Value-Based Purchasing Raises the Stakes

Value-Based Purchasing Raises the Stakes

Mock scorecards, interactive blueprints, quality dashboards: Hospitals are frantically seeking out any advantage that might help them excel in a fast-approaching, mandatory competition with millions of dollars on the line. Value-based purchasing (VBP), a program authorized by the Patient Protection and Accountable Care Act of 2010, gives the Centers for Medicare & Medicaid Services (CMS) the power to base a portion of hospital reimbursement payments on how well hospitals perform in 25 core measures.

The move is intended to help CMS flex its muscles and move from being a passive bystander to an active buyer of what its officials have deemed higher-quality healthcare. Analysts and healthcare experts warn that if hospitalists aren’t paying attention, however, they could put themselves at unnecessary risk or lose out on a major opportunity to demonstrate their value in what Patrick Torcson, MD, SFHM, is calling a “team sport.”

Dr. Torcson, chair of SHM’s Performance and Standards Committee, says every hospitalist should be aware of the core-measures concept, which has been around since 2003 in what’s now called the Hospital Inpatient Quality Reporting (IQR) Program. “We’re not reinventing the wheel; we’re just transforming the program from pay-for-reporting to actual pay-for-performance,” he says. Value-based purchasing, though, is raising the stakes considerably. “It’s really significant because it marks the beginning of an era of accountability and true pay-for-performance at the hospital level.”

A major reason for the heightened concern is the structure of the program. In other quality demonstration projects, CMS has established a score to beat: “Anyone above that threshold is in the money. If you didn’t make it, there was no harm, no foul,” says Trent Haywood, MD, JD, chief medical officer of the Irving, Tex.-based for-profit healthcare cooperative VHA Inc.

Laura DietzelWe are really honing in on that kind of a quality dashboard, and [VBP’s arrival] is definitely going to be a big boost toward doing that. We are talking about making it part of our credentialing process, part of our privileging process, and part of our physician reimbursement and pay schedule process.

—Laura Dietzel, PeaceHealth’s program director for High-Tech Meaningful Use

What’s different this time is that value-based purchasing is not a collaboration but a competition in which every hospital is pitted against the entire market, says Dr. Haywood, the former deputy chief medical officer at CMS. It’s also a zero-sum game. That means there will be winners and losers, with the entire cost-neutral program funded by extracting money from the worst performers to financially reward the best. “In this competition-type model, you need to know who you can beat,” he says.

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