Back to basics: Measuring value in value-based payment programs

Value-based payment (VBP) and value-based care (VBC) programs have proliferated since the Affordable Care Act introduced compulsory value-based payment initiatives and Accountable Care Organizations (ACOs) for Medicareopens in a new tab in 2010. Since then, a plethora of VBP programs have ensued in both the public and private healthcare payer and provider markets. An expansion of metrics has accompanied the expansion of VBP programs, which not only creates added burden to healthcare providers but also makes it more difficult to make comparisons across programs.

Program-specific metrics can be valuable to specialized VBP programs, such as oncology, behavioral health and maternity. However, it is important to maintain consistency by utilizing metrics that measure value within the most critical areas, especially metrics that quantify avoidable health events, focus on patient outcomes, and yield performance results that can be compared across providers and plans. These include reducing potentially preventable events, such as inpatient admissions, emergency department (ED) visits, readmissions, unnecessary services, and inpatient and outpatient complications.

The primary goal of any VBP program is to improve quality and reduce costs. Since hospitals account for the largest category of healthcare spendingopens in a new tab, reducing unnecessary hospital admissions continues to have the greatest impact on healthcare expenses. Additionally, hospital readmissions and inpatient complications are quality concerns that also have a direct impact on costs.

As more services shift from the inpatient to outpatient setting, spending could be reduced by 3.2% to 4.1% annuallyopens in a new tab. These savings are not only the result of moving from higher cost to lower cost settings, but there is an additional opportunity to identifying unnecessary procedures and complications that arise from these outpatient procedures.

ED visits remain an ongoing concern. While some visits are a result of actual emergencies, many others are potentially preventable and related to limited access to primary care or preventive service gapsopens in a new tab. One studyopens in a new tab demonstrated reductions in less-emergent or nonemergent ED visits when comparing states that expanded Medicaid coverage compared to those that did not. Maintaining a consistent measure of potentially preventable ED visits should be a key outcome of any VBP program.

While metrics that measure the experience of an entire population are necessary to evaluate the impact of VBP programs across large groups, it must also be acknowledged that a small share of the population accounts for most healthcare spending. Five percent of insured populations with the highest health spending account for half of healthcare expenditures annuallyopens in a new tab. Effective interventions among this group will disproportionately impact program outcomes. Thus, it is critical to have a tool that identifies patients at the highest risk of utilizing expensive and/or frequent healthcare services.

Value-based care has enjoyed bipartisan support over the past 15 yearsopens in a new tab. Reducing potentially preventable healthcare utilization costs has broad support among those who pay for care, including federal and state governments, health plans, plan sponsors such as employers, and patients. Using metrics that focus on outcomes versus process enables performance comparison between providers or plans to identify areas for improvement. Maintaining consistent measures of value, such as potentially preventable events, as programs expand into specialty areas is paramount to demonstrating VBP effectiveness.

Steve Delaronde is a senior manager of product, regulatory and payer solutions at Solventum.