Melissa Stratman

30 Oct, 2017
Follow Coleman!

Melissa Stratman

30 Oct, 2017
Follow Coleman!

Overview of Value Based Payment in Primary Care

What is Value Based Payment (VBP)?
The Centers for Medicaid & Medicare Services had initially announced that it had plans to have 90% of all payments directly tied to value and quality by 2018. These payment changes were initially designed to affect hospitalizations in select areas of service, including but not limited to orthopedic care and surgery. While the ACA’s future and CMS’s mandate is in a state of flux, the overarching goal of moving to a VBP system remains the same: to reduce overall costs while increasing the outcomes-based quality of care provided in order to reward higher quality of care. While the vision itself is not new, this approach is an innovative attempt to contain costs while moving American medicine forward into what is sometimes referred to as the quadruple aim:

  1. Improve health of populations
  2. Increase patient experience (quality and satisfaction)
  3. Reduce cost of health care per capita
  4. Improve the work life of health care workers

Value Based Payment changes have followed the passage of certain laws and plans including the Affordable Care Act (ACA), Medicare Access and Child Health Plan Reauthorization Act (MACRA), and Merit Based Incentive Payment System (MIPS). While the political future of the ACA, otherwise known as ObamaCare, remains uncertain, it appears that specific tenets of this act, including a system of payment reform that rewards health care providers and health care systems that produce better quality outcomes for lower costs, will likely be enforced.

How is VBP different than what we have now?

In private practice as well as in Federally Qualified Health Centers (FQHCs), the current payment structure is centered around visits. This system is known as Fee for Service. In a Fee for Service world, a practitioner sees a patient, provides a service and then bills for a fee that is directly tied to that service. The fees can vary based upon the services performed (within a window of reasonable and customary charges) and the payment amounts can vary based upon the services billed and the reimbursement rate negotiated between a particular payor and provider. However, in the current Fee for Service world, there is not a direct link between the outcome achieved as a result of the care provided and the payment; there is only a direct link between the service provided, its corresponding billing code and the payment.

Payment reform and VBP seeks to move the dial on quality outcomes by initially providing a payment bonus to providers who produce better quality outcomes. This payment is not scheduled to replace Fee for Service. However, it is anticipated by some in the field that as better health outcomes emerge, this evolution could result in an overall cost savings nationally. These savings could allow Value Based Reimbursements to rise which could potentially push Fee for Service reimbursements down. This notion of decreasing Fee for Service while increasing Value Based Payments is seen by some as a system-wide attempt to reward those offices that produce better health outcomes for their patients.


Coleman DPI™ or Dramatic Performance Improvement™ approaches are very successful in this transition. Unlike many other lean style or rapid cycle improvement approaches, DPI™ was born in health care and uses health care specific techniques as well as engagement from both management and front line staff in a top down, bottom up approach to ensure adoption of and adaptation to current best practices.


DPI™ training:

  • Provides change management support and training
  • Tailors best practices to meet the needs of patients and staff
  • Adjusts the model of care to meet current staffing patterns as well as the architecture of the practice
  • Builds and establishes techniques for reaching and adhering to improved processes
  • Creates stronger care teams to inform any redefinitions of staff roles


Why is Value Based Payment important in outpatient care/ambulatory care?

The Value Based Payment system is a Quality Improvement Test or Plan Do Study Act (PDSA) for a new way of paying practitioners for health care delivery. While no one is saying that primary care practices will lose Fee for Service funding, primary care and other ambulatory care services would be wise to prepare themselves to monitor, report and enact process changes and approaches that will focus as much if not more on improving quality metrics as they do on producing individual billable encounters. This is a tremendous shift for ambulatory care practices that have always had to work to increase the number of billable visits while holding costs steady and simultaneously maintaining quality metrics. Health care practitioners work to improve quality outcomes as part of the moral obligation of the profession and of the industry; however, this effort has not always been rewarded financially in the past as it may be in the future.

The tension that has historically existed between clinical outcomes and finance could undergo a full paradigm shift in the coming years as clinical and financial departments and leadership must work more closely together with the support of human resources, Information Technology (IT), and process and operations teams in order to produce much better clinical outcomes while holding costs steady.

Some may wonder how health care providers can impact care outcomes in a more significantly measurable manner. While patients and providers are always partners in a patient’s health care, providers are increasingly finding ways in which they can help patients achieve higher quality outcomes. In some cases this can be achieved through better provider expertise and experience, better practices and processes (similar to the improvements made to create a systematic checklist to ensure that surgical instruments or sponges are not left inside patients before sewing them up). In other cases this is achieved through stronger outreach, patient follow up and a more thorough set of comprehensive questions during their care (e.g. finding out more about patients’ living conditions or social situations before sending them home to carry out a certain series of steps that are often considered part of a routine home care regimen.)

With Value Based Payment changes, it is critical to understand how to best prepare for success in this changing payment system.

Read the second article in this series : How to Prepare for Value Based Payments.



Affordable Care Act.

Centers for Medicaid and Medicare Services.

Coleman Associates. DPI™ (Dramatic Performance Improvement) Collaborative

Institute for Health Care Improvement.

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