VBP Update – Exploring Current Value-Based Payment Models and the Next Frontier
How Different Value-Based Payment Models Are Transforming Healthcare Outcomes
THE VBP Blog
November 7, 2024 –
Value-based payment (VBP) models are transforming the healthcare landscape by focusing on patient outcomes rather than the quantity of services provided. Over the past decade, various VBP models have been implemented, each designed to improve care quality, enhance patient satisfaction, and reduce costs.
From bundled payments to accountable care organizations (ACOs), these payment models reward providers for delivering efficient, high-quality care. In this blog, we will explore key VBP models that have been rolled out, their evolution, and where we see VBP models going next.
Original CMS Value-Based Payment Models
There were five original value-based CMS programs designed to support their three-part aim, which includes better care for individuals, better health for populations, and lower cost, including:
- End-Stage Renal Disease Quality Incentive Program (ESRD QIP)
- Hospital Value-Based Purchasing (VBP) Program
- Hospital Readmission Reduction Program (HRRP)
- Value Modifier (VM) Program (Physician Value-Based Modifier or PVBM)
- Hospital Acquired Conditions (HAC) Reduction Program
These models were just the tip of the iceberg, though.
CMS Innovation Center: Testing New Models for Better Healthcare
On the heels of promising results, the CMS Innovation Center (CMMI) was launched to look for new ways to effectively implement VBP models. Through pilot programs, CMS explores innovative ways to enhance patient care and provider efficiency. One of the latest initiatives is the ACO REACH model, designed to encourage health equity by promoting better access to care for underserved populations. It emphasizes value-based care with a focus on improving health outcomes. There’s also the Medicare Advantage Value-Based Insurance Design (VBID) Model tests customized benefit designs that incentivize Medicare Advantage plans to offer high-quality, affordable care.
Another recent development is the Home Health Value-Based Purchasing (HHVBP) program, first piloted in 2016 and expanded nationwide in 2022. This program measures home health agencies’ performance on key metrics such as patient outcomes, hospital readmissions, and patient satisfaction. By linking payments to performance, the HHVBP model encourages home health agencies to focus on improving the quality of care and patient well-being. And early reports from the Expanded HHVBP program have been positive.
As we covered in another blog, there was a cumulative reduction of $1.38 billion in overall Medicare spending for FFS beneficiaries receiving home health services during 2016-2021. And despite the reduction in healthcare spending, the Sixth Annual Report also showed that Total Performance Scores (TPS) for HHAs participating in the model were also 6% higher on average than the control group. The TPS values are important as they serve as an indicator of HHA performance. For each of the six years under the original HHVBP model, the TPS for agencies in HHVBP states were higher relative to the TPS calculated for agencies in the 41 non-model states.
The HHVBP program is particularly transformative because it targets home-based health care, a growing and critical part of the healthcare landscape as more patients prefer to receive care in their homes rather than institutional settings. By prioritizing preventive care, care coordination, and patient engagement, the HHVBP model aims to reduce hospitalizations, improve patient recovery at home, and enhance overall care quality.
Home Care: The Next Frontier of Value-Based Payments
Home care is increasingly seen as the next major area for value-based payment models. This is important as patients want to receive care in the comfort of their homes. With the aging population and a shift toward patient-centered care, home care services offer a crucial opportunity to improve healthcare outcomes while reducing costs. VBP in home care can incentivize providers to deliver high-quality, coordinated care that prevents hospitalizations and promotes recovery at home. Models like the Home Health Value-Based Purchasing (HHVBP) program are already leading this charge, showing how value-based care can transform home health by focusing on patient outcomes and care coordination.
As more healthcare moves into the home setting, VBP models will continue to evolve, supporting care that is efficient, personalized, and less expensive than institutional care. With advances in telehealth and remote monitoring, home care is well-positioned to become a central component of future healthcare delivery systems, driving quality improvements and better outcomes for patients. This shift not only benefits patients but also supports healthcare providers in delivering cost-effective, comprehensive care.
Advocates Perspective - Is There a Better Option?
As we can see, value-based payment models have come a long way in the last decade because they present significant advantages in improving healthcare quality, accessibility, and affordability. By incentivizing providers to focus on patient outcomes, these models encourage preventive care, reduce unnecessary treatments, and promote coordinated care across different settings. Programs like ACO REACH and HHVBP show how VBP can empower patients with better, more personalized care while controlling healthcare costs. As the healthcare landscape evolves, expanding these models to home care and beyond will further ensure that patients receive efficient, high-quality care tailored to their needs.
Onward!
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About the Author
Fady Sahhar brings over 30 years of senior management experience working with major multinational companies including Sara Lee, Mobil Oil, Tenneco Packaging, Pactiv, Progressive Insurance, Transitions Optical, PPG Industries and Essilor (France).
His corporate responsibilities included new product development, strategic planning, marketing management, and global sales. He has developed a number of global communications networks, launched products in over 45 countries, and managed a number of branded patented products.
About the Co-Author
Mandy Sahhar provides experience in digital marketing, event management, and business development. Her background has allowed her to get in on the ground floor of marketing efforts including website design, content marketing, and trade show planning. Through her modern approach, she focuses on bringing businesses into the new digital age of marketing through unique approaches and focused content creation. With a passion for communications, she can bring a fresh perspective to an ever-changing industry. Mandy has an MBA with a marketing concentration from Canisius College.