What Is Value-Based Purchasing
Value-based purchasing (VBP) ties a portion of Medicare reimbursement to the quality and efficiency of care delivered, rather than solely to service volume. RHIA candidates must understand the major CMS value-based programs affecting hospital reimbursement and the role coded and quality data plays in determining payment adjustments under each.
Major CMS Value-Based Programs
- Hospital Value-Based Purchasing Program: adjusts inpatient PPS payments up or down based on performance across clinical outcomes, patient experience, safety, and efficiency measure domains
- Hospital Readmissions Reduction Program: reduces payments to hospitals with higher than expected 30-day readmission rates for specific conditions, such as heart failure and pneumonia
- Hospital-Acquired Condition Reduction Program: reduces payment for hospitals ranking in the lowest-performing quartile on hospital-acquired condition measures
- Merit-based Incentive Payment System (MIPS): adjusts physician payment under Medicare Part B based on performance across quality, cost, improvement activities, and promoting interoperability categories
The Shift from Volume to Value
These programs represent a broader shift away from traditional fee-for-service incentives, which reward volume of services, toward payment models that reward quality outcomes and cost efficiency. HIM professionals support this shift by ensuring the underlying coded and quality data used to calculate performance scores is accurate and complete, since inaccurate data can unfairly penalize an organization's reimbursement.
Role of Present-on-Admission Indicators
Present-on-admission (POA) indicators are critical to several value-based programs, since a hospital-acquired condition is defined by comparing conditions coded as present on admission against those that developed during the encounter. Incorrect POA assignment can misclassify a condition as hospital-acquired when it was not, unfairly affecting the organization's HAC Reduction Program performance and payment.
Alternative Payment Models
Beyond traditional VBP programs, CMS and commercial payers increasingly use alternative payment models such as accountable care organizations and bundled payment arrangements that share financial risk and reward with providers for managing total cost of care across a population or episode, further reinforcing the shift toward value-based reimbursement.
Exam Tips
Expect questions distinguishing the major CMS value-based programs and their specific measure focus. Also expect questions connecting POA indicator accuracy to Hospital-Acquired Condition Reduction Program outcomes.
Key takeaway: Value-based purchasing programs link reimbursement to quality performance, and accurate coded data, particularly POA indicators, is essential to fair program outcomes within the Revenue Cycle domain.