Hospital Value-Based Purchasing (VBP) is Medicare’s payment system to reward providers for the quality of care they provide. This program rewards acute care hospitals with incentive payments for the quality of care they give to patients, not just the quantity of services they provide. The payments are made by asking, “How well did you do? rather than How much did you do?.”

MEASURING VALUE

Management guru Peter Drucker is often quoted as saying that “you can’t manage what you can’t measure.”

The goal of value-based reimbursements is to replace the fragmented, fee-for service care with comprehensive, coordinated care using payment models that holds organizations accountable for cost control and high quality outcomes. The shift from volume to value starts with measurement. Measuring volume is simple, but how do you measure value in health care?

The health care value equation is defined as quality over cost.

TOTAL PERFORMANCE SCORE (TPS)

A hospital’s performance is assessed on the measures that comprise various domains. The domains are weighted and rolled up to the Total Performance Score. The FY 2017 Total Performance Score (TPS) is derived from 4 domains as below:

  1. Clinical Care (30 percent)
    • Outcomes (25 percent)
    • Process (5 percent)
  2. Patient and Caregiver Centered Experience of Care/Care Coordination (25 percent)
  3. Safety (20 percent)
  4. Efficiency and Cost Reduction (25 percent)

INCENTIVE PAYMENT

The Total Performance Score is then translated into an incentive payment that makes a portion of the base Medicare severity diagnosis-related group (MS-DRG) payment contingent on performance. It’s possible for a hospital to earn back a value-based incentive payment percentage that is less than, equal to, or more than the applicable withholding for that Fiscal Year (FY). Following is the withholding schedule:

FY 2013 1.00% FY 2016 1.75%
FY 2014 1.25% FY 2017 2.00%
FY 2015 1.50% Succeeding Years 2.00%

UNIT OF VALUE MEASUREMENT

The data collection and the performance improvement at the hospital level has been challenging, especially with the exponentially increasing metrics used to measure performance. The complexity increases when the unit value of measurement is at the individual provider level.

The next phase in the value transformation will focus on measuring individual provider performance in the delivery of high value care to address the question(s) – “How well did the individual provider do?” and more importantly, “How well did the patient do?”.

FURTHER DISCUSSION

CHI will further explore the evolving definitions of healthcare value at our Healthcare Executive Roundtable Discussion on 10/12/17 in Manhattan, NY. The Roundtable is an expert, cross-sectoral discussion designed to help healthcare stakeholders optimize engagement, communication, and collaboration. The exclusive roundtable provides the top thought-leaders, visionaries, and executives from the patient advocate, provider, biopharma, and payer spaces with the latest insights and ideas on how patient engagement drives healthcare value for all stakeholders. Please visit chisite.org/education/healthcare-executive-roundtable for more information.

Saravana

About Saravana "Samy" Govindasamy, (DBA), MBA

Saravana “Samy” Govindasamy is a success-driven, innovative leader with over 20 years of diverse experience in executive management, strategy and technology, and specializes in consulting for the areas of strategic planning, change leadership, project/program management, process improvement, and systems implementations in healthcare and finance industry. He is a Fellow, Executive Doctorate in Business Administration (Healthcare Applied Research), Fox School of Business at Temple University, Philadelphia, PA.