In any field, improving performance and accountability depends on having a shared goal that unites the interests and activities of all stakeholders. In health care, however, stakeholders have myriad, often conflicting goals, including access to services, profitability, high quality, cost containment, safety, convenience, patient-centeredness, and satisfaction. Lack of clarity about goals has led to divergent approaches, gaming of the system, and slow progress in performance improvement.

Achieving high value for patients must become the overarching goal of health care delivery, with value defined as the health outcomes achieved per dollar spent. This goal is what matters for patients and unites the interests of all actors in the system. If value improves, patients, payers, providers, and suppliers can all benefit while the economic sustainability of the health care system increases.

Value — neither an abstract ideal nor a code word for cost reduction — should define the framework for performance improvement in health care. Rigorous, disciplined measurement and improvement of value is the best way to drive system progress. Yet value in health care remains largely unmeasured and misunderstood.

Value should always be defined around the customer (patient), and in a well-functioning health care system, the creation of value for patients should determine the rewards for all other actors in the system. Since value depends on results, not inputs, value in health care is measured by the outcomes achieved, not the volume of services delivered, and shifting focus from volume to value is a central challenge. Nor is value measured by the process of care used; process measurement and improvement are important tactics but are no substitutes for measuring outcomes and costs.

Why are value-based programs important?

CMS describes their  value-based programs as a move toward paying providers based on the quality, rather than the quantity of care they give patients.

What are CMS’ original value-based programs?

There are four original value-based programs; their goal is to link provider performance of quality measures to provider payment:

  • Hospital Value-Based Purchasing (HVBP) Program
  • Hospital Readmission Reduction (HRR) Program
  • Value Modifier (VM) Program (also called the Physician Value-Based Modifier or PVBM)
  • Hospital Acquired Conditions (HAC) Program

Value-based care is emerging as a solution to address rising health care costs, clinical inefficiency and duplication of services, and to make it easier for people to get the care they need. In value-based models, doctors and hospitals are paid for helping keep people healthy and for improving the health of those who have chronic conditions in an evidence-based, cost-effective way.

This is a departure from the traditional fee-for-service approach. With fee-for-service, doctors and hospitals are paid based on the number of health care services they deliver, such as tests and procedures. Payment generally has little to do with whether their patients’ health improves.

Value-based care is a form of reimbursement that ties payments for care delivery to the quality of care provided and rewards providers for both efficiency and effectiveness. This form of reimbursement has emerged as an alternative and potential replacement for fee-for-service reimbursement which pays providers retrospectively for services delivered based on bill charges or annual fee schedules.

In order to transform how healthcare providers are reimbursed for services rendered, the Centers for Medicare & Medicaid Services (CMS) has itself introduced an array of value-based care models, such as the Medicare Shared Savings Program and Pioneer Accountable Care Organization (ACO) Model. Private payers have in turn adopted similar models of accountable, value-based care.

While the traditional fee-for-service reimbursement model promoted quantity of services, federal officials have proposed several reimbursement programs that reward healthcare providers for the quality of care that they give to patients. Value-based care aims to advance the triple aim of providing better care for individuals, improving population health management strategies, and reducing healthcare costs.

In more basic terms, value-based care models center on patient outcomes and how well healthcare providers can improve quality of care based on specific measures, such as reducing hospital readmissions, using certified health IT, and improving preventative care.

The Department of Health & Human Services (HHS) has set a goal of converting 30 percent of fee-for-service Medicare payments to value-based payment models by the end of 2016. The agency expects 50 percent of traditional payments to make the transition by 2018.

But what does that mean for you?

A value-based approach is designed around patients. Medical care teams zero in on individual needs, whether preventive, chronic or acute. You benefit from a team that coordinates your care, and technology that connects you and your providers with information to help you get the right care — across the health care system.

Four models in action

  1. Accountable care organization (ACO). Accountable care organizations are transforming care delivery by paying health systems and doctors based on their success at improving overall quality, cost and patient satisfaction with their health care experience. ACOs are alliances of doctors, hospitals and other health care providers that deliver and coordinate care for their patients. In an ACO, providers are responsible for improving the quality of patient care and health outcomes, at equal or lower costs, through better coordination and preventive care.Health plans team up with doctors and health systems to provide experience in managing financial risk, clinical care management expertise, and data and technology that helps connect providers with other providers, health plans and patients. Doctors and health systems that successfully manage the health of the entire population reap the rewards. However, if they do not improve quality and control the cost of care, they may lose money. For you, that means a team of providers is incented to work together to keep you healthy.
  2. Patient-centered medical home (PCMH). A PCMH is a care model led by a primary care doctor that is focused on providing enhanced care coordination across the health care system. In a PCMH, a primary care doctor leads a clinical team that oversees the care of each patient in a practice. The medical practice receives data about their patients’ quality and costs of care in order to improve care delivery. Financial incentives are based on performance on specific quality measures that result in better access to care, more coordinated patient care and improved outcomes. When practices do well on quality and efficiency measures, they share in the savings they create. In this model, you will likely get more coordinated care, easier appointments and more time with your doctors.
  3. Pay for performance (P4P). This model rewards doctors and hospitals that improve or maintain quality, while keeping across-the-board rate increases lower. Doctors, hospitals and health plans together develop and agree to a set of quality and efficiency measures. This model puts a portion of the doctor’s or hospital’s usual fee-for-service payments at risk for improving performance. If the doctor or hospital meets or exceeds the performance measures, they receive payment that had been put aside as an incentive for improved care. While still fee-for-service, this entry-level value-based model encourages quality and efficiency.
  4. Bundled payments. In a bundled payment model, a single payment is made to doctors or health care facilities (or jointly to both) for all services associated with an episode-of-care, such as a hip or knee replacement. “Bundled payment rates” are determined based on the costs expected for a particular treatment, as well as costs for any preventable complications that may arise. These payment models promote a coordinated, efficient and cost-conscious effort for specific treatments or conditions. Fewer tests are repeated, “overtreatment” declines, and readmissions and length of hospital stays go down.

Since value is defined as outcomes relative to costs, it encompasses efficiency. Cost reduction without regard to the outcomes achieved is dangerous and self-defeating, leading to false “savings” and potentially limiting effective care.

Health care delivery involves numerous organizational units, ranging from hospitals to physicians’ practices to units providing single services, but none of these reflect the boundaries within which value is truly created. The proper unit for measuring value should encompass all services or activities that jointly determine success in meeting a set of patient needs. These needs are determined by the patient’s medical condition, defined as an interrelated set of medical circumstances that are best addressed in an integrated way. The definition of a medical condition includes the most common associated conditions — meaning that care for diabetes, for example, must integrate care for conditions such as hypertension, renal disease, retinal disease, and vascular disease and that value should be measured for everything included in that care. (New England Journal of Medicine)

Effective collaboration within the medical team to achieve higher quality outcomes in an increasingly interdependent health care delivery system continues to grow in importance. Collaboration is a complex partnership. It is a process that occurs over time. It is also an outcome, a synthesis of different perspectives, an integrative solution. It is important to remember that conflict is a natural and expected part of collaboration. Team collaboration may have hurdles, however these hurdles can be overcome with an open attitude and feelings of mutual respect and trust. A study determined that improved teamwork and communication are described by health care workers as among the most important factors in improving clinical effectiveness and job satisfaction

Are value based payment models the right approach to containing healthcare costs and improving the quality in healthcare delivery ?

Brenda Hopkins RN, Editor in Chief – Healthcare Discruptors