Medicare Value-based Purchasing – The Big Ship that Could

Many voices have expressed their frustration when it comes to the cost of healthcare. These voices aren’t just those of patients receiving bills, but also health insurance companies and employers who are paying out each year to insure their employees. One of the loudest voices comes from the CMS or Centers for Medicare and Medicaid Services, which helps cover many Americans with their healthcare needs. To help find out why costs were rising, but the level of care was not, Medicare sought out a new way of working with healthcare providers and developed what is known as the Medicare Value-base Purchasing program to incentivize healthcare organizations to do two simple things: improve care and cut overall costs.

Just like a huge aircraft carrier doesn’t make its way out to sea very quickly, you can’t change the way healthcare has been run for decades overnight. Medicare knew that and has been working for decades with many different providers to discover ways that were effective and could be implemented across the board to help meet these two goals. One of the first areas of interest to investigate was the fee-for-service mentality that is and was so common in the healthcare industry. It isn’t a bad way of handling care and treatment for patients, however, it is ripe for deceit, fraud and extra demands on a patient.

Instead, what Medicare wanted to see was the healthcare community held responsible for the care they provided. For example: if a patient was treated for a heart attack, received significant care and was discharged from a hospital, but returned to the hospital with a staph infection only a couple weeks later, something probably picked up while staying in the hospital the first time. Obviously, there is no way to prevent every negative scenario from happening to patients, however, patients should have some level of expectation of a positive outcome when they have been treated. This patient doesn’t need to be subjected to tons more testing or pay for care that may have been no fault of his own, alternatively, the hospital would be on the hook for this second go-around of treatment(s). This is specifically where improvement to care and treatment would be ramped up for the healthcare industry, and they can be penalized when there are adverse events with a patient.

Medicare Value-based Purchasing links financial incentives with the performance of an organization. The understanding for this linking started back in the late 90’s, with the help of the Health and Human Services (HHS) department when they sought initial knowledge why improvements were not being seen with patients, even though technology and grasp of medicines was on the increase. The first few organizations willing to participate in the study were watched and paid for their performance or outcomes with patients rather than the number of services they provided. The resulting information saw a small but noticeable difference in both the experiences with patients being more positive and a lower of the overall costs involved with each patient.

The biggest jump towards implementation and required standards for Medicare Value-based Purchasing came with enactment of Obamacare (The Patient Protection and Affordable Care Act) when the bar went from casual operation to full Medicare involvement and standardization. But, going back to the analogy of the aircraft carrier, nothing as big as healthcare moves that nimbly or quickly. Along with the fact that not everything was known about the program as a whole has led to some revamping of requirements and some retuning of the benchmarks that must be reached. These changes are still happening and may continue to happen as this large program discovers more information to help Medicare understand finite details.

Healthcare organizations have been thrown into the deep end of the pool with this. A few things that have been plaguing them include:

  • Ambiguity when it comes to standards– statements from Medicare may say, “Improve patient care,” but this is a generalized request, not a standard that can be quantified, tracked and recorded.
  • Defining their own standards– because the system is still somewhat new, things like baselines and standards are being asked to be defined by each organization by themselves
  • Large organizations vs. small– most larger organizations are able to cut costs better just because they have more resources to draw upon and thus can make more significant cuts, while the smaller organizations may be penalized more because they can’t make as many cuts to costs

More than any one thing, data is the key to being able to meet any standard of improvement to patient quality of care along with cutting costs and waste out of daily practices. The data helps to show where problematic areas exist, where resources may need to be reassigned, and where patients are not receiving the best care possible. In order to achieve this, healthcare facilities are having to be more creative with how they thing about their business as a whole, how the perform that business and identify ways to improve the system, possibly from the ground up. This is no small feat for any business, let alone one that has such high demands as healthcare. One characteristic that should be a part of the overhauling process is the ability to be flexible to changes as they come up.

With the Medicare Value-based Purchasing system being still in its infancy, and with afore mentioned possibility of changes to systems and standards, healthcare organizations can’t sit on their collective hands and talk about the changes that need to be implemented. Instead, they must be able to move that ship on a dime, thus implementing new standards as quickly as possible.

“Whether you are a patient, a provider, a business, a health plan, or a taxpayer, it is in our common interest to build a health care system that delivers better care, spends health care dollars more wisely and results in healthier people.” Douglas E. Henley, M.D. – executive vice president and chief executive officer of the American Academy of Family Physicians

None of this is truly all that simplistic in its fundamentals, nor is it going to be easy moving forward. However, the end goals of better care and lower costs need to be met as soon as possible, and the Medicare Value-based Purchasing is the path that everyone has been put upon. It is an evolution from the old ways of thinking and handling healthcare, which can truly be a good thing for all of us, because at some point, we all become a patient in the system.

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