Value-based purchasing is supposed to tie reimbursement to quality of care and costs. Providers that are high quality and low cost are supposed to get higher reimbursement, those that are low quality and high cost the reverse. The key question is: does this reimbursement approach work in practice?
According to a recent study by Grabowski et al. (2016), the answer is probably not. Using data between 2008 and 2012 for skilled nursing facilities (SNF) in Arizona, New York and Wisconsin, the authors examine the impact of Medicares SNF value based purchasing (VBP) program and find:
Medicare savings were observed in Arizona in the first year only and Wisconsin for the first 2 years; no savings were observed in New York. The demonstration did not systematically impact any of the quality measures. Discussions with nursing home administrators suggested that facilities made few, if any, changes in response to the demonstration, leading us to conclude that the observed savings likely reflected regression to the mean rather than true savings.
The Federal nursing home pay-for-performance demonstration had little impact on quality or Medicare spending.
This evidence is disconcerting as CMS continues to push for value-based provider payments.
- Grabowski, D. C., Stevenson, D. G., Caudry, D. J., O’Malley, A. J., Green, L. H., Doherty, J. A. and Frank, R. G. (2016), The Impact of Nursing Home Pay-for-Performance on Quality and Medicare Spending: Results from the Nursing Home Value-Based Purchasing Demonstration. Health Services Research. doi: 10.1111/1475-6773.12538