Purchasers of healthcare are beginning to take a more active role in ensuring they receive value for their health care dollars, and these savvy shoppers want to develop programs to increase the quality and efficiency of the care they purchase. This movement has given rise to the concept of value-driven healthcare, commonly called value-based purchasing. Over the next three months, “From the College” will take a look at this type of purchasing and provide rheumatologists and rheumatology health professionals with practical advice on how to stand out to these value-based purchasers.
An August 2007 Commonwealth Fund report defines value-based healthcare purchasing as follows: “The concept of value-based healthcare purchasing is that buyers should hold providers of healthcare accountable for both cost and quality of care. Value-based purchasing brings together information on the quality of healthcare, including patient outcomes and health status, with data on the dollar outlays going towards health. It focuses on managing the use of the healthcare system to reduce inappropriate care and to identify and reward the best-performing providers. This strategy can be contrasted with more limited efforts to negotiate price discounts, which reduce costs but do little to ensure that quality of care is improved.”
Value-based purchasing is often associated with reporting on quality measures; however it is important to understand that value-based purchasing is a larger concept of which quality reporting is only one tool. Value-driven healthcare encompasses system redesign both of the greater healthcare system and payment structure and of practice systems and the processes of care delivery.
Traditionally, value-based purchasing has existed in three basic models:
- Single large purchaser: Involves a large purchaser working actively and cooperatively with suppliers while using its market power to make demands;
- Purchaser coalition: Involves a group of public and private purchasers (commonly called a purchaser coalition) working together to standardize demands on suppliers and share value-driven strategies; and
- Mixed coalition: Involves a group of healthcare purchasers and suppliers working cooperatively to promote transparency and incentives.
Depending on the model, value-based purchasing programs employ a variety of strategies to increase the quality and efficiency of services provided for every healthcare dollar spent.
Although these concepts have been around for more than a decade, value-based purchasing is now finding legs in the U.S. healthcare system, largely due to the August 2006 executive order in which former president George W. Bush outlined the Value-Driven Healthcare Initiative and called on employers and other purchasers to use the following four cornerstones when they purchase health insurance:
- Interoperable health information technology;
- Reporting of quality-of-care measures;
- Reporting of healthcare price information; and
- Incentives for high-quality, cost-effective care.
Value-Based Purchasing in Medicare
The Centers for Medicare and Medicaid Services (CMS) is currently developing the tools necessary to achieve a system of value-based purchasing, and, in effect, transform their current role as a “passive payer of services into that of an active purchaser of higher quality, affordable care.” These actions are being taken to lessen the rapidly increasing cost of healthcare and to identify and encourage care delivery patterns that are not only high quality, but also cost efficient.