SHM Joins D.C. Session on Value-Based Purchasing


SHM had a seat at the table at a high-level roundtable meeting March 6 in Washington, D.C., to discuss Medicare’s value-based purchasing of hospital care.

SHM President Russell Holman, MD, chief operating officer for Cogent Healthcare, Nashville, participated in the roundtable convened by Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking member Chuck Grassley, R-Iowa. The roundtable included representatives from 22 public and private healthcare organizations, including SHM, the American Hospital Association, and National Quality Forum.

“SHM was one of only two physician organizations participating,” points out Laura Allendorf, SHM’s senior adviser for advocacy and government affairs. “That is very significant. I think [our inclusion] is a testament to our growing presence, our advocacy efforts and our willingness to help representatives with healthcare issues like value-based purchasing.”

The Proposed Plan

At the roundtable, representatives from the Centers for Medicare and Medicaid Services (CMS), the Medicare Payment Advisory Commission (MedPAC), and the Government Accountability Office (GAO) presented an overview of the report that CMS submitted to Congress in November, which outlines a hospital value-based purchasing program. The plan is designed to meet CMS’ objective of “transforming Medicare from a passive payer of claims to an active purchaser of care.” It builds on the existing framework of the current pay-for-reporting program, Reporting Hospital Quality Data for Annual Payment Update, but more closely links hospital Medicare payments to performance.

Dr. Holman is well versed in the plan; he and members of SHM’s Public Policy Committee, who were in Washington for annual visits to Capitol Hill, had just met with CMS’s Chief Medical Officer Tom Valuck, MD.

“That same morning, Tom Valuck had spent an hour and a half briefing Public Policy Committee members on Medicare’s value-based purchasing plan,” says Allendorf. “I’d lined up that meeting before the roundtable was set up.”

A transition to CMS’s proposed value-based purchasing plan, or VBP, would probably occur over three years. Under the plan, a percentage of the hospital’s diagnosis related group (DRG) payment would rely on the hospital’s performance on a specific set of measures. Although the report is comprehensive, details on implementation, incentives, and more must be made final.

Public reporting of quality measures remains a key part of the plan; quality of care information would be available to patients through the CMS Hospital Compare site at A PDF of the CMS report to Congress is available at

I let the group know that SHM is working on a number of initiatives regarding care transitions. —Russell L. Holman, MD, president of SHM

Support For Harmonization

After the formal presentation on the VBP plan, roundtable moderator John Inglehart, founding editor of Health Affairs, asked a series of questions directed at specific segments of the group, targeting issues surrounding the plan’s quality measures, performance standards, incentives, and plan implementation.

Dr. Holman was asked to comment on how CMS could ensure that hospital measures and physician measures become more aligned.

“The measures that each party are asked to report in terms of Part B of Medicare are somewhat different and can lead to confusion and people working at cross purposes,” Dr. Holman explains. “This adds complexity to a system that’s already too complex. In my statement, I said that what we call harmonization [of reporting measures] is a very important step for CMS to take, so that physicians and hospitals are required to measure and report the same thing. The more we can move toward outcome measures, as well as efficiency and patient experience measures, the more harmonization we’ll have. Focusing on outcomes creates a common goal.”

Dr. Holman continued his comments to the roundtable by using an example of harmonization at the heart of hospital medicine: transitions of care. “I let the group know that SHM is working on a number of initiatives regarding care transitions,” he says. “Transitions of care require the whole system to come together; it’s a great way to help galvanize all the stakeholders toward that shared goal.”

In his written statement, Dr. Holman elaborated on SHM’s efforts regarding transitions of care and pushed for an alignment of CMS quality measures and incentives for physicians with those for hospitals.

Air of Excitement

Although they had many concerns about implementation, the roundtable participants were enthusiastic about the plan. “There was a fabulous give-and-take on issues regarding implementation,” says Allendorf.

Dr. Holman stayed after the meeting to discuss the proceedings with other participants. “All in all, the informal comments I heard after the meeting were that this was the most exciting moment they’d had in 30-plus years in healthcare,” he notes. “This marks a substantial change in the payment system, which has always been seen as a barrier to quality.”

What’s Next

The ball is now in the court of Sens. Baucus and Grassley, who will use the roundtable input to draft legislation that would make the necessary statutory changes in time for CMS to implement the plan by fiscal year 2009, or Oct. 1, as mandated by the Deficit Reduction Act (DRA) of 2005.

“I think they’ll be back in touch with [SHM] as they develop the plan,” Allendorf predicts. After the legislation has been submitted, it’s up to Congress to act. “Everything depends on whether any Medicare legislation moves this year, and no one know whether that will happen,” she says.

Whatever final form the CMS plan takes, the future looks bright for value-based purchasing—and for SHM’s continued involvement.

“This roundtable was an excellent opportunity for SHM to develop a relationship with CMS, and to link to the Senate Finance Committee,” Dr. Holman asserts. “My hope is that those relationships will bear fruit over time, and that we can continue to work with those entities, as well as the other roundtable participants, to propose and develop measures over time, and to bring alignment between hospital measures and physician measures.”

Jane Jerrard is a medical writer based in Chicago.

Read More Online

For more information on the roundtable, including Dr. Holman’s written statement and others, as well as a recorded Webcast, visit Sen. Baucus’ Web site at TH

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