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VBP Alphabet Soup: So Many Recipes - What's the Secret Sauce?

APM, ACO, CPC, BPCI, MSSP, MIPS, CJR – all are acronyms for some kind of value-based program or payment (VBP) arrangement. Each shares the goal of improving healthcare outcomes while reducing costs.

When you look at the list of value-based acronyms, three questions come to mind.

Why are there so many value-based programs?

As former Secretary of Health and Human Services Mike Leavitt said recently, “The nation’s healthcare system is 25 years into a 40-year journey on the path to value.” Healthcare financing and delivery is complex. Since no quick fix exists that can improve outcomes and reduce costs across the entire healthcare industry, state and federal governments have been experimenting with different VBP programs.

The 2015 passage of the Medicare Access and CHIP Reauthorization Act (MACRA) added even more forms of VBP arrangements.

What works?

Well, it seems to depend on the “recipe.” Last week, CMS reported some good news that Medicare accountable care organizations (ACOs), one of many forms of payment for value, resulted in a total savings to Medicare of $1.1 billion in 2017. Top performing providers received a large portion of those savings, with about $313 million returning to the federal government.

Some forms of bundled payment have also resulted in savings and improved outcomes. A bundled payment aggregates separate but related services. For example, if you need a knee replacement, a provider would traditionally bill separately for the pre-operative services, surgery, and recovery—these would now be bundled.  To make money, providers must deliver these services at a lower cost than the bundled payment.

Why have these programs been successful?

A preliminary look at the data for Medicare ACOs suggests some key ingredients for success.

  • Experience: Many providers that had previously participated in some form of value-based payment have had positive achievements, indicating it takes time to build competencies. Providers must collect and analyze, learn from, and use data on costs, savings, and outcomes in ways that align with their value-based contract or payment regime. 
  • Accountability: In value based arrangements, accountability for performance is easier to tie directly to specific healthcare providers. With the right tools to track comparative performance and costs, doctors and other providers can adjust care delivery in real time to achieve desired results.
  • Alignment of care delivery: Although hard to decipher from the data, I hypothesize that providers that have aligned their care delivery model with high value while tracking the cost of care and outcomes have had more success.

All three—experience, accountability, and alignment of care delivery—are important ingredients worth keeping in mind as future VBP arrangements are created or adopted.

Like all innovation in healthcare, the hard work to improve care while reducing health spending growth requires leadership and assets. Leaders committed to making sustainable, systemic improvements make countless tough choices to ensure success, such as investing in technology to track costs and outcomes, training providers to use data, and taking on financial and operational risk. 

As the healthcare sector continues its journey on the road to value, understanding what works and why is crucial. Doing so may help get us there in fewer than 40 years.