What is Value-based Purchasing?
When talking about programs and strategies that promote value in health care, there are a variety of terms and acronyms used including value-based purchasing (VBP) and value-based insurance design (VBID).
Value-based Purchasing: A strategy used by employers and the Federal government to maximize their market power as a force to promote quality and value of health care services. The overarching goal is a health care system, built on value, with a clear return for every dollar spent.
The NBCH Value-based Purchasing Council, a group of purchasers, coalitions, health plans, and other stakeholders, offers a more detailed definition: a demand-side strategy to measure, report, and reward excellence in health care delivery, taking into consideration access, price, quality, efficiency, and alignment of incentives. Effective health care services and high performing health care providers are rewarded with improved reputations through public reporting, enhanced payments through differential reimbursements, and increased market share through purchaser, payer, and/or consumer selection.
It is important to note that VBP is different from limited efforts to negotiate price discounts, which historically have reduced costs but did little to ensure that quality of care was improved.
Key elements of value-based purchasing:
• measuring and reporting comparative performance
• paying providers differentially based on performance
• designing health benefit strategies and incentives to encourage individuals to select high value services and providers and better manage their own health and health care
Examples of value-based purchasing programs that NBCH and its purchaser-member coalitions have either participated in or developed:
To learn more about the Value-based Purchasing Guide, please check out the “About the VBP Guide” page.