How Value-Based Purchasing Works and Affects Your Hospital

Jennifer P. Lundblad, PhD, MBA, CEOVicki Tang Olson, RN, MS, Program Manager

Trustee PresentationJanuary, 2014

Session GoalTo provide an orientation to hospital trustees about the shift from volume to value in U.S. health care and the role of value-based purchasing, leading to understanding of the role of a hospital board trustees in a value-driven environment.

The Stratis Health Perspective• Independent, nonprofit Minnesota organization

founded in 1971– Mission: Lead collaboration and innovation in health care

quality and safety, and serve as a trusted expert in facilitating improvement for people and communities

• Working at the intersection of research, policy, and practice– Federally designated roles as the Medicare QIO and HIT

Regional Extension Center– Develop and lead quality improvement projects

and campaigns across care continuum– Inform federal and state policy

The Healthcare Reform Environment

A National Health Care Quality Strategy• The federal health reform legislation passed

in 2010 called for the first ever National Quality Strategy (NQS) in health care.

• NQS is built on the “Triple Aim”:– Better Care– Better Health – Lower Cost

Federal Push to Value-Based Purchasing (VBP)• Transforming Medicare from a passive payer

to an active purchaser of high-quality, efficient health care– Improve quality of care and health of beneficiaries– Reduce adverse events, improve safety– Encourage coordination of patient care– Avoid unnecessary costs– Stimulate investments in structural systems– Make performance results transparent

and meaningful

Medicare Hospital Value-Based Purchasing Program• Federal health reform law established a

hospital value-based purchasing program under which value-based incentive payments are made each year to hospitals that meet the performance standards for that year

• Program began in FY 2013, now in third year

The Shift to ValueWhat types of

measures do we have… Process Outcome Patient experience Spending

…to tell us about quality and value:

Cost/efficiency– Overuse– Underuse– Appropriate use

Percentage of patients receiving evidence-based practice

Why Does it Matter?• Opportunities and Risks to the hospital based

on performanceCommunity and patient perceptionComparisons to peers and competitorsPayment from public and private purchasers

increasingly tied to performanceMeeting your mission…doing the right thing

How Does the Medicare VBP Program work?

Measures Measure score Domain and weighting

Total Performance

Score

Payment adjustment

factor

Measures

Clinical

Process

12

13

12

8

Patient Experience

8

8

8

8

Outcome

0

3

5

8

Efficiency

0

0

1

1

FY2013

FY2014

FY2015

FY2016

20

24

26

25

Measure Score

Improvement points Achievement points

Two ways to get points:

0-9 points 0-10 points

Whichever is greater

Domains

Domains

Performance period over. Will get results Summer 2014.

Performancemeasured in 2014. Results available Summer 2015.

Minnesota Hospitals: 2013 Total Performance Scores

Minnesota Hospitals:2014 Total Performance Scores

Minnesota Payment Adjustment Factor

U.S. Payment Adjustment Factor

What is the Hospital Board Trustee Role?

Know Your Numbers

• Establish quality and value as an organizational priority

• Determine senior leadership accountability• Proactively plan for and monitor

performance on federal, state, and commercial VBP programs

Set the Bar High

• Make evidence-based practice the way you deliver care

• Set expectation with physicians and staff to make it happen

• Establish bold goals for your performance in quality and value

Support a Learning Culture• Understand systems thinking• Make it safe to share problems…and

expect every failure to be evaluated • Use insight from errors, near misses,

patient feedback to make improvements• Help clinicians, quality staff, finance staff to

be working together toward shared goals to be successful in a value-driven environment

Build Community Partnerships• Recognize that VBP measures

increasingly reflect the importance of care coordination and transitions

• Know and leverage your community health needs assessment results

• Encourage your hospital to partner with other health care and community-based organizations to provide seamless care

Stay Current

• Stay informed using resources available to you– Stratis Health VBP fact sheet

• Updated annually and available Stratis Health website:

http://www.stratishealth.org/documents/VBP_factsheet.pdf

– MHA resources, CMS resources

Questions?

Questions?

Jennifer Lundblad, President & CEO

952-853-8523 or 877-787-2847

jlundblad@stratishealth.org

Vicki Olson, Program Manager

952-853-8554 or 877-787-2847

volson@stratishealth.org

www.stratishealth.org

Stratis Health is a nonprofit organization that leads collaboration and innovation in health care quality and safety, and serves as a trusted expert in facilitating improvement for

people and communities.

www.stratishealth.org  

Prepared by Stratis Health, the Medicare Quality Improvement Organization for Minnesota, under contract with the Centers for Medicare & Medicaid Services (CMS), an agency of the U.S. Department of Health and Human Services. The contents presented do not necessarily reflect CMS policy. 10SOW-MN-C7-13-158 123113