Steven Littlehale

Do value-based purchasing (VBP) programs work? The concept of paying for “quality not quantity,” or “value-based” not “volume-based,” care has made it into the rhetoric from the U.S. Department of Health & Human Services and the Centers for Medicare & Medicaid Services, to the water cooler at work.

Clinicians get a warm fuzzy feeling, as do financiers who suddenly include rehospitalization rate, quality measures (QMs) and average length of stay (ALOS) into their usual vernacular — right next to revenue operating income and the requisite PPD calculations and EBITDAR.

The concepts of VBP emerged long before Affordable Care Act healthcare reform, but this philosophical shift away from paying for volume has accelerated since the ACA was signed into law in March 2010. HHS made clear in 2015 that it intended to tie 85% of all traditional Medicare payments to quality or value by 2016 and 90% of payments by 2018.

Because of the ACA and this shift in how we pay for care, VBP programs “reward” hospitals, SNFs and home health for having desirable outcomes. Although greatly simplified, the common unifying thread in these three VBP programs is that the reward or “carrot” for achieving these better outcomes is coming from a pool of dollars withheld from the providers. In a sense, the provider is earning back what it would have received prior to the VBP implementation.

Not all VBP programs are the same. In fact, several managed Medicare plans have bonus programs established, with bonuses coming in the form of actual cash incentives or inclusion in preferred networks and referrals. The criteria for achieving these bonuses are meeting or exceeding thresholds on things such as length of stay, satisfaction or resource utilization.

California’s Quality and Accountability Supplemental Payment Program (QASP) and Texas’ Quality Incentive Payment Program (QIPP) are noteworthy examples of creative approaches to improving care. Although they are quite different, both are Medicaid-based incentive plans and are truly “carrots.” They reward from dollars derived from sources outside of the provider pocketbook or wallet, motivating improvement and maintenance of excellence in care. “Winning SNFs” in California receive a bonus payment north of $220K and “winning SNFs” in TX can see a $20 per Medicaid patient day bump for meeting targets.

What I really appreciate about these programs is that not only are they motivating a change in behavior, but they’re motivating the right behavior — the very QAPI activities which many providers are already engaged in. They reward excellence in the care of the traditional long-stay population.

California has seen a tremendous improvement in the quality measures included in its bonus program, and I fully expect Texas will see similar success.

I wish I were as optimistic about the other VBP referenced at the beginning of this post. Current literature hasn’t been all that compelling in terms of how these programs are motivating better care.

Earlier this month McKnight’s reported on a study in The Journal of the American Medical Association (JAMA) that discussed hospitals’ lowered readmission rates that were motivated by the Hospital Readmission Reduction Program (HRRP) and their increased mortality rate in heart failure patients.

Why these mediocre and inconsistent results? I’ve had firsthand experience with hospital CFOs who said that the HRRP penalties are not significant enough to motivate change; empty beds have a greater financial consequence. Though somewhat shortsighted, that sentiment is not unique. Contrast that with California providers who have invested resources to ensure success with QASP. Clearly, financial incentives must be adequate to motivate change. Truly investing in quality has an associated price tag.

Additionally, the VBP must be understandable. For example, SNFs today cannot calculate their rehospitalization metrics used for SNFVBP. The algorithms are complex and the variety of data used is well outside of the scope of any provider. How can you manage what you cannot measure? Contrast that with Texas’ QIPP that uses four Quality Measures. Providers are well-versed in these measures and can effectively target them for QAPI.

The other strength of the QIPP program is that it “pays out” within the next quarter, meaning providers will get immediate financial feedback on their performance. In most VBP programs that have recently emerged, rewards are often two years after meeting performance goals.

So, do value-based purchasing programs work? The jury is still out and we’re still a work in progress.

We all yearn for a time when value-based purchasing (and care) loses its originality; when motivations for providing excellent care and achieving excellent resident outcomes are aligned with reimbursement.

And carrots are truly carrots and not actually sticks in disguise.

Steven Littlehale is a gerontological clinical nurse specialist, and executive vice president and chief clinical officer at PointRight Inc.