McKnight’s Articles

Sometimes a carrot is really a stick…but sometimes it’s 24-karat gold!

Do value-based purchasing (VBP) programs work? The concept of paying for “quality not quantity,” or “value-based” not “volume-based,” care has made it into the rhetoric from the U.S. Department of Health & Human Services and the Centers for Medicare & Medicaid Services, to the water cooler at work.

Clinicians get a warm fuzzy feeling, as do financiers who suddenly include rehospitalization rate, quality measures (QMs) and average length of stay (ALOS) into their usual vernacular — right next to revenue operating income and the requisite PPD calculations and EBITDAR.

The concepts of VBP emerged long before Affordable Care Act healthcare reform, but this philosophical shift away from paying for volume has accelerated since the ACA was signed into law in March 2010. HHS made clear in 2015 that it intended to tie 85% of all traditional Medicare payments to quality or value by 2016 and 90% of payments by 2018.

Because of the ACA and this shift in how we pay for care, VBP programs “reward” hospitals, SNFs and home health for having desirable outcomes. Although greatly simplified, the common unifying thread in these three VBP programs is that the reward or “carrot” for achieving these better outcomes is coming from a pool of dollars withheld from the providers. In a sense, the provider is earning back what it would have received prior to the VBP implementation.

Continue reading Steven Littlehale’s guest column on