Is There Value in Hospital Value-Based Purchasing?

Published - Written by Muhammad Sohaib Qamar, M.D.

As a practicing physician, you probably do not think on a daily basis about how insurance companies reimburse your hospital for the care your patients receive. However, the impact of programs designed by insurance companies and hospitals to improve quality and control costs may affect your practice. Additionally, if you ever become involved in hospital leadership, you will have the responsibility to decide how to maximize the quality of patient care while controlling costs. Any program designed to improve quality of care must undergo critical evaluation to ensure it is achieving this goal.

The Affordable Care Act established a program through Medicare called the Hospital Value-Based Purchasing Program (HVBP). The goal of the program is to financially incentivize hospitals to meet certain quality benchmarks. In this week’s NEJM, investigators report the result of a difference-in-differences analysis of the effect of HVBP during its first four years to compare quality improvement measures in 4799 acute care hospitals exposed to HVBP and 1331 critical-access hospitals exempt from HVBP (smaller, typically rural hospitals). The quality metrics included were composite scores of clinical process metrics (e.g., whether surgical patients received appropriate venous thromboembolism prophylaxis and patients with acute myocardial infarction received cardiac catheterization); patient experience metrics (e.g., patient reports of communication quality with their doctors); and 30-day risk-standardized mortality rates associated with acute myocardial infarction, heart failure, and pneumonia.

The results indicated that hospitals exposed to HVBP had a nonsignificant increase in the clinical process composite score, a nonsignificant reduction in the patient satisfaction score, and no difference in mortality for acute myocardial infarction and heart failure, compared to control (critical access) hospitals. Pneumonia-associated mortality in the HVBP-exposed acute care hospitals was slightly but significantly lower than that in critical access hospitals; however, this difference was attributed to a rise in mortality in the matched samples in the critical access hospitals.

HVBP was designed based on fundamental economic principles — that people respond to incentives. However, there are many reasons why HVBP has not yet improved these quality metrics. Hospitals might need more time to robustly implement the processes needed to improve quality of care or it is possible that financial incentives are not large enough to cover the cost of these programs. Additionally, no matter how much money is on the table, achieving improvements in some of these metrics can be hard. How do you reduce mortality in patients admitted with pneumonia? Do you spend money on building more ICU beds? Hire more infectious disease consultants? Although meeting some process measures might be more straightforward, making an impact on clinical outcome measures such as mortality is an enormous challenge.

For now, Medicare continues to implement the Hospital Value Based Purchasing program, including refining the list of metrics and increasing incentive payments. Continued analyses by Medicare and independent investigators will be important to help decide whether and how to continue hospital value-based incentive programs.

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Rebecca is a 2016-2017 NEJM Editorial Fellow and a hospitalist at Massachusetts General Hospital. She graduated from Columbia University College of Physicians and Surgeons in 2013 and completed internal medicine residency at Massachusetts General Hospital in 2016. Her interests include medical education, quality improvement, patient safety, health care delivery innovation, and teaching value in health care.

Muhammad Sohaib Qamar is an internal medicine resident at University at Buffalo Catholic Health System. He participated in the 2017 resident and fellow elective at NEJM. His interests include general internal medicine and hospital medicine.