Health Policy 101: Medicare’s “Value-Based Purchasing”
What is it?
The fundamental idea behind Value-Based Purchasing (VBP) is that hospitals and physicians should be paid for doing the best and most cost-effective care. The majority of US insurers including Medicare currently reimburse based on the number of services performed regardless of the quality of the care. In 2002 Medicare, hoping to eventually become a value-based purchaser of health care, began collecting data on measure of quality. In 2004 data reporting became mandatory, resulting in a ‘pay for reporting’ system. (This data is publically available at www.hospitalcompare.hhs.gov.) The Affordable Care Act took the next step by instituting incentives for performance based on quality measures. Starting on October 1, 2012 Medicare payments will be reduced by 1% to create a funding pool for these incentive payments.
How does it work?
The VBP payments will be based on both the clinical process of care (Did a patient receive the current recommended care for their diagnosis?) as well as the patient experience (How did the patient feel about staff communication and responsiveness?), which are both already reported in the Medicare reporting system. Hospitals will be evaluated relative to other hospitals as well as relative to earlier performance evaluations. This will reward leading hospitals as well as safety net hospitals with modest improvements. While all hospitals will contribute equally to the fund, financially disadvantaged hospitals may have more difficulty obtaining the resources necessary for significant improvements.
What are the drawbacks?
Critics of VBP argue that by evaluating whether patients receive expert-recommended care imposes ‘cookbook medicine’ restricting a doctor’s ability to tailor care to an individual patient’s needs. Additionally there is varied data supporting a correlation between adhering to these recommendations and actual health improvements. To address this concern, Centers for Medicare & Medicaid Services (CMS) plans to move toward outcome-based measures related to patient mortality in the future.
Source: http://www.rwjf.org/files/research/howdoesmedicarevaluebasedpurchasingwork.pdf
Your loyal Legislative Affairs team,
Brad Hunter – Northeast Region
Robert Sanchez – Central Region
Sean Vanlandingham – Southern Region
Claire Sadler – Western Region
William Teeter – National Delegate
More "Heath Policy 101" articles on the official AAMC-OSR Legislative Affairs website.
What is it?
The fundamental idea behind Value-Based Purchasing (VBP) is that hospitals and physicians should be paid for doing the best and most cost-effective care. The majority of US insurers including Medicare currently reimburse based on the number of services performed regardless of the quality of the care. In 2002 Medicare, hoping to eventually become a value-based purchaser of health care, began collecting data on measure of quality. In 2004 data reporting became mandatory, resulting in a ‘pay for reporting’ system. (This data is publically available at www.hospitalcompare.hhs.gov.) The Affordable Care Act took the next step by instituting incentives for performance based on quality measures. Starting on October 1, 2012 Medicare payments will be reduced by 1% to create a funding pool for these incentive payments.
How does it work?
The VBP payments will be based on both the clinical process of care (Did a patient receive the current recommended care for their diagnosis?) as well as the patient experience (How did the patient feel about staff communication and responsiveness?), which are both already reported in the Medicare reporting system. Hospitals will be evaluated relative to other hospitals as well as relative to earlier performance evaluations. This will reward leading hospitals as well as safety net hospitals with modest improvements. While all hospitals will contribute equally to the fund, financially disadvantaged hospitals may have more difficulty obtaining the resources necessary for significant improvements.
What are the drawbacks?
Critics of VBP argue that by evaluating whether patients receive expert-recommended care imposes ‘cookbook medicine’ restricting a doctor’s ability to tailor care to an individual patient’s needs. Additionally there is varied data supporting a correlation between adhering to these recommendations and actual health improvements. To address this concern, Centers for Medicare & Medicaid Services (CMS) plans to move toward outcome-based measures related to patient mortality in the future.
Source: http://www.rwjf.org/files/research/howdoesmedicarevaluebasedpurchasingwork.pdf
Your loyal Legislative Affairs team,
Brad Hunter – Northeast Region
Robert Sanchez – Central Region
Sean Vanlandingham – Southern Region
Claire Sadler – Western Region
William Teeter – National Delegate
More "Heath Policy 101" articles on the official AAMC-OSR Legislative Affairs website.