Tracking healthcare metrics in the age of value-based payment, what to know

The Department of Health and Human Services threw down the gauntlet in late January when Secretary Sylvia Burwell announced its intention to increase value-based purchasing dramatically in the next few years.

HHS plans to move its payment system to 30 percent value-based in 2016 and 50 percent by 2018. It also plans to have 95 percent of fee-for-service plans include some sort of value and efficiency components by 2018.

The industry has slowly been moving in this direction for some time, nudged further by the Affordable Care Act. But what does it mean for hospital CFOs trying to build budgets based on schizophrenic payment systems? Volume will no longer be king when it comes to gauging success and financial planning.

The core challenge when converting to a value-based, rather than fee-for-service, system is the lack of consistency in payment measures. Unlike a set fee for a particular DRG code, value is much more ethereal.

“Physicians and hospitals are doing things routinely but don’t really know what the ultimate outcomes are,” said Doug Fenstermaker, managing partner and executive vice president of healthcare for Warbird Consulting Partners, LLC. “If they did hip replacement surgery, how do they know if the patient was better or worse off after doing it? There are more questions than answers right now.”