HCMFPX5314_TrueloveElizabeth_Assessment3-1

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Jan 9, 2024

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Value-Based Purchasing and Shared Risk Models Elizabeth P. Truelove HCM-FPX5314 Capella University Dr. John Gaze December 18th, 2023

Components of Value-Based Purchasing Models Healthcare in the United States is ever-changing and evolving. Most recently, managed care organizations, like UnitedHealth Group, have adopted the value-based purchasing model. Value-based purchasing, or VBP, links provider payments to improved provider performance (HealthCare.gov, 2023) . Value-based programs support a three part aim: lower cost, better care for individuals, and better health for populations (Centers for Medicare & Medicaid Services, 2023) . This model steers away from the traditional fee-for-service healthcare models and affords providers the ability to spend more time with patients and provide higher quality care. The value-based purchasing model helps CMS move towards paying providers based on quality of care delivered, versus services rendered (Centers for Medicare & Medicaid Services, 2023) . There are four domains to value-based purchasing models: clinical outcomes, person and community engagement, safety, and efficiency and cost reduction (Centers for Medicare & Medicaid Services, 2023) . The clinical outcomes domain assesses the number of deaths in the 30 days after entering the hospital for certain conditions. This domain is important in value-based purchasing models because patients that receive high-quality care during a hospitalization and post-discharge are more likely to have improved outcomes (Centers for Medicare & Medicaid Services, 2023) . The person and community engagement domain evaluates the experience a patient has during their hospital stay related to communication with the medical team, cleanliness of the facility, discharge, transition of care, and overall hospital rating. Safety assesses a wide range of healthcare activities that affect patients’ overall well-being. Healthcare associated infections, reduced risk of falls, bed sores, and other adverse healthcare events are evaluated under this domain. The final domain of value-based purchasing is efficiency and cost reduction. The purpose of this domain is to increase transparency of care to patients by acknowledging facilities that provide high quality care at lower costs, specifically to Medicare (Centers for Medicare & Medicaid Services, 2023) . Each of the aforementioned domains consists of sub-measures and account for 25% of a facility’s total performance score. According to the U.S. Department of Health & Human Services, “value-based purchasing is funded through a reduction from participating hospitals’ Diagnosis-Related Group (DRG) payments for the applicable fiscal year” (U.S. Department of Health & Human Services, 2017) . Money that is withheld from the DRG is then redistributed to participating hospitals based on their total performance score. Participating facilities can earn back a value-based incentive payment based on their quality performance that is less than, equal to, or more than the applicable reduction (U.S. Department of Health & Human Services, 2017) . Implications of Value-Based Purchasing on Management Practices and Decisions Adopting the value-based purchasing model impacts leadership and direct patient care team members such as physicians, advanced practice providers, and nursing staff. When implementing a value-based purchasing model, management practices and decisions should focus on three core elements: characteristics of the providers and the settings in which they practice, program design features, and external factors (Damberg, Lovejoy, Mandel, Martsolf, & Sorbero, 2014) . It is critical for leadership to adhere to a forward-thinking financial model to help

predict and manage fluctuations in volume changes, gains and losses from incentives, penalties, capital budgeting, management control, and other factors that are related to value-based purchasing models (Centers for Medicare & Medicaid Services, 2023) . Value-based purchasing models link financial compensation to provider performance of quality measures and cost reduction and therefore have a major impact on financial and budgetary strategies. Successful implementation of a value-based purchasing model entails ensuring staff have the right tools, knowledge, and resources to manage alternative payment models (LaPointe, 2017) . Shifting away from the fee-for-service model requires unique capabilities such as quality reporting systems, effective healthcare management strategies, enhanced EHR capabilities, external provider partnership, and cost and utilization reduction strategies (LaPointe, 2017) . While each of these components have financial and budgetary implications for management, they help to achieve success in value-based purchasing models with the emphasis being on improving the overall health of patients. As a managed care organization, UnitedHealthcare is no stranger to value-based care. According to UnitedHealth Group, or UHG, building a successful value-based care model involves focusing on the basics of population health management: comprehensively looking at the health of an entire community or population instead of individually as patients seek care (UnitedHealthcare, 2023) . Partnering with providers and healthcare organizations participating in value-based care enables healthcare professionals to spend more time and have greater opportunity to understand what their patients really need. Moreover, the partnership among healthcare providers and managed care organizations helps to lower the overall cost of healthcare while improving patient outcomes. Shared Risk Models According to CMS, one goal of the CMS Innovation Center is to improve quality of care patients receive without increasing the cost, ideally, increase the quality of care while lowering costs (Centers for Medicare & Medicaid Services, 2023) . Risk arrangements are agreements between CMS and a healthcare provider or facility that hold the participant financially responsible for the quality and cost of care that is delivered to patients in exchange for flexibility in the way care is delivered (Centers for Medicare & Medicaid Services, 2023) . Shared risk models are also known as downside risk models. These agreements contain uncertainty as it relates to potential financial losses. Providers agree upon a budget and quality performance measures they must meet in order to receive any financial gain. Shared risk models are a form of value-based care reimbursement which require population health management programs, extensive data analytic capabilities, and electronic health record use for documentation and reporting needs (xtellignet Healthcare Media, 2023) . Delivering the best value-based care consists of adopting population health management strategies that replace the “one size fits all” care mentality. This method involves giving consideration to physical and social determinants of health that may have an impact on patients so that providers can focus on preventative care rather than waiting for a patient to become ill. Population health management, according to the American Hospital Association, is “the process of improving clinical health outcomes of a defined group of individuals through improved care

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