What is the Goal for Value Based Purchasing?

On paper, the methodology of VBP is simple: pay providers for quality and value, not just volume. Hold healthcare organizations accountable for both the quality and cost of the care they deliver and reward the best-performing providers.

The goal of VBP is to facilitate a high level of care that is both safe and efficient. To reduce medical errors, lower the rate of accidents, achieve better patient outcomes, and maximize financial rewards. In an ideal world, clinics and hospitals will operate at optimal effectiveness and efficiency – resulting in lower prices for both patient and payor.

Organizations work hard, month after month, to achieve this noble “value proposition”.  But the everyday reality of succeeding for their organization in a Value-Based Purchasing program is far from simple.

Value-based care goals come with their own elaborate set of rules, metrics, benchmarks, reimbursement adjustment tables, and a million other things. The delay between capturing data and applying benchmarks to a provider’s reimbursement is significant. It’s all too easy for care providers to become immersed in the administrative minutiae of VBP and lose track of the program’s highest goal – better value for patients.

Therefore, whether you’re a front-line staffer or a top-level executive, it’s important to circle back to one basic question: “Does what we’re doing truly improve value?”. If the answer is “No” or, (as is often the case), unclear – then it’s time to evaluate the effectiveness of the task, process, or tool on a fundamental level.

How Does Value Based Purchasing Work?

Keep in mind that value based purchasing works in procuring services aimed towards the medical field, hence the reason why we are going to use medical terms and facts for this part. This is a whole different type of procurement at work!

As mentioned above, value based care models reimburse healthcare providers (or penalize them) based on quality and cost of care. For example, consider a hospital that works under HVBP. The CMS would evaluate the hospital based on numerous criteria, such as immunization rates for certain diseases, Medicare spending per beneficiary,  and even patient feedback on their experience at the hospital.

Then, depending on how the hospital scores for population health management, compared to established baselines, the CMS will either reimburse the hospital on top of their typical fee-for-service payments, or penalize their Medicare revenue.

One way the Affordable Care Act seeks to reduce health care costs is by encouraging doctors, hospitals and other health care providers to form networks that coordinate patient care and become eligible for bonuses when they deliver that care more efficiently.

The law encourages the formation of accountable care organizations (ACOs) in the Medicare program, where providers make more if they keep their patients healthy. 

Another reimbursement model growing in popularity is shared savings, specifically bundled payments. Under this structure, healthcare providers receive a fixed amount of money to treat a patient either for a specific condition or procedure (ex: 

Pneumonia or an appendectomy) or within a certain period of time (ex: 60 or 90 days). If the provider is able to treat the patient for less than the fixed amount provided, then they are entitled to a share of the surplus, per the terms of their contract. If the cost exceeds the fixed amount, then the provider misses out on the opportunity for reimbursement they could have had under traditional reimbursement models.