Value-Based Purchasing

Centers for Medicare & Medicaid Services, the federal agency that runs Medicare, is changing the way Medicare pays for hospital care by rewarding hospitals for delivering services of higher quality and higher value. The Hospital Value-Based Purchasing Program, established by the Affordable Care Act, is a pay-for-performance approach designed to promote better clinical outcomes for hospitalized patients and improve their experience of care during hospital stays. 

Under this program, Medicare makes incentive payments to hospitals based on:

  • How well they perform on each measure, or
  • How much they improve their performance on each measure compared to their performance during a baseline period.

Milwaukee Area Scorecard 

Released in October 2012, the first Value-Based Purchasing scores include clinical process and patient experience measures. The clinical process measures address specific care related to heart attacks, heart failure, pneumonia and surgery. Experience measures focused on patient satisfaction with communication, responsiveness, pain management and the hospital environment, among other measures.

The benchmark was “every patient, every time” and failing even once meant a lower score. The bar continues to rise with more measures being added, and a shift from clinical process measures to outcomes. We will continue to adjust how we deliver care to achieve a high level of performance.

Value-Based Purchasing Total Performance Score

What the Data Show

All three Froedtert & the Medical College of Wisconsin hospitals scored well above both state and national averages in this first report. 

Froedtert Hospital outscored all Milwaukee area hospitals except for two small specialty orthopaedic hospitals, and ranked in the top 25 percent of the nation’s participating hospitals. Community Memorial Hospital ranked in the top five and St. Joseph’s Hospital was among the top 10 area hospitals.

More About Value-Based Purchasing

Launched in early 2011 as part of national health care reform legislation, the Value-Based Purchasing program uses financial incentives to encourage high-quality, cost-effective hospital care. The government is the largest purchaser of health care, so it wants to know the value it is getting for its purchase. 

Employers also invest in health care through benefit plans for their employees. Value-Based Purchasing allows purchasers of health care to compare the quality of hospitals on the same set of measures. Since quality leads to more cost-efficient care, these measures are also indicative of the cost of the care a health system provides.

Value-Based Purchasing metrics are one way we can demonstrate to employers the quality of the care we provide. By ensuring quality, we are able to bend the curve of health care costs.