Why is value based purchasing important

Cost Reduction With value based purchasing, patients have the right to hold medical providers accountable for service quality and costs.

Value based purchasing plans pair information on medical cost data and patient outcomes in an actionable way. The outcomes generated by value based purchasing plans ideally lead to improved health care services, insurance satisfaction, and healthcare providers that can compete in a competitive market. Increased Patient Satisfaction Value based purchasing focuses on reducing medical errors and rewarding the health care organizations that perform the best. It can lead to increased patient satisfaction which often indicates quality service.

Less Medical Errors Unfortunately, medical errors are a serious concern in the healthcare industry. The AQC evaluation research team also has examined the effect on quality measures not included in AQC, particularly for children with special needs; in this case, they observed more improvement for generic prescribing measures, but no effect on other measures that were not incentivized. A TEP member who represented the AQC cited two possible reasons for the absence of spillover effects: 1 Blue Cross Blue Shield of Massachusetts has provided physician practices with better data on ACQ members than other plans' members, so a provider's behavior changes only for the AQC patients, since they have better data to manage those patients; and 2 the practices have used case managers and other resources for high-risk subgroups covered by the AQC, and these resources are not available for other high-risk patient populations they serve.

Other TEP members agreed that this is a common occurrence, as health plans focus on providing resources for their members who are the focus of the VBP programs. ACOs are expected to implement a variety of quality improvement and care management programs, information technology, and patient registries, which have the potential to improve quality of care more broadly and which could generate positive spillover effects.

Some researchers and policymakers have expressed concerns that the formation of ACOs may lead to greater market concentration and have the adverse effect of raising prices; the TEP expressed similar concerns. One TEP member commented that in Massachusetts, a law was passed in that sets a maximum rate of growth in health care spending by providers and hospitals, which holds providers accountable.

This law established guardrails and protects against the effects of excessive consolidation. The TEP suggested that a similar law in other states or nationally could be a strong policy lever to guard against this type of behavior.

We found no evidence of unintended effects or spillover effects from the three studies of bundled payments that included quality measures. The Hussey et al. However, Hussey et al. There was little evidence that there were major effects on quality; rather, the findings were mixed, with some measures having improved while other worsened.

To assess spillover effects on quality requires access to data for other measures within the same clinical condition or addressing other clinical conditions that were not incentivized by the program, something that most programs do not routinely collect. The TEP also identified multiple possible unintended consequences, the occurrence of which should be monitored, including the loss of revenue for providers caring for disadvantaged populations, the excessive exclusion of patients when that is an option in the program, access barriers and patient turnover from practices related to providers avoiding more difficult patients, and market concentration and price effects in the context of ACOs.

Many P4P studies have commented about possible unintended effects for patients of low socioeconomic status SES and the providers that serve these populations e. Examinations of whether VBP programs work to reduce or increase disparities are challenged by the lack of information at the patient level on race, ethnicity, education, SES, and other markers of vulnerable populations prone to disparities.

We found only five empirical studies that assessed the effects of P4P on disparities. Among the four studies that evaluated U.

Three years post-HQID-intervention based solely on attaining performance in the top 20th percentile of performance distribution, there were modestly greater gains only a few significant for the high-DSH-index hospitals compared with the non-high-DSH-index hospitals exposed to P4P e. This study should be interpreted in light of the fact that differences at baseline were negligible, and nearly all hospitals in both the P4P and pay-for-reporting groups topped out their performance on the clinical process measures that were the focus of this study.

The Ryan study,[89] which had a strong design, found no negative access effects related to avoiding treating minority patients after introduction of the Premier HQID. A more recent study by Ryan et al. This effect was a function of changes in the structure of the incentive and not due to lower-performing hospitals actually improving more.

A study from the United Kingdom[91] showed a lessening of the disparities gap in performance among primary care practices, with measures largely topping out on performance; however, the results of this study are not generalizable to the United States due to substantial differences in the delivery system national health system, national HIT platform in primary care practices and design of the P4P program.

A TEP member from one large commercial health plan noted that a global-budget contract model with strong quality incentives had driven important gains in closing racial and ethnic disparities. This is because a few medical groups with a low-SES patient mix worked to innovate with their population and to get their doctors to improve quality. These provider groups with low-SES patient populations actually achieved some of the highest gains and absolute quality scores in the state.

However, this was not a universal finding among all groups with low-SES patients. While the TEP recognized the importance of monitoring the effects of VBP programs on disparities in care, panelists also noted that assessing the effect of VBP on disparities is difficult to monitor due to the lack of routinely collected data on the demographic and socioeconomic characteristics of patients. TEP members indicated that they had faced challenges in capturing this information, despite their interest in capturing self-reported language, health literacy, and indicators of patient vulnerability to help improve their ability to work with patients.

