Four healthcare quality improvement insights from past value-based payment models
Value-based payment models that aim to improve healthcare quality have existed in numerous forms for decades. From older programs such as the Medicare Premier Hospital Quality Incentive Demonstration (HQID) launched in 2003 to current quality initiatives, total cost of care models, and specialty payment models in both the public and private sectors, there is a wealth of evidence on improving healthcare quality that can be used to inform future approaches.
Quality healthcare does not exist without equitable care
While evaluations of some Centers for Medicare and Medicaid Service (CMS) models find improvements in quality, the CMS’ 2021 Innovation Center Strategy Refresh emphasizes that “the full diversity of beneficiaries in Medicare and Medicaid is not reflected in many models to date.” In addition to outlining next steps that will help the organization identify barriers to participation, CMS is also emphasizing measuring disparities in healthcare quality for underserved populations.
The first step in achieving equitable care is measuring disparities in health outcomes. Healthcare quality measures and the associated disparities should be measured at multiple levels: the population level, ACO or health system level, practice level, provider level, by attribution status, etc. It’s not necessary to have perfect data on demographics to get started, either. For example, if race data is available, then stratify outcomes by race. If detailed demographic data is unavailable, then use neighborhood-level risk indices to identify social risk factors based on address.
Once an approach to measure disparities exists in a framework that can be easily communicated and assessed over time, the next step is to understand the drivers of disparities. Understanding the drivers is the foundation for ensuring your value-based payment model provides the flexibility and support to address the underlying issues of health inequality and promote better health outcomes.
Narrowly focused pay-for-performance models are less likely to deliver healthcare quality improvements
Compared to more comprehensive value-based payment models with financial risk, basic pay-for-performance models are less likely to improve healthcare quality. A pay-for-performance model can produce the incentive to improve specific measures, but, unlike value-based payment models, it does not provide the financial flexibility to take the broader, interconnected set of steps that providers must take to fully address patient needs.
The foundation of a value-based payment model should be a total cost of care or population-based framework. From that foundation, payers can build aligned specialty-focused models built on metrics relevant to the given therapeutic area.
Health outcome measures are the gold standard
Readmission rates are a common outcome measure that payers argue should be affected with improvements in care coordination and patient-centered care. Providers point out that factors outside of their control affect readmission rates and other outcome measures. There is ample evidence that clinical care only accounts for roughly 10-20% of factors that impact health outcomes.
Incorporating comprehensive risk adjustment approaches (e.g., a model that incorporates broader drivers of health) into both financial and quality benchmarks can compensate providers for factors that are outside of their control and impact health outcomes, which we do regularly for patient age. When done correctly, risk adjusting for social risk factors ensures providers are not unfairly penalized for factors outside of their control. However, it does not remove the requirement to address social risk factors or imply lower standards of care are acceptable.
Reduce the complexity of payment models to encourage scalable healthcare transformation
Providers manage multiple payment models from public and private payers that change over time. Even CMS acknowledges the need to build on successful, established programs, such as the Medicare Shared Savings Program. Private payers, which usually account for a much smaller percentage of a provider’s patient panel, need to emphasize programs with low administrative burden, clear model parameters and requirements, and alignment with a consistent long-term strategy.
Applying lessons learned about value-based payment models for healthcare quality improvement
Designing a value-based payment model that addresses quality, cost, and experience is complicated. Models need to encourage equitable care with a comprehensive payment structure that gives providers the flexibility they need to improve care. Risk adjustment methodologies need to incorporate social risk factors so that a relevant, streamlined outcome measurement encourages scalable transformation.
In addition to these quality considerations, value-based payment models also need to consider financial benchmarking, patient attribution, and glide paths for increasing downside risk. RTI Health Advance has decades of implementation experience supporting CMS value-based payment models and has experts ready to navigate design and implementation for private payers.
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