Understand how quality is measured and used in different VBP models

Quality measures are a key component of any VBP arrangement. Important questions to consider include:

  • Are the measures aligned with the provider’s VBP and clinical goals?
  • What data are needed to meet measurement requirements? Will the provider need to provide supplemental data?
  • What kind of data sharing is required? Does the measure set require changes to my EHR?
  • How many and which measures are tied to the financial incentives or payment arrangements?
  • To what extent are different payer VBP measures and benchmarks aligned?
  • How are provider performance benchmarks established?
  • Does the payment arrangement recognize both achievement and improved performance?
  • Are measures weighted equally in terms of financial calculations in the payment arrangement?
  • Are incentives tied to provider and/or payer activities or investments in delivery system reform?
  • How are performance benchmarks established?

There are multiple approaches payers may adopt to set performance benchmarks and assess provider performance on quality and patient experience measures. For example, a VBP arrangement may measure your performance to targeted metrics based on:

  • A specific, absolute performance threshold (sometimes referred to as an external benchmark). Standardized HEDIS measures are often reported in percentile rankings to a specific benchmark.
  • Relative performance to other providers/peers.
  • Improvement targets relative to your own past performance may evaluate a provider entity’s absolute percentage point improvement, gap reduction between the target and the performance rate, or achievement of statistically significant improvement to define VBP improvement benchmarks.


Six years ago, PacificSource Community Solutions – Columbia Gorge CCO began partnering with primary care providers and Central Oregon Independent Practice Association to annually select an aligned set of quality improvement measures (QIMs) for use in the capitated VBP arrangement. Providers convene at 7 am three times over six weeks to engage in an iterative process to select a subset of the CCO quality incentive measures for focus in the next year. The process starts with reviewing the prior year’s selected metrics as well as overall performance data for all QIMs, eliminating current-year measures that are too easy or too difficult, discussing the remaining current-year measures and selecting a small set for all primary care providers.

The CCO invested time upfront and continues to do so to build relationships and trust with providers. This work and time invested in organizing the annual process, has resulted in a partnership that improves the quality of care members receive and reinforces the philosophy of improvement. To promote coordination, PacificSource has structured the performance-based payment component of the VBP model such that if the CCO meets the OHA benchmark for the selected metrics all participating providers receive the quality incentive. Over the six years of the model all providers have received the incentive payment nearly 100% of the time.

Some VBP arrangements may include performance measures as a “gate.” A gate is a minimum performance benchmark that a provider must meet or exceed for the provider to receive a specific incentive payment (such as shared savings), or in some cases, even to participate in the VBP payment.

In addition, VBP arrangements may include a performance “ladder.” In VBP models using a performance ladder, the payment amount, or the amount of savings or loss for which a provider is accountable, could vary based on quality performance. A high-quality performer might be able to share in a greater proportion of savings it earns, or be responsible for a smaller percentage of losses it incurs. Similarly, the quality performance of a provider in an episode-of-care model might influence the gain/loss distribution for shared risk arrangements, and/or qualify a high-performing provider entity for a separate bonus. In these types of VBP arrangement, quality performance plays a very important role within the payment model.