5 Ways Value-Based Purchasing Relates to ACOs

The final rule for the Hospital Inpatient Value-Based Purchasing program, released by CMS on April 29, in many ways parallels proposed rules for accountable care organizations CMS released on March 31, according to a Monday Memo by Paul Keckley, executive director at the Deloitte Center for Health Solutions.

Here Mr. Keckley lists five ways the ACO program, which begins next January, is similar to the VBP rule, which provides incentive payments to hospitals based on their performance on certain quality measures, starting in FY 2013.

1. Shift from volume-based to results-based payments. The VBP rule contains 46 measures on patient safety, clinical process improvements, patient safety and patient satisfaction. The ACO rule lists 65 measures of quality, focusing special attention on five Medicare enrollee populations, such as the frail elderly.

2. Focus on collaboration among providers. The VBP rule requires coordination among physicians, hospitals, long-term care and post-acute care. ACOs require alignment among hospitals, physicians and long-term care providers, with an emphasis on primary care physicians and allied health professionals.

3. Both set the bar higher each year. VBP will add 20 measures in fiscal FY 2014. In ACOs, providers in both the one- and two-sided risk models will have to adjust to Medicare savings thresholds set annually.

4. Built on previous CMS programs. For VBP, the predecessor was CMS' Hospital Inpatient Quality Reporting Program, started around 2004. For ACOs, it was CMS' Physician Group Demonstration Program, begun around 2005.

5. Put providers at financial risk. Funding for VBP will come from reductions in base DRG payments for poor performers, starting at 1 percent in FY 2013 and 2 percent in 2014. For ACOs, providers participating in either the one- or two-sided risk models must pay back overspending to Medicare and risk any bonus if quality benchmarks are not hit.

Both programs, part of the healthcare reform law, enact changes that are "profound and immediate," Mr. Keckley said. "When the dust settles, the result is likely a fundamental change in how consumers will interact with their doctors and hospitals."

Here he lists three changes driven by the two programs.

• More relevant information on performance. Safety, outcomes, accessibility, methods for coordinating care and predictable costs will be linked to an individual's personal insurance program.

• Technology for accurate diagnosis and treatment. Many technologies are being brought together to provide more efficiency, consistency and accuracy in diagnosing and treating medical problems. Electronic health records are combined with personal health records in mobile communication device applications. Clinical knowledge management tools are linked to genomic mapping. The trend involves "the convergence of what things work in health care (clinical solutions) and what they cost (financial consequence)," Mr. Keckley wrote.

• Technology for shared decision-making. Applications that capture and analyze clinical and administrative data can provide real-time prompts, alerts and queries for pending treatment decisions and associated financial and clinical risks.

Read the Monday Memo by Paul Keckley at the Deloitte Center for Health Solutions.

Related articles on VBP and ACOs:

CMS Issues Final Rule for Value-Based Purchasing Program

50 Things to Know About the Proposed ACO Regulations