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What is Value-Based Purchasing?

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In January, the Centers for Medicare and Medicaid Services (CMS) proposed policies for implementing a value-based purchasing (VBP) program for Medicare hospitals in accordance with the Affordable Care Act passed by Congress in 2010. Last month, the CMS solidified the VBP program by releasing a final rule that requires performance metrics. The VPB program will go into effect beginning in fiscal year 2013.

Value-based purchasing is a new concept that focuses on increasing the value that comes from purchasing medical supplies in a tangible way that can be assessed through metrics. CMS has helped identify certain aspects of hospital service that can be measured and improved, including everything from product costs and payment expediency to improving patient outcomes and customer service scores.

If the metrics indicate that a Medicare hospital has been demonstrating high levels of performance in these areas by purchasing these products, then the hospital becomes eligible to receive higher reimbursement levels, which translates directly into more money for purchasing. Payments made for hospital performance and quality measures will begin in fiscal year 2013.

So what does the implementation of value-based purchasing mean for hospitals and healthcare service providers? How will it affect healthcare suppliers? As an industry leader in connecting healthcare service providers with purchasers in hospitals, we will be examining the effects of value-based purchasing in respect to quality and cost in the coming weeks.


Next week: How Value-Based Purchasing Will Affect Hospitals and Healthcare Service Providers

Following week: How Value-Based Purchasing Will Affect Healthcare Suppliers