Measuring Success in Health Care Value-Based Purchasing Programs

Measuring Success in Health Care Value-Based Purchasing Programs: Findings from an Environmental Scan, Literature Review, and Expert Panel Discussions

Cheryl L. Damberg
Melony E. Sorbero
Susan L. Lovejoy
Grant Martsolf
Laura Raaen
Daniel Mandel
Copyright Date: 2014
Published by: RAND Corporation
Pages: 240
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  • Book Info
    Measuring Success in Health Care Value-Based Purchasing Programs
    Book Description:

    Value-based purchasing (VBP) refers to a broad set of performance-based payment strategies that link financial incentives to health care providers’ performance on a set of defined measures in an effort to achieve better value. This report summarizes the current state of knowledge about VBP, drawing on a review of the published literature and other documents about VBP programs and discussions with a panel of experts on VBP.

    eISBN: 978-0-8330-8551-1
    Subjects: Health Sciences

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iii)
  3. Table of Contents
    (pp. iv-vi)
  4. Figures
    (pp. vii-vii)
  5. Tables
    (pp. viii-viii)
  6. Executive Summary
    (pp. ix-xxxiv)
  7. Acknowledgments
    (pp. xxxv-xxxv)
  8. Abbreviations
    (pp. xxxvi-xxxvii)
  9. 1. Introduction
    (pp. 1-9)

    Value-based purchasing (VBP) refers to a broad set of performance-based payment strategies that link financial incentives to providers’ performance on a set of defined measures. Both public and private payers are using VBP strategies in an effort to drive improvements in quality and to slow the growth in health care spending. Nearly 10 years ago, the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) began testing VBP models with their hospital pay-for-performance (P4P) demonstrations, known as the Premier Hospital Quality Incentive Demonstration (HQID) and the Physician Group Practice (PGP) Demonstration, which provided...

  10. 2. Environmental Scan of Existing Value-Based Purchasing Programs
    (pp. 10-21)

    The purpose of the environmental scan of public and private VBP programs was to describe the current VBP landscape and provide information to address selected research questions. The review focused solely on publicly available documentation; within the scope of this contract, we were unable to conduct interviews with VBP program sponsors to gather additional information.

    We compiled a list of VBP programs for review and stratified the list by the type of VBP model (i.e., P4P, ACO, bundled/episode-based payments). To develop the list, we began by drawing on lists of P4P program sponsors that were generated for prior physician and...

  11. 3. Review of the Pay-for-Performance Literature
    (pp. 22-125)

    The use of P4P in health care emerged in the late 1990s, and between 1999 and 2012, a number of natural experiments testing P4P occurred. On the federal side, CMS started testing the application of P4P in the hospital setting through the Premier HQID and in the physician group practice setting through the PGP demonstration. Much of the published literature related to hospital P4P comes from early and more recent evaluations of HQID. The Premier HQID initially provided incentive payments to hospitals for attaining predetermined performance levels and then evolved to reward both attainment and improvement.

    During this same period,...

  12. 4. Review of the Accountable Care Organization Literature
    (pp. 126-148)

    ACOs represent the latest performance-based payment innovation designed to reduce health care spending and improve care delivery. ACOs combine much stronger financial incentives in the form of shared savings and shared risk models among the ACO players (i.e., physician group, hospital, and health plan) than many previous VBP efforts. ACOs are focused on improving care coordination and increasing the sense of responsibility that providers feel to improve patient care regardless of where it occurs.

    The most common ACO arrangement includes both quality performance benchmarks and spending targets. If the quality benchmarks are met or exceeded, then the ACO is eligible...

  13. 5. Review of the Bundled Payment Literature
    (pp. 149-164)

    In this project, we were asked to examine bundled payment as a form of VBP that specifically includes both cost and quality components in the VBP design, which differs from prior bundled payment models (e.g., DRGs used in hospital setting) that focused solely on reducing costs.

    Bundled payment refers to a form of payment to providers that is based on predetermined expected costs for a group of related health care services.¹ The bundles can be constructed in many different ways, covering different periods of time (e.g., a one-year episode of diabetes or a hospital admission) and different provider types providing...

  14. 6. Summary of Technical Expert Panel Discussion
    (pp. 165-178)

    As summarized in Chapters Three, Four, and Five, the literature on VBP provides an incomplete picture regarding whether these programs are successful, what defines success, and what elements need to be present for VBP programs to succeed. Many studies have examined whether P4P has improved performance on the incentivized measures, and this evidence shows modest effects from the initial P4P program designs. P4P programs are evolving both in terms of expanding the types of measures included (i.e., cost and resource use measures, outcomes) and modifying incentive structure (i.e., shared savings), and these types of changes may lead to different responses...

  15. 7. Conclusion
    (pp. 179-180)

    The application of performance-based payment models represents a work in progress regarding how best to design VBP programs to achieve desired goals, the optimal conditions that support successful implementation, and provider response to the incentives. We believe that continued innovation is desired at this early stage of VBP development and implementation. Concerted efforts will be required to ensure that the lessons learned from these experiments are identified and disseminated to advance the use of VBP as a strategy for improving federal and private health care programs.

    The findings of our review of the literature and public documents highlight important challenges...

  16. Appendix A: Value-Based Purchasing Programs Included in Review of Public Documents
    (pp. 181-184)
  17. Appendix B: Program Design and Context Variables
    (pp. 185-186)
  18. References
    (pp. 187-203)