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From: The Rheumatologist, September 2009

Value-Driven Healthcare Moving Into Your Practice

In last month's issue, “From the College” gave a brief overview of the theory of value-driven healthcare; in this month’s edition, we’ll move from the theory of value-driven healthcare to its implementation in today’s healthcare system.

Value-driven healthcare involves more than the pay-for-performance or reporting of quality measures with which it is often associated. The reporting of quality measures is only one of many tools in the value-based purchasing tool box that aims to reduce fragmentation and duplication, effectively manage chronic disease, accelerate the adoption of effective and interoperable health information technology (IT), and empower consumers to make good choices and actively engage in their healthcare.

The Centers for Medicare & Medicaid Services (CMS)—as well as key players in the private payer industry—is now moving towards value-driven healthcare through a series of demonstration projects. CMS is also implementing large-scale programs that are expected to bring Medicare beneficiaries one step closer to engaging in and receiving high-quality and efficient care, delivered at the proper time.

CMS has identified four key elements of value-driven healthcare and is focusing on these cornerstones when designing programs that seek to place measures at every level of the Medicare care delivery system, from the interaction with the individual patient and provider to the institution facilitating care. The four cornerstones are:

  1. Health IT: The development of IT standards that allow rapid communication and transfer of data in a secure environment that protects patient privacy.
  2. Quality Standards: The establishment of quality measures that allow consumers and providers to make informed healthcare decisions.
  3. Price Standards: The establishment of cost-of-service measures and price transparency that also contribute to informed decision making.
  4. Quality Incentives: The development and implementation of pay-for-performance programs and other measures that reward not only providers of cost-effective quality care, but also those making buying decisions based on quality as well as cost effectiveness.

CMS Value-Driven Healthcare Demonstration Projects

As your practice prepares to engage in current and future value-based programs, it is important to know what pilot programs and demonstration projects are currently underway and to review these programs for important lessons learned that are applicable to your practice.

CMS is engaged in several demonstration projects addressing each of these key points and spanning the full spectrum of care settings, from hospitals to physician practices. These demonstration projects are developed to evaluate each program in relation to the goals of attaining quality-of-care improvements, cost-efficiencies, and transparency of information.

Key CMS Value-Driven Healthcare programs now underway are:

  • Identifying and promoting the use of quality measures through pay-for-reporting: Physicians, Hospitals, and Home Health Pay-for-Reporting (commonly called PQRI).
  • Paying for quality performance: hospital pay-for-performance: premier demonstration.
  • Developing and using measures of physician and provider resource use: Internal Workgroup to Develop Resource Use Measures, Medicare Improvements for Patients and Providers Act Implementation.
  • Paying for value: promoting efficiency in resource use while providing high quality care: Hospital-Acquired Conditions (HACs) and Present on Admission (POA) Indicator Reporting, Hospital Value-Based Pricing (VBP) Plan Development, Physician VBP Plan Development, Payment for End-Stage Renal Disease Patients, Physician: Physician Group Practice Demonstration, Home Health Pay-for-Performance Demonstration, Nursing Home VBP Demonstration, Medical Home Demonstration.
  • Promoting better alignment of financial incentives among providers: Proposed Exception to the Physician Self-Referral Rules, Medicare Hospital Gain-Sharing Demonstration, Physician Hospital Collaboration Demonstration, Acute Care Episode (ACE) Demonstration, Post Acute Care (PAC) Payment Reform Demonstration.
  • Fostering transparency and public reporting: Compare Site Reporting Upgrades/Star Rating Systems, Charted Value Exchanges (CVE): Communities Designated by the Department of Health and Human Services as Working to Improve Quality and Value of Healthcare.
  • Implementing and Adopting EHRs and health IT: E-Prescribing Incentive Program, Electronic Health Record Demonstration, Personal Health Record Choice Pilot.

For a more detailed look at each of these programs, visit

Are You Ready for Value-Driven Healthcare?

There are several ways that you can get your practice in order and aligned with those goals of value-based purchasing. Of utmost importance is committing to monitoring your practice’s macro environment to identify value-driven healthcare related plans and pilot programs. A variety of new programs and contracting terms are likely to present over the next few years (if not months), and each will offer a bevy of potential opportunities, challenges, and other implications. Identifying these and strategically planning for what is in your practice’s best interest will help to position your organization for success.

It is likely that your practice already engages in value-driven healthcare-related programs with various health plans. Do you know what quality measures you are reporting and to whom? Take note of these, and identify the processes that you have in place to track, monitor, and report measures accurately and efficiently.

You should also be keeping track of what payment programs and contracting alternatives are being proposed by CMS and private payers. Discuss the financial and workflow implications of these payment structures with key clinical and administrative staff. Identify those programs that could potentially benefit your practice, and be sure that you completely understand the eligibility and resource requirements for participation. If revenues are expected to change as a result of the program, identify appropriate actions to be taken and set key thresholds and break-even points.

Finally, keep in mind that these performance goals and changes in clinical and administrative processes affect not only the participating physicians, but also the front and back office staff that help to facilitate care delivery. Focus on initiatives to ensure that high-quality and efficient performance penetrates the entire organization, from the front desk to the back office.

For further information on value-driven healthcare, contact Itara Barnes at


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