Are they the same thing?

There is a misunderstanding in the home health industry that the Value-Based Purchasing Demonstration is in fact Pay-for-Performance; albeit under a different title.

  • Well, that perception is incorrect.

The Value-Based Purchasing Demonstration is similar to Pay-for-Performance, but it does not include one of the biggest fundamentals of Pay-for-PerformanceThe piece lacking in the Value-Based Purchasing Demonstration is the financial componentThe Value-Based Purchasing Demonstration is all about quality of patient care.  Quality as identified by various mandated reporting metrics, as well as the survey responses of a sample of beneficiaries serviced.  So the Value-Based Purchasing Demonstration is 100% clinically focused.  I am not saying there is anything wrong with that, as that is what our industry was designed to do: provide quality healthcare services to the beneficiary/client at their place of residence.  But for the Value-Based Purchasing Demonstration, financial reporting does not come into playThere are financial bonuses and penalties applicable to the Value-Based Purchasing Demonstration, but no financial reporting requirements!  Hence, an agency could throw 40, 50+ visits at every patient episode which should enable them to generate top scores across the board for their quality outcome measures.  However, that kind of approach to providing patient care will likely bankrupt the agency. So, in that situation they should generate great clinical outcomes, and as far as the Value-Based Purchasing Demonstration, they would be considered a top-tier agency.  Yet their financial outcomes would be abysmal; undoubtedly leading to financial failure and probably bankruptcy.  So the Value-Based Purchasing Demonstration (VBPD) is not the latest and greatest iteration of Pay-for-Performance (PFP).

In fact, ACOs would be more in-tune with the PFP model than the VBPD (however, ACOs have their own problematic issues).  The true premise of the ACO model is to try to provide high-quality care in the most cost-efficient manner possible for the entire patient encounter; regardless of the setting.  Therefore, any ACO that doesn’t aggressively look to incorporate home health services as a significant part of their patient-care cycle is shortsighted and destined to be inefficient.  Any ACO that’s actually trying to incorporate a best-practices approach will highly leverage home health services.  So what are the home health agencies (HHAs) like that the ACOs will look for?  Remember, that the ACO approach is about risk-sharing/gain-sharing.  So the ACOs would want to align with HHAs that help minimize risk, all the while, helping to maximize gain.  What will those HHAs be like?

First, they will have to be high-quality outcome providers!

  • ACOs will want to align with HHAs that are in the 3.5 to 5.0 Star Ratings level as per Home Health Compare
    • Lower Risk with patient-outcomes
  • As opposed to aligning with HHAs that are in the 0.5 to 2.0 Star Range
    • Higher Risk with patient-outcomes
  • So from this perspective, ACOs would follow the VBPD approach for aligning with HHAs
    • The better the HHA does under the VBPD, the more leverage the HHA would have negotiating with the ACO!

But they would take it a step further than the VBPD perspective, as they will want to consider the HHA’s financial outcomes (i.e., profitability) as well.  Earlier, I noted that an agency could approach the top-tier of quality outcomes by throwing a huge number of visits at each patient episode.  However, would anyone consider this approach cost effective.  It might create a desired result for the VBPD, but from a PFP perspective would be totally inefficient financially (i.e., a poor utilization of resources).  So, from a PFP perspective, what type of HHAs would the ACOs look to align with?

  • ACOs will want to align with HHAs that generate the highest-profit margins
    • As these HHAs would help maximize gains of the ACO
  • As opposed to those HHAs that generate negligible profits, or even losses
    • As these HHAs would minimize any potential gains; if not completely eliminate them
  • So this is a perspective that the ACOs would follow that is not considered under the VBPD
    • And the more profitable the HHA would be, the more leverage they would have negotiating with the ACO!

Therefore, the ACO approach (even with its inherent flaws) uses a perspective that is more in-line with PFP (considering both clinical and financial outcomes) as opposed to the VBPD (which focuses solely on clinical outcomes).

  • As the ACOs would want to deal with high-quality providers (4-5 Stars), that are also agencies that generate strong profit-margins.

Therefore, the VBPD is not the same as PFP.  The VBPD is entirely focused on the clinical outcomes, Home Health Compare Scores/STAR Ratings and completely ignores the financial-outcomes of the agency.  The VBPD is a step towards PFP, but it is not PFP by another name!