service model.
What is value-based purchasing? As the Supreme Court deliberates some aspects of the Affordable Care Act, it seemed an appropriate time to examine one part of the legislation that will more than likely survive any and all debate: value-based purchasing. In short, providers under this arrangement are rewarded for meeting pre-established targets for delivery of healthcare services. This is a fundamental change from fee for service payment.
Value-based purchasing compensates physicians, hospitals, medical groups, and other healthcare providers for meeting certain performance measures for quality and efficiency. Deterrents, such as eliminating payments for negative consequences of care or increased costs, have also been proposed. Pilot studies in several large healthcare systems have shown slight improvements in specific outcomes and increased efficiency, but no significant cost savings have been truly realized yet because of the added administrative requirements. Statements by professional medical societies have been generally supportive of incentive programs that will increase the quality of health care, but they express concern with the credibilty of quality indicators, patient and physician autonomy and privacy, as well as increased administrative burdens.
Further, the Centers for Medicare and Medicaid Services (CMS) has issued proposed rules for value-based purchasing (VBP) that link payment to how effectively hospitals deliver high quality care. The suggested rules also present incentives for implementing electronic health records and payment adjustments based on rates of hospital-acquired conditions and readmission rates. The measures are a subset of those that CMS has adopted for its existing Medicare Hospital Inpatient Quality Reporting Program. The initial proposed clinical measures are focused on improving outcomes for acute myocardial infarction, heart failure, and for reducing health care-associated infections. The program also measures patient experience through the Hospital Consumer Assessment of Healthcare Providers and Systems Survey (HCAHPS).
Three broad goals have shaped HCAHPS. First, the survey is designed to produce data about patients’ perspectives of care that provide objective and meaningful comparisons of hospitals on topics that are important to consumers. Second, public reporting of the survey results promotes new incentives for hospitals to improve quality of care. Third, public reporting serves to boost accountability in health care by increasing transparency of the quality of hospital care provided in return for the public investment. With these goals in mind, the Centers for Medicare & Medicaid Services (CMS) and the HCAHPS Project Team have taken substantial steps to assure that the survey is reliable, beneficial, and practical.
Beginning in 2002, CMS partnered with the Agency for Healthcare Research and Quality (AHRQ), another agency in the federal Department of Health and Human Services, to develop and test the HCAHPS survey. AHRQ carried out a rigorous scientific process, including a public call for measures; cognitive interviews; review of literature; stakeholder input; a three-state pilot test; consumer focus groups; extensive psychometric analyses; consumer testing; and numerous small-scale field tests. During this process, CMS provided three separate opportunities for the public to comment on HCAHPS, and responded to well over one thousand comments.
Scores on patient experience, based on HCAHPS dimensions, will constitute 30% of a hospital’s overall score. Patient experience will be scored as follows:
•Hospital achievement comparable to an industry benchmark
•Hospital improvement relative to the organization’s starting benchmark and a range of predicted improvement
•The measure scores for the two aspects of patient experience will be totaled into a domain score, using the greater of the improvement or achievement scores for each dimension
•Up to 20 consistency points will be added to the combined patient experience score if all dimension scores surpass the achievement threshold
•If any dimension score is below the achievement threshold, the consistency points will be awarded in proportion to the percentile of the lowest-scoring dimension
The incentive payments will be based on whether a hospital meets or exceeds the projected performance standards. To pay for the incentives, CMS plans to start reducing diagnosis-related group (DRG) payments by one percent for fiscal year 2013 discharges. The program will apply to payments for discharges occurring at the start of federal fiscal year 2013, or on or after October 1, 2012.
