Value-based healthcare: Creating a new ideal

We all like to celebrate the ideal of the healthcare provider dispensing care as needed and without regard to such pesky concerns as profit or loss. However, that ideal is really suited to a mystical kingdom where bluebirds help you with the housework and talking bunnies wearing quaint hats leave baskets of tasty food on the doorstep (just because they love you). In the real world, even healthcare providers want to go home at the end of a long day with a little bit of money in their pockets. So while the vast majority try to do what is right for their patients, their efforts are tempered by the need to survive--and survival in the U.S. healthcare system has always been tied to the quantity of services.

The devil will definitely be in the details, but the nation's new healthcare reform law lays the foundation for transitioning U.S. healthcare from a volume-based system to a value-based system. In other words, the quality of care provided to patients could begin to have a significant impact on the bottom line, forcing some key changes in how many healthcare providers operate on a daily basis. And it should come as no surprise that hospitals are at the forefront of these changes.

The Patient Protection and Affordable Care Act (PPACA) mandates the creation of a national hospital value-based purchasing program for Medicare. Effective Oct. 1, 2012, many inpatient acute-care hospitals that meet or exceed certain performance standards for a minimum of five measures will be eligible for incentive payments (i.e., higher Medicare payments) from a pooled hospital-derived fund. The program will initially cover at least these five conditions or procedures: acute myocardial infarction (AMI); heart failure; pneumonia; certain surgeries; and certain healthcare-associated infections. However, within a year, the program will expand to incorporate "efficiency measures, including measures of 'Medicare spending per beneficiary,'" adjusted for adjusted for age, sex, race, severity of illness and other factors.

The PPACA also will launch the hospital readmissions reduction program to reduce Medicare payments to hospitals to account for certain excess (i.e., preventable) readmissions effective Oct. 1, 2012. The program starts by reducing Medicare payments for AMI, heart failure and pneumonia readmissions. This program also will begin to expand within a year, starting with the four additional conditions/procedures identified by the Medicare Payment Advisory Commission: chronic obstructive pulmonary disease, coronary artery bypass graft, percutaneous transluminal coronary angioplasty and other vascular procedures.

Other key quality/payment provisions in the Act include restricting Medicaid payments to states for services related to hospital-acquired conditions effective July 1, 2011, as well as cutting Medicare payments to hospitals with the highest rates of hospital-acquired conditions effective Oct. 1, 2014.

Reform likely will never create that imaginary world of bluebirds, bunnies and perfect healthcare for all. However, it definitely could prove to be the starting point of a better American healthcare system. - Caralyn