Implementing Innovative Value-Based Purchasing and Readmission Reduction Strategies

October 7, 2012
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No longer is the clock ticking; rather the alarm has sounded and value-based purchasing has commenced.  As this aptly titled article, “Medicare Rolls Out Carrots and Sticks for Hospital Quality”, the author points out that the Centers for Medicare & Medicaid Services (CMS) is now withholding 1 percent of its regular hospital payments and putting that money into a fund to reward hospitals that score well on No longer is the clock ticking; rather the alarm has sounded and value-based purchasing has commenced.  As this aptly titled article, “Medicare Rolls Out Carrots and Sticks for Hospital Quality”, the author points out that the Centers for Medicare & Medicaid Services (CMS) is now withholding 1 percent of its regular hospital payments and putting that money into a fund to reward hospitals that score well on 20 different quality measures.  Breaking that number down further reveals that seventy percent of a hospital’s score will be based on 12 measures that show how frequently hospitals performed recommended protocols, while the remaining 30 percent of a hospital’s value-based purchasing payment will be based on how it scored on patient surveys taken after they were discharged.

And as if this isn’t enough to contend with, CMS has also enacted the Readmissions Reduction Program, aimed at curtailing the number of patients that are sent back to the hospital.  With one in five Medicare patients typically being readmitted within one month, bringing this number down will help hospitals and healthcare systems avoid the 1% penalty looming in their future.  Some view the penalties as counterproductive since a patient’s behavior beyond the four walls of the hospital is simply beyond their control. And while medication adherence, diet, insurance and mental health status help drive many of these readmissions, CMS believes that hospital can significantly improve transitions and coordination of care.

In the face of two landmark program launches, what will your hospital’s valued-based purchasing and reductions readmission approach be?  According to Evolent Health, a joint venture between the University of Pittsburgh Medical Center system’s Insurance Division and the Advisory Board Company, a variety of paths can be taken based on a provider’s appetite for risk.  Ranging from individual programmatic efforts, to patient centered medical homes or accountable care organizations, providers must first review complex case management, condition management, and pharmacy utilization management to determine the right mix.

Specifically, Evolent Health believes that the following five key ingredients must exist in order to succeed at value-based purchasing:

  • Creating a Coherent View –organizations must integrate multiple sources of information, provide real-time alerts for ED admissions, and be able to transmit care manager notes to the appropriate providers
  • Prioritizing High-Risk Patients – entities must be able toassess patients over a discrete period of time by collecting data and processing it through a rules engine to create predictive models for readmission risks and risk scores
  • Providing the Right Intervention by Building a Targeted and Tiered Intervention Portfolio  – organizations must stratify patients into buckets and create menus of interventions and care management operations to address particular patients
  • Engaging at the Appropriate Intensity Level – depending on intensity, patients must be engaged in the appropriate format and/or forum

Given the current trend in healthcare spend, one would be hard pressed to argue the need for population health management, care coordination and home monitoring technology and processes.  And while large and medium size urban healthcare institutions have the ability to address these mandates head on, the question becomes – how will smaller entities in less well developed communities fare?  A first step in the innovation for value-based purchasing, according to Dr. Gregory Spencer, chief medical officer of Crystal Run Healthcare, is to develop internal processes and a registry for purposes of gaining a better understanding of your patient populations and identifying gaps in care.