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Value Based Purchasing

June 1, 2023

Value based purchasing is a government mechanism designed to reduce healthcare costs.

Value based purchasing reimbursement has been developed by the Federal government with the cooperation of 3rd party payors.

Performance based programming under this type of reimbursement has been linked by the government and 3rd party payors to payment for services.

The idea behind these effort is based on determining a set of predefined performance measures aimed at achieving better value and lower costs for payment of services. Financial incentives for providers are meant to lower payment costs to providers and is now driving provider improvements in quality outcomes and slowing the growth in health care spending.

What should be of major strategic concern to behavioral health providers today – is the new reality that the National Institute of Health (NIH), and the Centers for Medicare and Medicaid Services (CMS) have already been moving forward over the last five years with testing of these advanced payment models, starting with “pay- for- performance programs”.

The design features and the context in which these programs are implemented will become critical determinants of an individual Health program’s financial success or failure.

Current efforts are based on determining a set of predefined performance measures aimed at achieving better value for reimbursement monies spent. The overall focus is on driving provider improvements in quality outcomes and slowing the overall growth in health care spending.

All healthcare providers should look at value based purchasing as changes in a mandatory pay-for-performance measure.