Value-Based Purchasing of Medical Devices

The IHA Value-Based Purchasing (VBP) of Medical Devices project provides participants with new information, tools and strategies to increase the value of implants used for major orthopedic, spine and cardiac procedures.

Originally launched as a pilot program in 2006 in Orange County, IHA has extended the program statewide with a grant from the Blue Shield of California Foundation. The statewide VBP project is designed to stimulate collaborative initiatives among hospitals, physicians, and health plans to promote better data collection, quality of care, and payment methods. The intent is to pioneer and then diffuse these methods statewide in much the same manner as the IHA Pay for Performance initiative sparked initiatives in payment reform.

Statewide Initiative

Over time, the goal of the VBP project is to encourage adoption of practices that increase the value of implant technology for patients, physicians, hospitals and health plans; for example, technology evaluation, price transparency and appropriate management of financial conflicts of interest in device selection. The statewide initiative includes: data collection and analysis, a medical device collaborative, and bundled episode of care payment.

Data Collection and Analysis

The VBP of Medical Devices project begins with data collection pertaining to 14 high-volume and high-cost orthopedic, spine, and cardiac procedures. Uniform data collection and analysis processes for medical device use, costs, patient mix, co-morbidities and complications, quality, and insurance reimbursement will allow project participants to compare their own cost and use patterns (as a function of volume, payer mix, and patient demographics) to those of other hospitals and to statewide benchmark data. Data collection is currently underway. Benchmarking reports for the participating hospital systems will be provided for a collaborative of roughly 70 hospitals.

Medical Devices Collaborative

Working with participating hospitals and the California Hospital Association, the VBP project will encourage dissemination of best practices in device evaluation, purchasing, and utilization through a series of best practices roundtables, co-hosted by the Berkeley Center for Health Technology (BCHT).

The first roundtable was held April 3, 2009 in Berkeley, California, on the topic of price confidentiality and transparency in medical device vendor contracts. Sessions included: pricing policies and implications, pros and cons of legislatively mandated disclosure vs. market solution, and best practices for hospitals with regard to purchasing and alignment strategies amongst various stakeholders.

The second roundtable was held October 2, 2009 in Berkeley, California, on the topic of physician-hospital incentive alignment in device selection. Discussion sessions included: device registries, technology assessment committees, and managing financial relationships surrounding device selection.   

Orange County Demonstration

IHA conducted a two-year (2006-2008) demonstration project to improve data transparency and payment methods for high-value medical devices, including orthopedic and cardiac implants, in the California health care system. This project brought together prominent hospital systems, physician organizations, and health insurance plans in the Orange County region and culminated with a well-received conference on medical device purchasing issues and practices that was co-sponsored by the California Hospital Association. A summary report of the project is available in the Related Resources section to the right.