Introduction
The foundational principle of the value-based care approach is the focus on the quality of medical care provided in healthcare organizations rather than its volume. It was designed to serve the double purpose of promoting cost-efficiency and increasing the effectiveness of care. The approach was implemented as the opposition to the traditional fee-for-service reimbursement. The main issue regarding the previous method was that it motivated the organizations to use often unnecessary procedures to gain more profit and increase the number of patients. Both patients’ safety and healthcare suffered from this approach. Therefore, a focus on value in healthcare practice has transformed the way medical care is delivered today. The models differ according to the ways the quality is assessed and how the payment is provided, but they all focus on improving public health conditions and decreasing healthcare expenditures.
After the Affordable Care Act was passed, the implementation of value-based care became possible, with ACO being the first model. Accountable Care Organizations (ACOs) include different providers coordinating medical care and ensuring that a high quality of treatment is delivered to the patients. There are dozens of models of value-based care that provide quality-improving incentives, such as patient-centered medical homes, or bundled payments models. According to CMS (2020), there are five original programs of value-based care. End-Stage Renal Disease Quality Incentive Program (ESRD QIP) focuses on dialysis in healthcare centers, reducing reimbursement payments for those organizations not complying with the standards assigned by the program.
The Hospital Value-Based Purchasing (VBP) Program has been introduced to strengthen the quality of in-hospital when the Hospital Readmissions Reduction Program (HRRP) regulates payments and imposes penalties for recurrent admissions. The primary purpose of the Hospital-Acquired Conditions (HAC) Reduction Program is to motivate healthcare organizations to increase patient safety through the financial motivation approach. Additionally, Physician Value-Based Payment Modifier (PVBP) seeks to reward individual physicians who strive to provide high-quality care. Despite the focus on different areas of healthcare, all these incentives pursue a common goal – ensuring that the patient is treated with the best possible practices while the expenditures are optimized.
The Importance of Value-Based Care Models
Value-based care models perform a critical function in American society. According to recent research, the American healthcare system’s expenditures rose to 17,8% of the national GDP, which is the highest rate among high-income countries (Papanicolas et al., 2016). More importantly, the quality of care remained questionable, regardless of high costs. Therefore transforming the system through value-based care to make it more efficient was essential. Thus, the program has numerous benefits for patients, payers, providers, and the whole society.
First, patients have to spend less on the treatment that became more efficient as the organizations tend to avoid unnecessary practices and prevent readmissions. Moreover, the clients get improved health outcomes for their money. Secondly, providers can achieve higher patient satisfaction, focusing more on preventive practices than chronic disease management. They can reduce their time and effort spent previously on chronic diseases, and reinforce their work on health improvement practices. These working conditions encourage healthcare practitioners to develop better skills and patient-centered incentives. Moreover, American society benefits from public health improvements as the value-based approach cuts down the weight of chronic diseases (Rambur, 2017). The level of public health, in turn, is reflected in workforce quality, which impacts the whole society. Therefore, these incentives are essential for tackling low-quality, cost-inefficient care as the specific reimbursement models help to reward organizations and practitioners for a better quality of service.
Value-Based Care Payments
Value-based care requires an advanced approach to service reimbursement that rewards organizations for service quality and significant improvements in health outcomes. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is a legislative framework that established new pay-for-performance reimbursement practices. The Merit-based Incentive Payment System (MIPS) is the program that operates under MACRA and enables quality-based reimbursement. Payment scores in MIPS consist of several components that constitute the overall efficiency of care. According to Jones et al. (2016), the quality of care comprises 50% of the reimbursement package, followed by 25% for ACI (advancing care information), 15% for practice improvement, and 10% for the use of resources. The combination of these components allows a multi-faceted assessment of medical care and motivates organizations to develop in different directions.
Many physicians or organizations can participate in the APM (Alternative Payment Model) reimbursement programs that offer higher rates for quality improvement incentives. According to CMS (2020), it “can apply to a specific clinical condition, a care episode, or a population.” Jones et al. (2016) describe APM as “quality- and cost-based payment models in which the provider accepts more than nominal financial risk for poor quality performance” (p. 461). This program allows the participation of all organizations and single episodes of care reimbursed through bundled payments. Although MACRA is still the most significant legislation for medical care reimbursement, it undergoes the development process, and numerous issues will be clarified in the nearest future.
Hospital Readmission Reduction Program (HRRP)
HRRP is the value-based model that aims to reduce hospital readmissions due to insufficient patient service quality. The main instrument of the program is payment cutting for those organizations that have high readmission rates. According to CMS (2020), up to 3% payment reduction is imposed on those healthcare centers where readmission rates are higher than among hospitals with similar patient proportions under Medicare or Medicaid. The program is based on substantial evidence that links readmission rates to the quality of care across the U.S. The calculations of the excess readmission ratio (ERR) are completed separately for each of the included conditions. The diseases and procedures under the program are acute myocardial infarction (AMI), pneumonia, COPD, Total Knee Arthroplasty, CABG surgery, and heart failure (CMS, 2020). For this list of conditions, unplanned readmission in 30 days following the discharge is considered undesired and negatively impacts ERR. The payment reduction coefficient is then calculated separately for each hospital.
HRRP and its Impact on the Patients and Society
The primary goal pursued by HRRP is to enhance public health reducing the chronic disease burden. According to Lu et al. (2015), major causes of hospital readmissions include “complications from the inpatient treatment during the hospital stay, inadequate quality of care or care coordination, lack of follow-up care after the discharge” (p. 54). These are the factors of readmission that can be prevented if the medical centers considered health outcomes of a higher priority than gaining income. Therefore, HRRP impacts patient outcomes by motivating hospitals to ensure patient safety, follow-up care, and appropriate primary care before discharge. Scholars report a noticeable decrease in excess readmission that had dropped by 8% across the country during the first five years of the program (Perez, 2018, p. 80). Thus, the connection of payment to quality improves public health reducing readmissions and improving pre- and post-discharge care.
HRRP and its Impact on Healthcare Industry
The implementation of HRRP strategy and financial penalties urges the hospitals to transform the way patients are treated during the initial admission. Organizations have to develop strategies that help to decrease the readmission rate after acute conditions. The process of these changes can be challenging for healthcare professionals as they have to adjust the way they work to modern-day reality. However, this change is necessary as it helps hospitals develop patient-centered strategies focused on improving health outcomes. However, Fonarow et al. (2017) express concerns about the way the program can influence healthcare practice. The scholars claim that the unwillingness of hospitals to be penalized has led to an increase in out-of-hospital mortality. Although the change is not staggering, the rise in death rate is steady, and its beginning coincides with the implementation of penalties (Fonarow et al., 2017). That is why the future of hospitals under HRRP can be marked by the transformation of the assessment procedure that will focus more on the patient outcome than the bare fact of readmission.
HRRP and its Function during the Trump Administration Period
Although there are several questions regarding the ACA and its incentives, the implementation of value-based care programs is the most fundamental healthcare reform of the last decades. However, the first years of the Trump administration were marked by the opposition to all the incentives under ACA and the attempts to replace the model. Nevertheless, the majority of the programs remained active as “HHS and CMS have been generally supportive of value-based care” (Perez, 2018, p. 82). According to Perez (2018), the Hospital Readmission Reduction Program has been recognized as successful and therefore continues to function under the Trump Administration. During recent years, the program has been contributing to the improvements in healthcare practice design that relieves taxpayers’ burden and promotes quality improvements in hospitals. As many organizations have already adapted to the work under the new framework, it is expected that the program’s future will bring lower readmission rates with improved patient outcomes.
References
Centers for Medicare & Medicaid Services (CMS). (2020). CMS’ value-based programs. Web.
Fonarow, G. C., Konstam, M. A., & Yancy, C. W. (2017). The Hospital Readmission Reduction Program is associated with fewer readmissions, more deaths. Journal of the American College of Cardiology, 70(15), 1931-1934.
Jones, L. K., Raphaelson, M., Becker, A., Kaloides, A., & Scharf, E. (2016). MACRA and the future of value-based care. Neurology: Clinical Practice, 6(5), 459-465.
Lu, N., Huang, K.-C., & Johnson, J. A. (2015). Reducing excess readmissions: promising effect of hospital readmissions reduction program in U.S. hospitals. International Journal for Quality in Health Care, 28(1), 53-58.
Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health care spending in the United States and other high-income countries. JAMA, 319(10), 1024-1039.
Perez, K. (2018). The current outlook for value-based care under the Trump administration. Healthcare Financial Management, 72(5), 80-82.
Rambur, B. A. (2017). What’s at stake in U.S. health reform: A guide to the Affordable Care Act and Value-Based Care. Policy, Politics, & Nursing Practice, 18(2), 61-71.