Executive Summary

 

Value-based purchasing (VBP) represents a collection of new Medicare payment programs designed to improve clinical quality and patient experience while reducing cost inflation. In this paper, we discuss several forces leading to the design and implementation of Medicare VBP programs and then describe programs for five provider types: prospective payment hospitals, critical access hospitals, skilled nursing facilities, home health agencies, and physician office practices. These VBP programs are in various stages of implementation, including statutory language only, demonstration projects, and staged program implementation. We also describe (if applicable) the legislative statute, regulations or demonstration project details, rural inclusion, and preliminary results of Medicare VBP programs.

 

Although VBP outcomes thus far are mixed, VBP provides incentives to improve clinical quality and patient experience while reducing cost inflation. The Centers for Medicare and Medicaid Services should actively include rural in new VBP program opportunities. Many rural providers are eager to demonstrate their performance on quality measures. While we encourage rural participation in VBP programs, we outline several questions and comments that rural providers and policy makers should consider prior to VBP program participation.

 

Our paper presents a general discussion and implications for rural providers, without detailed policy suggestions. Specific recommendations for the Secretary of Health and Human Services can be found in a White Paper published by the National Advisory Committee on Rural Health and Human Services.1

 

We conclude that rural provider inability to take advantage of efficiencies of scale (volume) in a fee-for-service payment environment should not become a compounding disadvantage during VBP program participation. New VBP program designs should acknowledge the safety-net status of many rural providers and rural providers' fragile financial status exacerbated by a volume-dependent payment system. Risk-adjustment methodologies require special consideration since rural divergence from the mean dramatically increases the importance of special circumstances. In fact, special consideration of rural disparities may be appropriate due to historic and persistent rural health disparities and access challenges. Assuring high quality care across all providers should be a policy goal that recognizes the unique needs of rural people and places to access a health care system that is both high quality and cost efficient. Ideally, VBP programs should be aligned across health care provider types to ensure coordination of services and to avoid inappropriately moving resources from one provider to another. VBP performance measures must be pertinent to the services provided by rural providers. Finally, health services research should be engaged during VBP design development to ensure that program effectiveness evaluation accurately assesses new VBP health care payment policies.