How Value-Based
Purchasing Works and
Affects Your Hospital
Jennifer P. Lundblad, PhD, MBA, CEO
Vicki Tang Olson, RN, MS, Program Manager
Trustee Presentation
January, 2014

Session Goal
To provide an orientation to hospital trustees about the shift from volume to value in U.S. health care and the role of value-based purchasing, leading to understanding of the role of a hospital board trustees in a value-driven environment.

The Stratis Health Perspective
• Independent, nonprofit Minnesota organization founded in 1971
– Mission: Lead collaboration and innovation in health care quality and safety, and serve as a trusted expert in facilitating improvement for people and communities
• Working at the intersection of research, policy, and practice
– Federally designated roles as the Medicare QIO and HIT
Regional Extension Center
– Develop and lead quality improvement projects and campaigns across care continuum
– Inform federal and state policy

The Healthcare Reform
Environment

A National Health Care
Quality Strategy
• The federal health reform legislation passed in 2010 called for the first ever National
Quality Strategy (NQS) in health care.
• NQS is built on the “Triple Aim”:
– Better Care
– Better Health
– Lower Cost

Federal Push to Value-Based
Purchasing (VBP)
• Transforming Medicare from a passive payer to an active purchaser of high-quality, efficient health care
– Improve quality of care and health of beneficiaries
– Reduce adverse events, improve safety
– Encourage coordination of patient care
– Avoid unnecessary costs
– Stimulate investments in structural systems
– Make performance results transparent and meaningful

Medicare Hospital Value-
Based Purchasing Program
• Federal health reform law established a hospital value-based purchasing program under which value-based incentive payments are made each year to hospitals that meet the performance standards for that year
• Program began in FY 2013, now in third year

The Shift to Value
What types of measures do we have…
 Process
 Outcome
 Patient experience
 Spending
…to tell us about quality and value:
 Cost/efficiency
– Overuse
– Underuse
– Appropriate use
 Percentage of patients receiving evidencebased practice

Why Does it Matter?
• Opportunities and Risks to the hospital based on performance
 Community and patient perception
 Comparisons to peers and competitors
 Payment from public and private purchasers increasingly tied to performance
 Meeting your mission…doing the right thing

How Does the Medicare
VBP Program work?

Measures
Measure score
Domain and weighting
Total
Performance
Score
Payment adjustment factor

FY2013
FY2014
FY2015
FY2016
Measures
Clinical
Process
12
13
12
8
Patient
Experience
Outcome
8
8
8
8
0
3
5
8
Efficiency
0
0
1
1
20
24
26
25

Measure Score
Two ways to get points:
Improvement points Achievement points
0-9 points 0-10 points
Whichever is greater

Domains

Domains
Performance measured in
2014.
Results available
Summer
2015.
Performance period over.
Will get results
Summer 2014.

Minnesota Hospitals:
2013 Total Performance Scores

Minnesota Hospitals:
2014 Total Performance Scores

Minnesota Payment
Adjustment Factor

U.S. Payment
Adjustment Factor

What is the Hospital Board
Trustee Role?

Know Your Numbers
• Establish quality and value as an organizational priority
• Determine senior leadership accountability
• Proactively plan for and monitor performance on federal, state, and commercial VBP programs

Set the Bar High
• Make evidence-based practice the way you deliver care
• Set expectation with physicians and staff to make it happen
• Establish bold goals for your performance in quality and value

Support a Learning Culture
• Understand systems thinking
• Make it safe to share problems…and expect every failure to be evaluated
• Use insight from errors, near misses, patient feedback to make improvements
• Help clinicians, quality staff, finance staff to be working together toward shared goals to be successful in a value-driven environment

Build Community
Partnerships
• Recognize that VBP measures increasingly reflect the importance of care coordination and transitions
• Know and leverage your community health needs assessment results
• Encourage your hospital to partner with other health care and community-based organizations to provide seamless care

Stay Current
• Stay informed using resources available to you
– Stratis Health VBP fact sheet
• Updated annually and available Stratis Health website: http://www.stratishealth.org/documents/VBP_factsheet.pdf
– MHA resources, CMS resources

Questions?

Questions?
Jennifer Lundblad, President & CEO
952-853-8523 or 877-787-2847 jlundblad@stratishealth.org
Vicki Olson, Program Manager
952-853-8554 or 877-787-2847 volson@stratishealth.org
www.stratishealth.org

Stratis Health is a nonprofit organization that leads collaboration and innovation in health care quality and safety, and serves as a trusted expert in facilitating improvement for people and communities.
www.stratishealth.org
Prepared by Stratis Health, the Medicare Quality Improvement Organization for Minnesota, under contract with the Centers for Medicare & Medicaid Services (CMS), an agency of the U.S. Department of Health and Human Services. The contents presented do not necessarily reflect CMS policy. 10SOW-MN-C7-13-158 123113