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Realizing the Promise of Value-based Purchasing

Analyzing Current Practices

Participants were asked to analyze their own States' current value-based purchasing efforts and discuss ways they can fully realize their purchasing objectives. Small State team-specific groups met and then convened as a whole to highlight some of the strengths, weaknesses, threats, and opportunities relevant to their purchasing strategies.

Some of the strengths underlying States' present purchasing arrangements include:

  • A heightened awareness of quality issues in many jurisdictions, and more leaders and purchasers focusing on value over cost.
  • Several States are looking to ensure more competition and choice of care across their regions.
  • Performance measures are being incorporated into provider agreements.
  • States are collecting a lot of data including Health Plan Employer Data and Information Set (HEDIS®) measures and Consumer Assessment of Health Plans (CAHPS®) and are sharing these across State agencies.

These strengths are often offset by weaknesses that preclude States from being able to achieve their health care purchasing objectives. The weaknesses most often identified fall into four major areas:

  1. Poor communication. Plans and agencies lack communication and the ability to coordinate around issues of quality.
  2. Data collection issues. States lack data (e.g., regarding variations in patterns of care, or outcomes at the provider level), have inefficient means to collect data, and an excess of data that can not be used for quality improvement.
  3. Challenges associated with designing effective value-based purchasing strategies in rural areas. Providers are reluctant to engage in value-based purchasing, and provider choice and health maintenance organization (HMO) penetration are lacking in these areas.
  4. Problems with disseminating information. Information is not being shared broadly enough to reach consumers and decisionmakers within agencies.

A number of environmental obstacles were identified that also affect States' purchasing initiatives. One State faces potential negative actions from providers when it raises concerns with them about saving money, while another State perceived problems arising from State medical societies and hospital groups coalescing to blunt purchasing legislation. Budget restrictions (i.e., spending caps) also pose a very real threat that prohibits States from using funds as they would like.

States have begun to address these threats by acting upon opportunities that may allow them to focus more on quality of care. Many States are infusing more value-based principles into their purchasing efforts by:

  • Becoming actively involved in coalition efforts, increasing their leverage in the health care market by coordinating with other purchasers.
  • Developing report cards and other reports to assist in making policy changes.
  • Examining the potential for telemedicine, e-health, and other technologies to help increase access to care in rural areas.

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AHRQ Advancing Excellence in Health Care