However, several providers on the TEP stated they were making inroads in the data they capture to be able to examine disparities. For example, one delivery system has a mandatory data gathering protocol for zip code, race, and ethnicity.

There is limited evidence characterizing high- and low-performing providers under VBP. The few studies that do describe characteristics of high- and low-performing providers have been opportunistic in defining the characteristics based on the variables that were available to them e. The TEP noted that the American Medical Group Association has developed a set of elements for what defines the characteristics of a high-performing health system;[92] however, it remains untested whether these elements differentiate high and low performers under VBP.

Most of the studies that looked at provider characteristics focused on physician or physician group P4P programs. The limited literature shows that higher-performing providers tend to be large provider organizations,[7, 43, 69] have a medical group rather than an independent practice association organizational structure, have more HIT infrastructure,[93—96] and have been historically high performers.

Other studies find that high performers engage in more care management processes,[7] use order sets and clinical pathways for measured areas,[97] have nursing staff's support for quality indicators, have adequate human resources for initiatives to improve performance,[97] and engage in more external quality improvement initiatives.

Hospitals that achieved the largest improvements under P4P are characterized as being well financed, operating in less competitive markets,[56] having lower performance at baseline,[58, 59] and having a higher DSH index. Although associations have been found between patient population SES and provider performance, it is important to note that some providers that serve low-SES populations are able to perform well.

For example, Medicare has found that most hospitals with high proportions of Medicaid patients achieve readmission rates comparable to those with fewer Medicaid patients.

The CMS Physician Group Practice demonstration evaluation highlighted organizational characteristics associated with performance. Physician groups characterized as being either affiliated with an academic medical center or a freestanding physician group practice were more able to achieve both quality and cost targets than groups with only non-academic hospital affiliations.

It is unclear whether the results based on the 10 physician groups that self-selected into the Physician Group Practice demonstration would generalize more broadly. Case studies and commentaries suggest that strong physician leadership with a clear strategy and vision is necessary to change practice culture to one that is comfortable with sharing the risk of a predetermined patient population.

There is very limited published literature to inform what structural and implementation features are associated with successful P4P programs. It is rare to find studies that examine the effects of alternative design features e. Consequently, it is difficult to assess from these studies whether the programs have been successful and would be if scaled up to a larger number of providers i. Based on the review of the published literature, there have been mixed findings on the effectiveness of VBP programs to meet its intended goals to improve quality and control costs.

This may be because VBP programs are still a work in progress and sponsors are continuing to evolve these programs in response to what does and does not work when implemented. Despite the fact that many programs have been in operation for the past five to ten years, there is a substantial gap in the knowledge base about what has been learned regarding design and implementation in large P4P programs to inform what features promote success in VBP programs.

ACOs are new, and there has not been sufficient time to test ACOs to know whether they can succeed and what factors must be present to allow them to form and achieve desired goals.

There is, as yet, little accumulated knowledge about their formation and, once formed, what types of performance results are accrued and what factors are associated with observed performance results. Evaluations of the private- and public-sector ACO experiments will hopefully generate knowledge to inform what factors need to be present for an ACO to succeed in meeting performance goals.

Various challenges associated with implementing bundled payments have been identified,[] and, similar to ACOs, these models are not well tested or in routine operation. When we queried the TEP about the features of successful VBP programs based on their knowledge from having designed and operated these programs, most panelists agreed that the evidence is thin regarding successful programs and what features characterize these programs.

Based on the panelists' anecdotal evidence and the limited literature, we identified six features that appear to influence the success of VBP programs:.

TEP members stated that the dissemination of best practices currently occurs through trade conferences and regional quality improvement activities. Although the information from these conferences is not published, several provider organization TEP members observed that they do provide vital information for organizational learning of best practices and improvement strategies.

Panelists said that it would be useful to extract and compile lessons learned from providers about best practices they have implemented and to widely disseminate this information. Some panelists recommended that HHS should conduct case studies of high-performing providers to see what factors they identify as contributing to producing positive results; however, because high performers may be doing many of the same things as low performers, it is necessary to look at both high and low performers to see what differentiates them.

Alternative approaches to disseminating best practices were discussed by the TEP. The TEP broadly agreed that there is a need for qualitative research to understand what has been learned by those who design and sponsor VBP programs and by the providers who are targets of the VBP programs.

