The Relationship Between Quality and Cost: Value-Based Payments

Posted on August 3, 2021

By Carli Friedman, CQL Director of Research

Alternative payment models, such as Medicaid managed care, often shift from fee-for-service (FFS), which focuses on the number of services provided, to value-based payments (VBP), which focus on the quality of the services provided. However, there is little research about VBP for people with intellectual and developmental disabilities (IDD), especially on long-term services and supports (LTSS). “‘In the health system, data such as rates of infection, diabetes, or post-acute hospitalizations may demonstrate quality of care; however, when goals for services relate to independent living, employment, or community participation, valid and reliable metrics are far more challenging to identify. IDD stakeholders fear a return to a ‘medical model’ of services if measurement of quality of care relies primarily on clinical outcomes and does not incorporate a broader definition of quality’ (Lewis et al., 2018, p. 5)” (Friedman, 2020, p. 12).

Because of an expansion of alternative payment models in the LTSS IDD service system, and because of a lack of evidence regarding VBP for people with IDD, the aim of this study by CQL | The Council on Quality and Leadership was to examine the relationship between quality and costs. To do so, we analyzed Basic Assurances^® data, and billing data from 68 human service organizations that supported 6,608 people with IDD.

Our analysis revealed the following seven quality indicators significantly improved our ability to predict LTSS billing (see the full study for more information):

• The organization implements an ongoing staff development program (practice);
• People access quality health care (system);
• The organization monitors Basic Assurances (system);
• Supports and services enhance dignity and respect (system);
• People have meaningful work and activity choices (practice);
• The support needs of individuals shape the hiring, training, and assignment of all staff (practice); and,
• People have supports to manage their own health care (system).

“Our findings revealed quality assurance indicators can account for a significant portion of cost variance. That is, our findings add to literature which notes quality metrics are important – the impact of quality practices on cost is just one of the many forms of evidence to suggest this… Financial incentives alone will not achieve quality person-centered services for people with IDD, particularly as it is difficult to produce cost savings with IDD services. Instead, the primary motivating factor behind managed care and VBP should be improving quality and outcomes; our findings suggest, cost savings will likely follow” (Friedman, 2020, pp. 11-13).