Why Value-Based Purchasing?

We think of value-based purchasing as a philosophy pushing our health care system to provide better care at a lower cost to help us all live healthier lives. Most of the health care that we receive today is fee-for-service, where clinicians, hospitals, and others are payed for the number of services they provide. Across the country, and even among care providers within Washington State, there are differences in costs for the same procedures, for similar patients, and variation in cost that does not correspond to better outcomes.  More care is not always better, and in some cases can be worse for patients.

In this traditional fee-for-service model, individual care providers involved in a complex case such as knee replacement (primary care physicians, surgeons, rehabilitation providers, and others) are paid separately, along with separate hospital and medication costs.  Any miscommunication or problems between these often result in complications or delays, which typically increase cost. The patient may receive a separate bill for medication, visits with her primary care provider before the surgery, the surgeon’s time, use of the hospital, and any follow-up or rehabilitative care. She may also be in charge of coordinating her own care, communicating with all the different care providers. Cost is not associated with whether she can return to work or how she feels, and if the surgery resulted in an infection, she might have to pay for the care to treat the infection too!

Across our country we are seeing employers, State governments, including our own Washington State, and our Federal government working towards paying for value in health care rather than quantity. We want high-quality care that prevents problems before they occur, that uses evidence-based procedures shown to be effective, and that is coordinated around the patient’s needs. This is not only better for patients but can also be less expensive.

Our Bree Collaborative work in value-based reimbursement has been focused on developing bundled payment models for total knee and total hip replacements, lumbar fusion, coronary artery bypass surgery, and currently in bariatric surgery. We’ve talked about these bundles before in our blog posts Bundling Payments, Improving Care and Bringing Transparency and Quality Standards to Bariatric Surgery. A bundled payment groups all the care that our patient would receive during a surgery, like a knee replacement, into one payment, including coordination between her different providers and care centers. Our other recommendations have explored how paying for value can support goals like decreasing unnecessary caesarian sections and supporting patients through cancer treatment.

Value-based reimbursement can also include:

– Developing accountable care organizations (a group of clinicians, hospitals, and other health care providers, coming together voluntarily to give coordinated care)
– Pay for performance,
– Patient-centered medical homes, and/or
– Capitation (a fixed payment paid in advance per patient for a certain amount of time for health care services).

Some argue for a particular type of value-based payment above others, see recent articles from the Harvard Business Review How to Pay for Health Care and The Case for Capitation.

Washington State

Paying for value is a big part of Healthier Washington’s goals for better health, better care and lower cost. These three goals are often called the triple aim, with clinician satisfaction often added to make the quadruple aim. We need to create a system that will keep us healthy as patients at a reasonable cost but that also works to engage and support clinicians. Our state is taking the lead in this area with goals “to drive 80 percent of state-financed health care and 50 percent of the commercial market to value-based payment by 2019.”[i] You can find out more about this work here: www.hca.wa.gov/hw/Pages/paying_for_value.aspx.

Centers for Medicare and Medicaid Services

Value-based payment is also of the Centers for Medicare and Medicaid’s Services (CMS) quality strategy. CMS aims to create a “better, smarter, healthier” system through incentives, tying payment to value, and changing how care is delivered through improvements like better coordination, better teamwork and using health information technology.[ii] You can find out more about this work here: www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/index.html

If we do this right, we can shift from a confusing, fragmented system with short-term solutions and wide variation in cost and quality to sustainable, whole-person health care focused on patients.

We will feature more blog posts on value-based purchasing throughout the summer!

Ginny Weir, MPH
Bree Collaborative Program Director

Emily Wittenhagen
Bree Collaborative Program Assistant

[i] Washington State Health Care Authority. Paying for Value. www.hca.wa.gov/hw/Pages/paying_for_value.aspx

[ii] Centers for Medicare and Medicaid Services. What’s the CMS Quality Strategy? www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/CMS-Quality-Strategy.html