Value-Based Purchasing

On February 14, the Oakland, Calif.-based Integrated Healthcare Association announced that it had been awarded a three-year, $2.9-million grant by the federal Agency for Heathcare Research and Quality (AHRQ) to support a demonstration project around bundled episode payments for physicians, hospitals, and other providers, in the private health insurance market in California.

As changes to the payment model continue to evolve, John Glaser, CEO of Siemens Health Services (Malvern, Penn.) foresees a challenging decade for healthcare providers. As receivables decline, they will not only be forced to do more with less, they must prove quality to get reimbursements. And to meet bundled payment mandates, they will need data—lots of data. "Anxiety about cost has become alarm about cost," he adds.

On January 7, the federal Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would establish a federal value-based purchasing program for hospital care, in accordance with provisions in the federal healthcare reform legislation passed in March of last year for such a program. CMS Administrator Donald Berwick M.D., in announcing the proposed rule, said in a statement, “Today's proposal is a huge leap forward in improving the quality and safety of America's hospitals for both Medicare beneficiaries and all Americans.”

Buried in last Friday’s announcement that CMS had released its proposed rule on the new Medicare value-based purchasing program for hospital care was a very, very important nugget. And that is that CMS plans for the program, mandated by the federal healthcare reform legislation passed last March, to encompass 30-day readmission rates for Medicare patients diagnosed with acute myocardial infarction, heart failure, and pneumonia. That’s on top of the other measures that will be in the program, of course.

The Charlotte, N.C.-based Premier healthcare alliance has been one of the leading organizations pushing the envelope on quality-based purchasing in the healthcare field for several years. Indeed, Premier healthcare alliance’s core program in this area, the CMS/Premier Hospital Quality Incentive Demonstration (HQID) program, which was launched collaboratively by Premier and the federal Centers for Medicare and Medicaid Services (CMS) in October 2003, has seen more than six years of impressive results, including an overall improvement in measured patient care quality of an average of 17.2 percent over the first four years of the HQID demonstration project, and an estimated 4,700 heart attack patients’ lives saved in the program’s first four years, according to Premier estimates. Meanwhile, a sister initiative, Premier’s QUEST: High Performing Hospitals initiative, has already racked up estimates of 8,043 lives and $577 million saved, as of last October, through that program’s focus on the elimination of avoidable hospital mortalities and on cost savings, across 157 participant organizations.