Value-Based Purchasing Series

Recently, the Centers for Medicare and Medicaid Services (CMS) released the final rule for the value-based purchasing (VBP) program.

Over the next few weeks, we will share information about this important product of healthcare reform. A four-part blog post series will define VBP, the history behind it, key provisions of the final rule and the impact on anesthesia services.

The Background Behind VBP

As early as 1983, Medicare redesigned its payment system for hospitals through the inpatient prospective payment system (IPPS) and diagnosis-related groups (DRGs).

IPPS replaced the prior fee-for-service reimbursement with a fixed amount for inpatient care, based on a diagnosis-related group (DRG) code. The goal was improving quality while reducing health care costs.

In the early 2000s, employer coalitions, health plans and public programs entered the mix by creating several pay-for-performance programs. The IPPS and pay-for-performance programs lay the foundation for the VBP program.

Enter Healthcare Reform

The Affordable Care Act of 2010 included provisions for integrating VBP programs into the healthcare system, particularly the Medicare payment system. Section 2013 established the VBP program for acute care hospitals under the Medicare IPPS.

At the core of VBP is accountability. Its intent is transparency in health care costs and quality of care so consumers have the necessary information to make health care decisions.

CMS in its publication, Roadmap for Implementing Value Driven Healthcare in the Traditional Medicare Fee-for-Service Programexplains its transformation from a "passive payer of services into an active purchaser of higher quality, affordable care."

Prior to VBP, CMS issued payments based on volumes. With its move from a passive payer to active purchaser, CMS established VBP as a mechanism for providing incentives for high quality health care at a lower cost.

The VBP program shifts CMS payments from a transaction-based system to one based on outcomes. Funding for the program's payments comes from a reduction in the DRG payments for each discharge. Reductions start at one percent in Fiscal Year 2013, increasing up to two percent in Fiscal Year 2017.

A Review of Provisions

The first two parts of our four-part series focus on understanding the basics and goals of the VBP program.

In Part two, we will review key provisions of the final rule for the value-based purchasing program. The post will review changes made to the original provisions, the performance period for evaluation, and other timelines.

The last two posts explore the impact to anesthesia services and outlines how hospitals and anesthesia teams can prepare for the changes ahead.

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