Value-Based Purchasing Is More than a Concept

Recent events suggest that value-based purchasing is quickly evolving from a concept to a living reality.

In April, after surprisingly little public debate, an otherwise  highly-divided Congress agreed to replace the sustainable growth rate (SGR) approach to updating Medicare payments with a system that will explicitly tie annual increases to practitioners’ ability to meet or exceed quality benchmarks. The new “Merit-Based Incentive Payment System (MIPS)” created by the legislation (which passed in the Senate by 92 to 8 and in the House by 392 to 37), will offer physicians payment increases of 0.5 percent each year over the next five years, as Medicare is transformed from a program that passively rewards quantity to one that actively rewards quality.

Meanwhile, the Department of Health & Human Services has developed its own aggressive time-table for change, forecasting that 30% of all Medicare payments will be tied to alternative payment models by the end of 2016, with 85% of all Medicare fee-for-service payments tied to quality or value by the same time period. The percentages are expected to jump to 50% and 90% by 2018.  Another announcement from HHS this spring—creation of  a multi-partner, national Health Care Payment Learning and Action Network—seemed designed to make sure that private sector payers and Medicaid programs are fully on-board with the same approach to assuring value and transparency that the Department is taking with the Medicare program.

As it happens, IPRO has a support role in an exciting, four-year, federally-funded  project headed by researchers at Brandeis University to create an Episode Grouper for Medicare (EGM) which is intended to quantify the cost and quality of all of the inpatient and outpatient services associated with specific illnesses. Under EGM, the Brandeis-led team is creating a comprehensive public domain episode grouper that will help analyze actual versus expected results in care delivery and service utilization in multiple settings. EGM is expected to support the efficiency measures component of the MIPS program created by the SGR legislation. IPRO is leading the project team’s efforts in episode construction and risk modeling.

It’s clear that value based purchasing is no longer just a theoretical construct.

It’s already here.

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