Are you ready for Value-Based Purchasing?

Written by Symbria Chief Medical Officer Rajeev Kumar, MD, FACP

With an average re-hospitalized patient stay costing tens of thousands of dollars, there is little doubt that all healthcare providers strive to avoid rehospitalizations. The impending roll-out of Value-Based Purchasing (VBP) has added even more pressure to this critical metric and now has providers fixated on readmission rates as even average performances will hurt their bottom line. 

 The concept behind this program is to incentivize healthcare organizations to prevent hospital readmissions by linking reimbursement to performance. VBP is poised to reward top performers in this single metric either in achievement Value-Based Purchasing(comparison to all SNFs) or improvement (enhancing their own readmission numbers). To describe VBP in the simplest terms, Centers of Medicare and Medicaid Services, (CMS), will employ a “withhold” approach by keeping 2% of each provider’s total reimbursement. Providers can then earn that withheld money back and in some cases, exceed their 2% that was withheld, through high Achievement scores and Improvement scores with their readmission rates. If readmission rates are not improved, the providers will lose most, if not all, of the 2%. “To successfully navigate VBP, Advanced BPCI, ACOs and MIPS/MACRA while keeping physicians and hospitals engaged, the primary focus of Post-acute care ought to be prevention of avoidable rehospitalizations.” Says Rajeev Kumar MD FACP, Symbria’s Chief Medical Officer.

The fact is that while a few top performers will see their reimbursements increase, the majority of SNFs will lose 2% from their Medicare reimbursement which will put even greater financial strain on their operations. A key consequence of VBP is that a SNF’s fate as it relates to its withheld 2% as well as the opportunity to earn any of it back in FY 2019 (beginning Oct 1st, 2018), has already been determined. This is because 2019 VBP rates were set when CMS used FY 2017 performance to compare with the base year of 2015.  Further, it is likely that by the time providers begin to implement changes to improve their readmission rates, reimbursement rates for FY 2020 will have also been determined based on their performance during FY 2018. What SNFs can do urgently is to begin focusing on not only understanding VBP but taking steps to improve their readmission rate, so they can either continue to recover or begin to recover some of that 2% in future years.

The healthcare industry continues to evolve, and CMS continues to raise the bar on value and quality for all providers. We should embrace this paradigm shift and begin preparing to ensure that we are supporting the quality of care that our patients deserve.