More hospital industry perspective on Medicare value-based purchasing (P4P)

Modern Healthcare published the first of a three-part series on VBP (free registration required), entitled High-risk proposition: With CMS’ "value-based purchasing" model, struggling hospitals are wondering if they can afford the IT needed to make it work.

This cover story on Medicare’s proposed pay-for-performance reimbursement program for hospitals is the first of a three-part series examining the connection between finance and patient care. The series will continue in upcoming issues, with the second part a report on hospitals forgoing payment for certain adverse patient events. The third part of the series will analyze the economics of patients with infections.

Check out earlier HealthBlawg posts on P4P as well.

The amount of reimbursement that the proposed VBP plan would put at risk could equal or exceed many hospitals’ operating margins. 

Part 1 concludes:

The AHA’s [spokesman] said that Congress would have to move on it before year-end—an unlikely prospect—in order for the program to be implemented in time for the fiscal 2009 deadline under the Deficit Reduction Act of 2005.

But [the] Premier [Inc.] spokesman . . . said considering the first year of the program calls for a continuation of the pay-for-reporting plan already in place, Congress could possibly take more time. He noted that influential Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Finance Committee, already urged in a written statement for Congress “to get the job done.”

“If you look across the policy community, (everybody) has said that this makes a lot of sense,” [the Premier spokesman] said. “It’s not only that pay-for-performance makes sense, it’s that the current system is dysfunctional because it rewards volume of care, not outcomes.”

Few would disagree at this stage of the game that paying for outcomes is the wave of the future, but outcomes are not guaranteed in health care, and sometimes even when everything is done by the book, the outcome doesn’t meet the predetermined definition of "value."  The same issue obtains in the parallel discussion of the CMS no pay rule for never events.  S@!# happens.  The challenge for CMS is to build an outcomes-directed payment system that doesn’t pave the road to ruin with providers’ best efforts — even though Congress has established a tight deadline for implementation.

— David Harlow