In an effort to control soaring federal healthcare spending and improve the quality of care,[i] value-based payment (VBP) models reimburse healthcare providers according to measurable performance (quality, patient experience, cost), rather than the volume of services provided.[ii]  The development and use of these models, also called pay-for-performance, expanded greatly with the 2010 Patient Protection and Affordable Care Act, which initiated a VBP system for acute-care hospitals receiving Medicare funds.

VBP models now span the healthcare continuum and will continue to expand. With federal and state payers leading the way, private insurers are also entering this realm.  In 2017, Forbes reported that almost 50% of insurer reimbursements were  value-based.  UnitedHealthcare, Aetna, and Humana are among the many commercial insurers that are tying provider payment to VBP arrangements.

What’s happening now and coming next?

DSRIP. New York State’s own venture into value-based payment is its ambitious DSRIP program, a five-year initiative aimed at transforming the state’s Medicaid program, promoting community-level collaboration, increasing access to primary care and care coordination, improving health outcomes, and preventing avoidable hospitalizations. Now in its fifth year, DSRIP payouts are based upon achieving predefined results in system transformation, clinical management and population health. By 2020, New York State Medicaid plans to cover 80 percent of primary care services under VBP arrangements.

Since DSRIP’s launch, the 1199SEIU Training and Employment Funds have provided Performing Provider Systems (PPS) with workforce development strategy, curriculum development and training. In the first six months of 2019, TEF trained more than 7,000 health care workers to support DSRIP goals.

Nursing Homes.  On October 1, 2019, the Center for Medicare and Medicaid Services (CMS) will implement its new Patient Driven Payment Model (PDPM)[iii]. The PDPM creates a new classification system that places patients into payment groups based on patient characteristics and care needs. This  VBP model is intended to help nursing facilities improve the patient experience, enhance the health of populations and reduce the per-capita cost of health care.[iv]  For more information about PDPM, visit the CMS website.

The Labor Management Project (LMP) is currently assisting nursing home managers and staff in New York to navigate the complex PDPM changes and develop sustainable, robust Quality Assurance and Performance Improvement (QAPI) programs that maximize reimbursements. 

Hospitals.  CMS’ Hospital VBP program began in 2013 and links Medicare payment to quality performance. This year  approximately $1.9 billion in value-based payments are available to U.S. hospitals.[v]  Hospitals can gain or lose up to two percent of their Medicare reimbursement based upon their performance on established measures across four domains: clinical care, safety, person and community engagement, and efficiency and cost reduction.[vi]  Over time, CMS has added new safety and outcome measures, while maintaining the relative weight of HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems).

Since the onset of the VBP program, the LMP has worked with many hospitals to help improve patient experience, patient safety, and service delivery efficiency through process improvement and labor management collaboration.  Click here to read some of our Partnership Success Stories.

Ambulatory Care Centers.  While the CMS value-based payment model for Medicare began in hospitals, it will continue making inroads into ambulatory care.  Many ambulatory care centers are voluntarily participating in the collection and reporting of CG-CAHPS (clinician and group) surveys that measure the patient experience. The New York State Department of Health already requires some practices participating in the DSRIP program to submit the Visit version of the CG-CAHPS Survey. Ambulatory care centers are anticipating greater emphasis on VBP from all payers – federal, state, and private. In October 2018, the national Nurse-Led Care Consortium published Preparing for Value-Based Care: A Guide for Health Centers. The report heralds the introduction of new CMS payment models that will affect providers serving Medicare and Medicaid recipients.

The LMP supports ambulatory care centers through training and process improvement conducted in the context of labor and management collaboration. For instance, the LMP worked with Maimonides Medical Center’s Ninth Avenue Women’s Primary Care Center to reduce patient cycle time (arrival to discharge), the Montefiore Hutchinson Urology Department to improve patients’ wait experience, and with ambulatory care centers within the Brookdale University Hospital Medical Center to develop process improvement skills to enhance the delivery of quality care, improve patient satisfaction and increase operational effectiveness.


[i] Chee T.T., Ryan A.M., et. al.  Current State of Value-Based Purchasing Programs. Circulation. Vol. 133, No. 22. 2016.

[ii] Conrad DA, et al. Emerging Lessons from Regional and State Innovation in Value-Based Payment Reform: Balancing Collaboration and Disruptive Innovation. The Milbank Quarterly, Vol. 92, No. 3, 2014.

[iii] Center for Medicare and Medicaid Services. Patient-Driven Payment Model: Frequently Asked Questions. Last revised April 11, 2019.

[iv] Berwick DM, Nolan TW, Whittington J. The Triple Aim: Care, health, and cost. Health Affairs, Vol. 27, No.3, May/June 2008.

[v] Joszt Laura. Majority of Hospitals Will Receive Incentive Payments in 2019 Hospital VBP Program. Newsroom published on: December 4, 2018.

[vi] Centers for Medicare and Medicaid Services. CMS Hospital Value-Based Purchasing Program Results for Fiscal Year 2019. Published on December 3, 2018. Accessed online at:

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