Value-Based Purchasing

[Summary in Progress]


Value-Based Purchasing Literature

(358) Bach PB, Pearson SD. Payer and Policy Maker Steps to Support Value-Based Pricing for Drugs. JAMA. 2015; 314(23):2503-2504. doi: 10.1001/jama.2015.16843

PMID: 26619354


  • In 2014, drug spending surged by 12.5% whereas all other parts of health care only increased by 5%.
  • Efforts are being made to determine optimal drug pricing proportional to the benefits of the drug compared to alternative treatments.
  • Various incentives could be offered to drug companies to increase the likelihood of their products being offered at benefit-proportional prices. The authors’ provide incentive possibilities such as:
    • Private insurance companies could incorporate low-value drugs into their benefit structure accordingly, with high tier-placement resulting in larger co-insurance burdens.
    • Medicare should take a similar approach by requiring formulary inclusion in Part D for value-priced drugs and by reducing co-insurance for such drugs in Part B.
    • Medicare should also base payments to risk-sharing entities such as accountable care organizations, on the value price of the drug as opposed to the market price.
    • Drugs at value-based price would be exempt from mandatory drug discount programs
    • FDA could take action by applying priority review status to potential competitors of drugs with low-value pricing and also extend the exclusivity period for drugs with appropriate value-based pricing.

Significance to Literature:

The authors provide recommendations for payers and regulators to incentivize pharmaceutical companies to offer their drugs at value-based prices.


(361) Gupta R, Arora VM. Merging the Health System and Education Silos to Better Educate Future Physicians. JAMA. 2015 Dec 8; 314(22):2349-50. doi: 10.1001/jama.2015.13574

PMID: 26647251


  • Academic Medical Centers (AMCs) have a unique responsibility to provide the next generation of physicians with the skills to effectively practice value-based care
  • In order for AMCs to accomplish their dual missions of high quality care and promoting new models of value-based care and population health, the authors offer three steps to follow:
  • Support physician leaders to bridge the gap between graduate medical education and the health system
  • Promote programs that directly link physician leaders with residents in order to promote innovation and culture change
  • Engage residents in projects that will serve the missions of both the education and health sectors of AMCs

Significance to Literature:

As the US health system is shifting from volume to value, AMCs should align efforts between health system and graduate education leaders to produce physicians well versed in value-based care.


(382) Ryan et al. The Early Effects of Medicare’s Mandatory Hospital Pay-for-Performance Program. Health Serv Res. 2015 Feb;50(1):81-97. doi: 10.1111/1475-6773.12206. Epub 2014 Jul 15.

PMID: 25040485


  • Analysis of the impact of hospital value-based purchasing (HVBP) on quality performance and patient satisfaction during its original implementation period (July 2011-March 2012)
  • HVBP was established by the Affordable Care Act and ties Medicare payments to quality performance for all acute care hospitals in the U.S.
  • Critical access hospitals and hospitals in Maryland were exempt from HVBP
  • Data was pulled from Hospital Compare from 5 years before implementation of HVBP to three quarters after
  • Performance was compared on 12 clinical process and 8 patient experience measures between those hospitals exposed to HVBP and those that were exempt
  • Results actually showed a slight decrease in both quality of care and patient experience associated with HVBP introduction in acute care hospitals
  • Notably, there was evidence for clinical process measure improvement prior to the implementation of HVBP, possibly driven by the expectation of HVBP penalties

Significance to Literature:

Early stages of HVBP implementation has not been associated with an improvement in clinical process or patient experience