Hospice Value-Based Purchasing Program: A Model Design

With the implementation of the Affordable Care Act, the U.S. government committed to a transition in payment policy for health care services linking reimbursement to improved health outcomes rather than the volume of services provided. To accomplish this goal, the Department of Health and Human Services is designing and implementing new payment models intended to improve the quality of health care while reducing its cost. Collectively, these novel payment models and programs have been characterized under the moniker of value-based purchasing (VBP), and although many of these models retain a fundamental fee-for-service (FFS) structure, they are seen as essential tools in the evolution away from volume-based health care financing toward a health system that provides “better care, smarter spending, and healthier people.” In 2014, approximately 20% of Medicare provider FFS payments were linked to a VBP program. The Department of Health and Human Services has committed to a four-year plan to link 90% of Medicare provider FFS payments to value-based purchasing by 2018. To achieve this goal, all items and services currently reimbursed under Medicare FFS programs will need to be evaluated in the context of VBP. To this end, the Medicare Hospice benefit appears to be appropriate for inclusion in a model of VBP. This policy analysis proposes an adaptable model for a VBP program for the Medicare Hospice benefit linking payment to quality and efficiency in a manner consistent with statutory requirements established in the Affordable Care Act.