HCMFPX5314_TrueloveElizabeth_Assessment3-1

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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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coordination and patient engagement supported by appropriate financial and care models” (American Hospital Association, 2023) . Risk stratification is used in shared risk models and consists of assigning all patients a risk status. The risk status, also know as a RAF score or Risk Adjustment Factor, is assigned to patients based on lifestyle, health status, and medical history. RAF plays into population health management and shared risk models by working to identify patients that are at risk and most likely to benefit from care management services (McNemar, 2021) . Shared risk agreements utilize population health management tools and components like the RAF score to enhance quality of care, improve overall health status, and lower healthcare cost for patients. Implications of Shared Risk Models on Management Practices and Decisions There are various implications on management practices and decisions when implementing shared risk models. Inevitably, there is more financial risk associated with shared risk models, which requires close attention from leadership. As with value-based purchasing models, it is imperative for staff to have the knowledge, access to tools, and resources readily available to appropriately manage the population. While there is much more risk associated with shared risk, there is ultimately a greater opportunity for financial reward if quality metrics are met and cost of care is reduced. For most organizations, creating a designated population health management team is a crucial role in successful implementation of value-based strategies. Developing a dedicated team to oversee the strategy and operations of population health does pose additional financial implications to the organization. However, if the team is successful in their oversight and strategy, it can lead to a greater financial reward and offset the costs associated with creating new roles. Maximizing analytical technology and EHR capabilities is another implication of shared risk models on management practices and decisions. Adding enhanced technological capabilities affects financial planning and budgeting, but having the right tools allows for more efficient and effective management of the patient population. Strategies to Develop Effective Organizational Culture One major component of successful implementation of any new strategy is to have a strong organizational culture. Implementing value-based purchasing models and shared risk models involves shifting the organization’s mindset from volume to value. Eliminating fee-for- service and developing a value-based care mindset requires a culture and belief to provide the highest quality of care to patients, while making every effort to minimize the overall cost. According to Healthcare Experience Foundation, Beryl Institute’s 2017 Benchmarking Study: The State of the Patient Experience 2017: A Return to Purpose, reported findings of over 1,600 respondents cited organizational culture as the biggest driver and roadblock to patient experience efforts (Healthcare Experience Foundation, 2017) . Driving positive organizational culture can be attained by ensuring management is aligned with the overall mission and values and displays this culture in patient and staff interactions (Carney, 2011) . In addition to modeling the organization’s mission and values, management should consider hiring and retaining employees that have personal values similar to the organization’s values. Effective organizational culture also comes with making employees

feel valued and that their role is a vital part of being successful. In doing so, employees feel a sense of accountability and autonomy and are more likely to embrace the mission and values of the organization leading to effective strategic implementation.

References American Hospital Association. (2023). Population Health Management . Retrieved from AHA Center for Health Innovation: https://www.aha.org/center/population-health-management Carney, M. (2011). Influence of organizational culture on quality healthcare delivery. International Journal of Health Care Quality Assurance , 523-539. Centers for Medicare & Medicaid Services. (2023, September 06). Hospital value-based purchasing program . Retrieved from CMS.gov: https://www.cms.gov/medicare/quality/initiatives/hospital- quality-initiative/hospital-value-based-purchasing Centers for Medicare & Medicaid Services. (2023). Linking quality to payment . Retrieved from Data.CMS.gov: https://data.cms.gov/provider-data/topics/hospitals/linking-quality-to-payment Centers for Medicare & Medicaid Services. (2023). Risk arrangements in health care . Retrieved from CMS.gov: https://www.cms.gov/priorities/innovation/key-concepts/risk-arrangements-health- care Centers for Medicare & Medicaid Services. (2023). Value-based programs . Retrieved from CMS.gov: https://www.cms.gov/medicare/quality/value-based-programs Damberg, C. L., Lovejoy, S. L., Mandel, D., Martsolf, G. R., & Sorbero, M. E. (2014). Measuring success in health care value-based purchasing programs. Rand Health Quarterly , 9. Healthcare Experience Foundation. (2017, July 25). Can organizational culture influence the healthcare experience? Retrieved from Healthcare Experience Foundation: https://healthcareexperience.org/can-organizational-culture-influence-the-healthcare- experience/ HealthCare.gov. (2023). Value-based purchasing (VBP) . Retrieved from HealthCare.gov: https://www.healthcare.gov/glossary/value-based-purchasing-vbp/#:~:text=Linking%20provider %20payments%20to%20improved,reward%20the%20best%2Dperforming%20providers. LaPointe, J. (2017, March 24). Best practices for value-based purchasing implementation . Retrieved from Revcycle Intelligence: https://revcycleintelligence.com/features/best-practices-for-value-based- purchasing-implementation McNemar, E. (2021, December 20). How population health, risk stratification support value-based care . Retrieved from Health IT Analytics: https://healthitanalytics.com/features/howpopulation- health-risk-stratificationsupportvalue-based-care U.S. Department of Health & Human Services. (2017, September 19). Hospital Quality Initiative - Hospital value-based purchasing . Retrieved from U.S. Dept. of Health & Human Services: https://www.hhs.gov/guidance/document/hospital-quality-initiative-hospital-value-based- purchasing-0 UnitedHealthcare. (2023, April 10). Understanding value-based care . Retrieved from UnitedHealthcare: https://www.uhc.com/news-articles/benefits-and-coverage/value-based-care

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xtellignet Healthcare Media. (2023, December 11). Understanding the value-based reimbursement model landscape . Retrieved from Revcycle Intelligence: https://revcycleintelligence.com/features/understanding-the-value-based-reimbursement- model-landscape#:~:text=Through%20shared%20risk%20models%2C%20also,lower%20than %20the%20set%20benchmarks.

HCMFPX5314_TrueloveElizabeth_Assessment3-1

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