- How does Value Based Purchasing impact on the revenue for healthcare
organizations. What is the advantage of Value Based Purchasing for the provider,
the payer and the patient?
According to the Centers of Medicaid & Medicaid Services (CMS), value-based purchasing pays hospitals based specific quality parameters for Medicaid patients. Which include the quality of care provided, safe clinical practices provided and based on the patient experience that is offered. There are many advantages for hospitals that adapt to VBP, by leading with the best clinical practices for the patient the hospital can retain its reputation for prospective Medicaid and Medicare patients. The goal is to achieve this payment for providers by offering exceptional care and experience to the patient while keeping their service cost low. While this is a great incentive for the consumers and insurers, this can impact the revenue in specific healthcare organizations negatively if not scoring satisfactorily. Rand Corporations conducted a review of the effects of revenue for providers/hospitals who used VBP. According to some of their qualitative results they found, “loss of revenue for providers caring for disadvantaged populations, the excessive exclusion of patients when that is an option in the program, access barriers and patient turnover from practices related to providers avoiding more difficult patients, and market concentration and price effects in the context of ACOs.” This is a concern when looking into the advantages and disadvantages for the provider, payer, and the patient. If providers are turning away complicated cases to maintain their quality measures and outcomes this may put patients at a disadvantage when seeking providers that accept their Medicaid/Medicare insurance. In contrast, the payer has more of an advantage due to the parameters listed above to compensate providers based solely on their safe-quality performance and efficiency in providing cost effective care. The Healthcare Financial Management Association states that most of the hospital’s revenue comes from CMS, approximately 40%. This gives them the power to establish payment policies. As a result of this, hospitals and providers are proving care at negative margins. Whereas there are pros and cons to the VBS, it is crucial that hospitals perform at a level that provides safe-effective care for all patients, regardless of their insurance being a determinant of quality.