Hospital value-based purchasing could still work with the right redesign

Value-based Care Scrabble
Redesigning the Hospital VBP program along three basic principles could salvage a play that's been unsuccessful to date, says Ashish K. Jha, M.D.

Hospital value-based purchasing (VBP) looks better on paper than it has to date in practice, but Ashish K. Jha, M.D., believes it’s still salvageable with the right approach.

In a piece for JAMA, Jha, professor of health policy at the Harvard T.H. Chan School of Public Health, surveyed the mixed evidence gleaned to date from pay-for-performance (P4P) healthcare programs fostered in part by the Affordable Care Act.  

Where the Hospital Readmission Reduction Program has shown signs of success, the national Hospital VBP program has been largely ineffective, according to previous FierceHealthcare. reports. Jha noted that P4P models have generally tended to reward hospitals that already produce good metrics, while penalty payments fail to push hospitals to improve.

Jha suggests that by redesigning the hospital VBP program around the following three general principles, policymakers could give it a better chance to succeed:

  • Create more substantial incentives. The current bonuses and penalties of up to 2% have not been big enough to move the needle significantly at high-mortality hospitals, so Jha suggests incentives that put more revenue at risk, to the tune of 5% to 10% of their Medicare payments.
  • Clarify design and implementation processes. According to Jha, part of the poor performance in VBP programs has stemmed from complex designs that make it difficult for hospitals to measure their progress and implement improvements. He advocates for programs with simple, transparent designs.
  • Simplify metrics. To make VBP programs more effective, policymakers must turn to patient-centric metrics, such as mortality rate, functional status, or patient experience. “Ensuring adequate risk adjustment and accounting for differences in underlying patient populations are important design principles to consider when developing metrics so that hospitals are motivated to provide better care, not avoid patients with clinically complex conditions or who are economically less well off,” he writes.

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