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Where Is The Value In Health Care?

Providers and payers are beginning to recognize the shift to value based payment in the public and private sector. According to a survey by McKession, 90% of payers and 81% of providers are already using some form of value based purchasing. This indicates a drastic decline of fee-for-service care. There is tremendous pressure for hospitals and providers to adapt due to the VBP trend and the implementation of the ACA. Although data is sparse, existing studies have already found improvement in health outcomes, reductions in hospital readmission rates, and spillover benefits to traditional Medicare. However, contrary this this, the program spend more money per beneficiary than traditional Medicare, though these additional payment are set to decline over time. Another concern is the uncertainty about if Managed Medicare has managed to deliver any cost savings or improvements in health outcomes, and the high fixed cost a value-based system will incur. Other example of an approach to more value includes CALPERS, which uses “reference pricing”, and competitive bidding. It is difficult to measure the cost versus value in health care when the value is not necessarily monetary. Read full article

The Strategy That Will Fix Health Care

Every health care system is struggling with rising costs and uneven quality, despite the hard work of well-intentioned, well-trained clinicians. Health care leaders and policy makers have tried countless incremental fixes—attacking fraud, reducing errors, enforcing practice guidelines, making patients better “consumers,” implementing electronic medical records—but none have had much impact. At its core is maximizing value for patients: that is, achieving the best outcomes at the lowest cost. Moving away from a supply-driven health care system organized around what physicians do and toward a patient-centered system organized around what patients need. The focus must shift from the volume and profitability of services provided—physician visits, hospitalizations, procedures, and tests—to the patient outcomes achieved. The strategy for moving to a high-value health care delivery system comprises six interdependent components: organizing around patients’ medical conditions rather than physicians’ medical specialties, measuring costs and outcomes for each patient, developing bundled prices for the full care cycle, integrating care across separate facilities, expanding geographic reach, and building an enabling IT platform. The transformation to value-based health care is well under way. The result has been striking improvements in outcomes and efficiency, and growth in market share. Read full article

How Value-Based Care Will Change Healthcare

Toby Cosgrove, M.D., in a blog post for the Harvard Business Review, described value-based healthcare as a "breakthrough that will change the face of medicine." He said the pay-for-performance model will lower healthcare costs, improve quality and outcomes and eventually affect every patient across the United States. But the road ahead is difficult, he said, as many oppose the plan, which offers less money than the current fee-for-service model. Because value-based care will necessarily involve making less money for better outcomes, Cosgrove wrote it is being delayed by "criticism, misunderstanding, and a reluctance to do things differently." But, he said, providers should view it as an opportunity rather than a problem. "After all, the providers who make the transition early will be rewarded with more satisfied patients, lower expenses, and pride in a job well done." However, not everyone agrees with Cosgrove on the feasibility of value-based care. The uniqueness of each individual patient complicates the idea of "mak[ing] all of medicine measurable and quantifiable," David A. Shaywitz, M.D., Ph.D., director of strategic and commercial planning at a San Francisco-based pharmaceutical company, wrote in The Atlantic. Patients' medical conditions tend not to be homogeneous, and a small portion of patients who may have complex, overlapping conditions are responsible for the majority of healthcare costs, Shaywitz wrote. For a value-based compensation system to be effective, he said, providers must "embrace the messiness of disease and the complexity of patients." Read full article

In Tough Economic Times, Employers Turn to Value-Based Health Care

Value-based health benefit design is a holistic, consumer-centered approach that focuses not on the actual dollars being spent but on how the dollars being spent work to improve employees’ health. To reinforce the importance of becoming a stakeholder in medical decision making, some employers and health plans are providing individuals with electronic personal health records. PHRs are used to store information from individual and family medical histories and to track an individual’s medical conditions, hospitalizations, medical test results, doctor visits, medications and the like. Access to high-quality medical services and providers is imperative in a value-based health care model. Evidence-based medicine identifies the best course of treatment for a diagnosis. Value-based medicine begins by using data and technology to identify employees with established or newly diagnosed chronic conditions or those at high risk to develop such conditions. Data and technology are also used to identify chronic conditions that are costly or responsible for productivity problems. Specifically, employers and health plans are analyzing health and prescription claims as well as short-term and long-term disability, workers’ compensation and absenteeism rates to identify high-cost conditions and employees. This data mining also reveals efficiencies and problems in the plan’s design, providers’ clinical outcomes and gaps in individuals’ treatments. Employers may see an initial increase in costs if the cost-share structure is changed to reduce or eliminate copayments and deductibles. A value-based design may also cause administrative and employee relations challenges. But employers who have implemented value-based initiatives have seen positive results in productivity levels and overall employee health. Read full article

Investing in Value-Based Health Care

Value is the quotient that drives reimbursement in most other industries, so why not health care? The Centers for Medicare & Medicaid Services have stated that transitioning to a value-based payment system will make health care safer and prevent injuries and unnecessary readmissions to hospitals, which increase overall health care costs. CMS officials say such a transformation will result in savings of $55 billion over five years for Medicare alone. This transformation — which points toward the formation of accountable care organizations — represents an enormous change from decades of volume-based reimbursement. The task requires the utilization of evidence-based medicine at every level of care, the sharing of information among health care stakeholders, and heightened communication with patients and their families to ensure continuity of care. Health systems must analyze the cost of care, pricing strategies and new ways to work with physicians. Sophisticated information systems are an essential element. One of the most crucial requirements is an alignment of goals among entities that previously have sometimes been at odds: providers, payers and health plans. In a value-based environment, no stakeholder will achieve success unless all stakeholders achieve success. Virtually every health system around the country is engaged in a cost-reduction initiative. Most are seeking to reduce costs by 20 to 30 percent over several years, industry analysts say. Some of those organizations are crunching the same kind of data they have gone over for many years. This includes an evaluation of FTEs and an in-depth look at supply costs, among other things. Read full article

Commonwealth Fund offers policy options for repealing the Sustainable Growrth Rate

(March 2013). Commonwealth advocates for value-based care as the solution to repealing an archaic and arbitrary spending formula. (Full Report Brief Here).

Slow Progress on Efforts to Pay Docs, Hospitals for 'Value,' Not Volume

KAISER HEALTH NEWS AND USA TODAY (March 26, 2013) - For decades, reformers have sought to change how doctors and hospitals are paid to reward quality and efficiency – efforts that accelerated as a result of the health care overhaul. But surprisingly little progress has been made to date, a consortium of large employers reported today. (Full Article Here)

Commission Advocates Ending Fee-For-Service System

POLITICO (March 4, 2013) - The National Commission on Physician Payment Reform is calling for eliminating the fee-for-service model within seven years, starting with a five-year transition period to a blended payment system.  The group, whose honorary chairman is former Senate Majority Leader Bill Frist (R-Tenn.) and includes representative…( Full Article Here)

Unlocking Value-Based Cares Upsides

HEALTH LEADERS MEDIA (February 11, 2013) - Value-based purchasing has begun to take hold, with federal incentives for lower-cost care and best performance and disincentives for unnecessary care. Many of the VBP metrics will…(Full Article Here)

Panel recommends drastic changes to healthcare payment

KAISER HEALTH NEWS (March 4, 2013) - A panel convened by a major medical group is recommending that Medicare heal its physician payment shortfalls with “drastic changes” in how it reimburses doctors and other providers, rather than seeking more taxpayer money. (Full Article Here)

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