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Value-based purchasing is working as intended

Premier Communications

SafetyShare® newsletter brought to you by the Premier Safety Institute ®
Gina Pugliese, RN, MS, editor


Value-based purchasing is working as intended

The recent Health Affairs article,
Medicare’s New Hospital Value-Based Purchasing Program is Likely to Have Only A Small Impact on Hospital Payments*, finds that relatively little
money will be redistributed from bottom performing hospitals to those at the top. While this is true, the relatively small amount of financial
redistribution of funds between hospitals is no reason to conclude that the program won’t achieve its desired goal. Quite the contrary, it is performing
exactly as intended so far. Real patients are getting better care because hospitals have significantly improved their results on quality measures as part
of value-based purchasing (VBP).

Limited redistribution of funds means quality is improving

  • CMS sets targets in the VBP program based on high performance in a baseline period. If hospitals are able to catch up to those levels, then they
    will avoid a penalty. So, as more hospitals improve the care they provide to patients, less money will be generated by penalties to redistribute to high
  • In other words, if the amount of financial redistribution is small, the program is achieving its goal of improving quality.
  • This is exactly what is happening. Premier’s early estimates predicted a greater redistribution than now appears likely. As the program has
    approached, more hospitals have been meeting the targets.
  • This does not mean there are no incentives to continue to improve for high performers. Because the rest of the field is constantly innovating and
    improving, there is always an upward pressure on hospitals. Moreover, new domains and measures are coming into the program each year and others are removed
    because they have topped out, forcing hospitals to continuously improve across many conditions and facets of care.

Value-based purchasing is far preferable to a penalty-only approach

  • By using a variety of measures and measurement domains, VBP can provide a holistic and balanced view that tells the full story about the patient,
    their care and the ultimate outcome.
  • This is a far better approach than the Medicare Hospital Readmissions Reduction Program enacted in the healthcare reform law, which is a
    penalty-only approach.
  • VBP was designed by lawmakers not as a penalty program but as a means to drive faster performance improvement. It’s imperative to keep the goal in
    sight – and it’s not exacting penalties. Its helping more Americans get the care they need and deserve.


*Werner RM and Dudley RA.
Medicare’s New Hospital Value-Based Purchasing Program Is Likely To Have Only A Small Impact On Hospital Payments
. Health Affairs 2012 Sep;31(9):1932-40.

Reprinted from the October 2, 2012 issue of Premier’s Nexus publication


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