There has been a lot of iterative work by VBP program sponsors, and case studies could shed light on lessons learned that are not making their way into the published literature. Qualitative research focused on understanding what does and does not work regarding design and implementation would be useful to those designing VBP programs.

For example, it would be useful to learn how providers have used performance benchmarking data provided by both public and private VBP programs to inform their quality improvement efforts and engage leadership in organizational infrastructure investments to support high-value care.

One TEP member suggested Qualitative Comparative Analysis[, ] as one qualitative analytic methodology that might be a good fit for VBP evaluations, as it attempts to isolate key factors that are necessary conditions, versus those that are sufficient conditions, to achieve the outcome. This approach acknowledges that there are a number of possible paths or combinations of elements e. The other area flagged by the TEP where qualitative work would be beneficial is understanding what changes providers are making in response to VBP programs.

Although the TEP emphasized the need for qualitative evaluation work, there may be challenges in getting private VBP sponsors to share proprietary information, particularly in a competitive marketplace. The TEP supported the need to evaluate the impact of VBP programs, and panelists felt that having a common set of variables that potentially influence outcomes, such as program characteristics e.

Although the past decade has witnessed a fair amount of experimentation with performance-based payment models, primarily P4P programs, we still know very little about how best to design and implement VBP programs to achieve stated goals and what constitutes a successful program. The published evidence regarding improvements in performance from the P4P experiments of the past decade is mixed i. Many of the published studies evaluating the impact of P4P programs suffer from methodological weaknesses that make it hard to determine whether the VBP intervention had an effect above and beyond other changes e.

VBP programs are natural experiments and inherently difficult to evaluate because program sponsors rarely withhold the VBP intervention from a matched group of providers to see what would have occurred absent the intervention.

There are many weaknesses in the methods often used to evaluate P4P and now the broader class of VBP programs , including reliance on pre-post comparisons without a comparison group that was not exposed to the intervention, comparisons with populations of providers that are substantially different from the treatment group, and failure to account for other factors that may be contributing to the observed results.

ACOs and bundled payment programs that embed clinical quality measures have only recently emerged and are just now being tested and evaluated. There is currently very limited evidence regarding the impact of these programs and whether they can be successfully implemented. Only a handful of ACO evaluation studies have been published, and these evaluations have been of relatively short duration i. These studies also suffer from similar methodological weaknesses as seen in the P4P literature.

The published studies show some improvements in cost and quality; however, several of the ACO studies reported cost savings compared with expected year-over-year trend in spending as opposed to comparing the intervention providers' experience against a matched comparison group of providers.

Bundled payment programs that incorporate a quality component are equally new, and there is virtually no evidence on whether they can be successfully implemented and what their effects are.

The paucity of publicly available information regarding what constitutes a successful VBP program—that is, what VBP design features and other factors i.

In practice, more is likely known about what does and does not work in terms of VBP design and implementation than what the published literature suggests. VBP program sponsors particularly private program sponsors have gained a great deal of experience through trial and error as they work to operationalize the VBP concept in real-world settings; however, these experiences are not being documented through traditional means.

Because VBP programs are relatively new and experimentation is likely beneficial at this stage of VBP development, the question is how to generate information from all the experimentation. Efforts to extract these lessons from VBP sponsors are critically needed to strengthen the knowledge base.

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The report measures traits such as patient satisfaction and quality of service. Value based initiatives encourage health care organizations to deliver treatments that are custom tailored to the local population. This wise course of action taken by administrators assist organizations in meeting service quality objectives that promote community wellness.

At Regis, we give you more pathways to pursue your goals in healthcare administration. As a dedicated leader of health administration education, we welcome ambition-driven, self-motivated professionals like you from all health care settings. Gain special insight into areas like management, communications, health informatics, and health policy through our Online Master of Health Administration. Wherever you are in your career and wherever you want to be, look to Regis for a direct path, no matter your education level.

Fill out the form to learn more about our program options or get started on your application today. Skip to main content. Reduces Costs In practice, value based purchasing involves a proactive approach to promoting service quality.

Increases Patient Satisfaction Value based purchasing encompasses reducing medical errors and rewarding the best performing care provider organizations. Reduces Medical Errors Medical errors are a pressing concern among significant insurance sponsors such as large employers.

Informs Patients Improved treatment outcomes attract patients. Promotes Healthy Habits Poor habits such as cigarette smoking, overeating, and excessive alcohol consumption contribute to poor employee health. Encouraging Value Based Purchasing Several health advocacy organizations have conducted successful value based purchasing campaigns. Learn More At Regis, we give you more pathways to pursue your goals in healthcare administration.

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