Financial impact of OASIS-E and value-based purchasing

The theory behind value-based purchasing is that agencies will be rewarded for better quality care and outcomes. The model is designed to:

• Provide incentives for better quality care and greater efficiency
• Study and test potential quality and efficiency measures for the care setting
• Enhance the current public reporting process

Study and testing

We started hearing a lot about home health value-based purchasing back in 2014. We also understood that the Centers for Medicare and Medicaid Services (CMS) would be doing a subset of testing around quality control measures. In 2016, the study and testing began in nine states: Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee, and Washington. The study ran for five years. It showed the original home health value-based purchasing model resulted in an average 4.6% improvement in a home health agency’s total performance score (TPS). That resulted in an annual savings of $141 million to Medicare without evidence of adverse risk. And with reductions in unplanned acute care hospitalizations and SNF stays, inpatient and SNF spending were also reduced.

Based on these findings, the U.S. Secretary of Health and Human Services determined that expansion of the original HHVBP model would provide ongoing reductions in Medicare spending while improving the quality of patient care. And in October of 2020, CMS certified the expansion of the model, confirming that it would produce additional savings when it reached all states.

Agency experiences with HHVBP

Two large agencies (one in North Carolina and one in Washington) that participated in the study reported the same outcomes for the first year, 2017. While the year was difficult, the agencies didn’t expect a reduction in payments.

In the way of preparation for HHVBP, one of the agencies spent more than $1 million preparing staff to drive better outcomes. The other agency spent less money but conducted extensive staff education and training around the value-based care model. For both agencies, the total patient experience was the bottom line — including HHCAHPS.

Both agencies also worked to adapt processes to improve reimbursement and outcomes, and each year the value-based model worked a little better. In the end, both agencies performed better than half the organizations that participated in the study, demonstrating that preparation and education go a long way in driving better results. It all comes down to performance, and better performers are going to see payment increases while lower performers are not.