iProtean – Value-Based Purchasing

Value-based purchasing—tying payment to outcomes, not volume—has become the cornerstone of CMS efforts to improve quality of care while reducing costs. Value-based purchasing (VBP) has financial rewards for hospitals; it also carries risk. As hospitals earn higher performance scores, and incentive payments are earned based on these scores, what happens when hospitals reach their improvement “ceiling?”


“Regardless of the position in which a hospital currently finds itself, there is an opportunity to improve and maximize the VBP incentive payment . . . While it is true that increasing a hospital’s payment from improvement gets more difficult the higher the performance score, high performing hospitals should identify key measures that provide the greatest opportunity to increase the hospital’s VBP incentive payment, and begin focusing on measures that will be used in future fiscal years.” “Value-Based Purchasing—What’s Ahead for Healthcare Providers,” Barbara Miltenberger, Sarah Downs, Laura Greene, Husch Blackwell LLP, AHLA Connections, February 2012.


The iProtean course New Delivery and Payment Systems spans the rationale for and implications of structural changes to the healthcare system. Todd Sagin, M.D., Brian Wong, M.D., Anjana Patel, Esq., Robin Nagele, Esq. and Dan Grauman offer hospital executives and board members their expertise on and expectations about value-based purchasing, accountable care organizations, bundled payments and medical homes—and the impact of these structural changes on quality.


Todd Sagin, M.D., J.D., Sagin Healthcare Consulting

We are moving away from a fee-for-service model, which has dominated healthcare reimbursement for the past many decades, to what is often referred to as value-based purchasing.  This is an umbrella term, but it basically is in reference to payment methodologies that tie payment, not to volume, but to the quality of the services, and usually pays for those services on some kind of a budget.  That is, it establishes an amount that an intervention or a procedure or a healthcare activity is worth, and then it lets you manage the specific healthcare services within that particular budget—and it doesn’t offer you payment unless you meet threshold quality benchmarks.  In this way these new payment methodologies will raise the bar for quality. At the same time they will start to diminish the overutilization of resources that is driving healthcare costs so high in America today.


Robin Nagele, Esq., Post & Schell

Value-based purchasing will be a voluntary program for hospitals.  CMS has developed specific benchmarks that hospitals will have to meet to get quality incentive payments [through this program].  The way it works is that the DRGs that exist now will be reduced 1 percent per DRG for hospitals. That money will go into a fund from which hospitals that meet or exceed the quality benchmarks that CMS has developed through the value-based purchasing program will receive additional payments that will be tacked on to the DRG payments.


Dan Grauman, DGA Partners

The health reform law provides for several new payment mechanisms and initiatives, trying to move the industry and payments by the Medicare program from a volume based, fee-for-service type system to one where hospitals and doctors are working collaboratively to try to manage the health of the total population.  If care is more integrated, if hospitals and doctors and specialists are working in a more coordinated way, that care is a better experience for the patient and, quite frankly, delivered in a higher quality way.


Todd Sagin, M.D., J.D., Sagin Healthcare Consulting

In recent years there have been many studies, demonstration projects and initiatives to try to bring down the high cost of care.  These vary from the use of nurse practitioners, to medical homes, to new reimbursement methodologies including one that is often referred to as bundled payments.  When all these different approaches are put together, bundled payments turns out to be perhaps the most effective way to bring down the high cost of care.


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iProtean Symposium & Workshop

Mark the Date!! October 10 – 12, 2012 at The Lodge at Torrey Pines, La Jolla, CA. Faculty: Barry Bader, Dan Grauman, Marian Jennings and Brian Wong, M.D. For more information, click here


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