There are many conversations on how the Affordable Care Act – Obamacare – has been executed and how it should change in the future. Amidst the fray about the individual mandate and exchanges, a lesser-known ACA goal is to improve population health and outcomes via Pay for Performance (P4P), hospital Value-Based Purchasing (VBP) and other value-based programs, like bundles and the emergent Medicare Access and CHIP Reauthorization Act (MACRA). These still evolving programs exist to reimburse provider organizations for outcomes, rather than procedures performed, a shift from “volume to value.” At this critical moment, we should ask the question: have value-based programs been working?

A provocative article recently published in the Journal of the American Medical Association declared that P4P and VBP programs are failing and “should be retooled or stopped.” While the criticism was valid, the article was almost solely focused on two P4P programs and not inclusive of all value-based programs. And while the article did not address the need for strong data and technology capabilities to improve performance in these programs, it did address incentives, quality measures and program design.

We agree that VBP and P4P programs do not yet have all the components in place to effectively measure and improve healthcare quality in these key areas:

  • Adequate incentives to motivate providers to fully invest time and resources
  • The narrowest set of measures possible to allow clinicians to focus on building proficiency
  • Programmatic strategy and information delivery that enables clinicians and administration to understand how they are doing at any given point

Value-based models are still in the early stages. We are still iterating on the items above, especially making incentives and feedback meaningful enough to support physician change. Roll-out strategies are still being perfected, and we do agree that while many of the healthcare quality and patient experience measures are good, some of them are not as useful or should be revisited.

Healthcare entities must continue to invest in data capabilities. The reality is that the bulk of structured quality data has been collected in the most recent five to six years and can only now see trends and begin predictive modeling. This does not even consider the troves of unstructured data that are growing at even faster rate. We are at the beginning of being fully equipped to collect, maintain and transform data into insights. Submissions processes are still kludgy and feedback loops haven’t been implemented as well as they should be. Patient outcomes and quality are still unreliable. Issues with submissions also impact the revenue entities should be receiving. Without strong data capabilities, entities will not be able to measure performance in value-based programs regardless of how well they are executing.

So why have value-based programs struggled? Besides the challenges in measurement, healthcare is inherently expensive, with the majority of costs driven by salaries and technology. Technology can be broken down into data/digital and medical technology.

The need to digitize and mobilize data. Strong foundational work is critical. This includes EMRs, analytics and mobile apps to get insights to the right user at the right time. These capabilities are a huge investment, take time to implement and operationalize. They can come with a decline in productivity while integrating the new technology into workflows. Compliance with contract requirements can also be impacted. This all costs time and money.

Medical technology includes new diagnostic, imaging and interventional equipment. When people get sick, they want the best care. The best care can mean overtreatment. For instance, a patient with lower back pain is likely to request diagnostic imaging, even if the evidence doesn’t support it. Unfortunately, some physicians simply comply instead of prescribing rest, physical therapy or some other, simpler treatment option prior to ordering a diagnostic image. These decisions impair performance on VBCs.

Our thought: It’s too early to tell if P4P, VBP and other value-based programs are working or failing, but we need reliable data to discern. We do agree many of the value-based programs need some programmatic changes but also that healthcare entities need strong data and digital capabilities to be competitive in the value-based programs and to create enough data to measure and evaluate the programs themselves.

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