Promoting high quality health care: updates from DMAS’ Office of Value-Based Purchasing


Nicole Pasia


As the Department of Medical Assistance Services (DMAS) continues to adjust to an influx of new beneficiaries throughout the pandemic, the Commonwealth’s Medicaid program leadership is driving conversations on value-based purchasing models of care to improve health outcomes and affordability. 


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DMAS’ Office of Value-Based Purchasing (OVBP) oversees financial and non-financial policies that promote high-quality health care provision, which translates to better health outcomes for Virginians on Medicaid, according to an OVBP spokesperson. 

OVBP’s role will be significant as more health care leaders advocate for the move towards value-based care, rather than traditional fee-for-service (FFS) payment models. OVBP said the FFS model lacks quality measurement standards.

“While [FFS] does a good job of defining a lot of discrete elements and services provided, there’s also an underlying financial incentive for higher volume. There’s really no assumption in a base fee for a service model of a certain level of performance or quality.”

OVBP currently employs programs that use quality of care provided as the determining payment factor. For example, the performance withhold program, which applies to managed care organizations (MCOs), withholds 1% of the MCO capitation rate “to be paid back based on quality and performance.” At the end of the year, MCOs will be paid back that rate based on how well they perform in areas such as chronic condition management, and emergency or acute care service follow-ups.  

OVBP said this is especially important when providing services for a community with specific needs. For example, parents and children in Medicaid’s Medallion population may have relatively less complex medical needs than the Commonwealth Coordinated Care (CCC) Plus population, who may need to receive health services in long-term care facilities. 

OVBP also implemented the Clinical Efficiencies Program, which focuses on an MCO’s ability to reduce unnecessary emergency department (ED) visits or acute care services. Data from the Virginia Health Information Agency found that in 2018, 13% of ED visits in the Commonwealth were avoidable, and cost the state $91 million. 

MCOs under the Clinical Efficiency Program are incentivized to reduce these visits by leveraging a coordinated care system or investing in preventative care services.   

However, programs like the OVBP’s episodic payments model — which covers a set of services that treat “episodes” such as asthma exacerbation or an ED visit — lost funding as a result of the COVID-19 pandemic.

OVBP also temporarily switched its Performance Withhold Program model from a pay-for-performance to pay-for-recording last year. Essentially, MCOs would earn back their 1% capitation withholds as long as they provided data on “designated performance measures,” rather than achieving performance targets for specific measures. 

OVBP said remaining flexible and responsive to available data helped the office adapt to the changing COVID landscape. 

“One thing that we kind of always — in any program, really — hold important is [to] make sure you do no harm. Make sure that the incentives you’re creating the program structure are developed in a way that incentivizes the best outcome for the member.”

Looking ahead, OVBP aims to expand the value-based care model, with help from the Virginia General Assembly. On Aug. 5, 2020, Gov. Ralph Northam created a task force on primary care, whose goals include researching alternative, more affordable, care payment models. The task force has worked continuously with DMAS to promote value-based care conversations ahead of the next legislative session.

Specifically, OVBP is working to implement budget language that will establish a pilot program for a value-based care model in nursing facilities. OVBP said the initial methodology for the pilot program is due at the end of the calendar year. 

“We’re very excited about nursing facility value-based purchasing. It’s our first, really, provider-focused program, meaning that this is crafted specifically for the provider, not necessarily the MCO, but the nursing facility itself. There’s been a lot of stakeholder outreach and discussion around that and we are very enthusiastic about the program.”