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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. You can find further information on VPB here.

The Value Based Purchasing (VBP) Council

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.

The VBP Council is an important venue to identify value-based purchasing innovations, and the purchaser and health plan partnerships needed for strategy execution and deployment beyond and including the current eValue8 markets. All health plan organizations are eligible for membership.

Benefits of membership include:

  • Participation in three in-person meetings, including travel stipends, to provide feedback that will help set priorities for eValue8 while expanding the conversation to include health plan and purchaser strategies / partnerships to advance health care delivery reform through VBP (e.g., ACOs, PCMH, payment reform, VBID, price and quality transparency)

  • Opportunity to interact with employer/purchaser members of the VBP Council, permitting an exchange of views and learnings with large employers in both the public and private sectors and NBCH member coalition leaders

  • Automatic membership in the NBCH National Health Leadership Council (see description above), including participation in its two annual meetings

  • Eligibility for special discounts related to our Annual Conference

  • Access to the NBCH e-newsletter, Action Briefs, white papers, and public policy updates

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: