Value-Based Purchasing Proposal

Value-Based Purchasing (VBP) is a payment model that offers financial incentives to healthcare providers to meet certain performance measures (Tanenbaum, 2016). Value comprises quality, patient experience, and cost of care. The meaning of value that predominates in VBP schemes is conformance to selected outcome metrics at the lowest possible costs. VBP schemes choose some “quality indicators” and financially incentivize providers to meet them. Providers and hospitals have a portion of their work paid based on their patients’ outcomes instead of purely on how many patients they treat.

Managed care is a healthcare delivery system organized to manage cost, utilization, and quality. Managed care is complex with various systems and arrangements that include planning and delivery of care along with the evaluation of received care. Many programs and organizations use managed care. They include HMOs, Medicaid, Medicare, etc. Managed care organizations (MCOs) try to achieve their goals by controlling patient access to specialized care, eliminating unnecessary services, and limiting provider fees by establishing fixed rates for physicians and hospital services.

More than half of all Medicaid beneficiaries receive services via MCOs. Many states and stakeholders recognize that the rising cost of healthcare in the United States is unsustainable. The rapid growth of healthcare costs is especially problematic for state Medicaid programs (Leddy, McGinnis, & Howe, 2017). Long-standing fee-for-service (FFS) payments to healthcare providers have been responsible for a lack of coordination in the healthcare system and poor health outcomes. VBP initiatives reward providers for delivering coordinated, high-quality care for beneficiaries. Payment to providers is, therefore, tied to improving performance and health outcomes while also containing cost growth.

Many states are increasingly moving away from volume-driven fee-for-service payments and toward VBP arrangements. State Medicaid agencies have traditionally relied on their contracted MCOs to independently oversee VBP arrangements with providers and move away from volume-driven FFS payments (Chee, Ryan, Wasfy, & Borden, 2016). States are increasingly using MCO contracts as leverage to change how providers are paid for their services and accelerate the widespread adoption of VBP. The value-based approach links provider payments to improved performance by healthcare providers and incentivizes providers to deliver a high volume of services without financial rewards for coordinating a patient’s care. By holding healthcare providers accountable for both quality of care and cost, the VBP system attempts to reduce inappropriate care and identifies and rewards best-performing providers.

References

Chee, T. T., Ryan, A. M., Wasfy, J. H., & Borden, W. B. (2016). Current State of Value-Based Purchasing Programs. Circulation, 133(22), 2197-2205. https://doi.org/10.1161/circulationaha.115.010268

CMS’ Value-Based Programs. (n.d.). Retrieved November 13, 2020, from https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Value-Based-Programs

Leddy, T., McGinnis, T., & Howe, G. (2017, March 31). Value-Based Payments in Medicaid Managed Care: An Overview of State Approaches. Retrieved November 13, 2020, from https://www.chcs.org/resource/value-based-payments-in-medicaid-managed-care-an-overview-of-state-approaches/

Tanenbaum, S. J. (2016). What Is the Value of Value-Based Purchasing? Journal of Health Politics, Policy and Law, 41(5), 1033-1045. doi:10.1215/03616878-3632254

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