What is Quality in Healthcare?

While clinical outcomes are a cornerstone of quality, the definition of quality in healthcare encompasses far more about the structures, processes, and experience of care beyond clinical outcomes alone. The Centers for Medicare and Medicaid Services (CMS) Innovation Center defines quality of care as “The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge,” adding that “high quality care means that providers follow current best medical evidence and prioritize decisions that are consistent with peoples’ values, needs, and preferences.”

This has been codified through the Agency for Healthcare Research & Quality’s use of the Institute of Medicine quality domains of safety, timeliness, equity, efficiency, effectiveness, and patient-centeredness. More recently the Institute for Healthcare Improvement has expanded its triple aim for improvement to a quintuple aim: the goal of elevating the importance of reducing clinician burnout and advancing health equity has been added to the original aims of improved health of populations, improved care experience, and reduced cost of care.

This broader definition of quality takes center stage in the shift from fee-for-service to value-based payment, reshaping how providers are paid, performance is measured, and innovation is rewarded. Quality, and particularly the measurement of quality, is central to this transition, ensuring that there is a dual, equal focus on both cost reduction and improvement in care quality in the definition and payment for “value.”

Quality measures are tools that quantify quality: how often are evidence-based structures and processes adhered to in the care delivery process?  What are the rates of desired outcomes? Are there disparities in outcomes among different sociodemographic groups? Measures are defined in great detail to ensure that the concept being measured and the measure results can be used consistently and across populations to understand the quality concept of interest, identify gaps in performance, the causes of those gaps, and improvement strategies that can lead to better measure performance.

Quality measure performance results incentivize improvement by tying payment or recognition to high-value care delivery. Both public and private payers use quality benchmarks across programs like the Hospital Value-based Purchasing Program, Medicare Advantage Star Ratings, and commercial accountable care models to influence provider and health system behavior in ways that improve measure performance. For example, results from the hospital quality programs are published on the CMS Care Compare website for the public and other payers to see, informing patients’ hospital choice or payers’ choice of which hospitals to include in network.

Inclusion of measures in high-impact programs like Medicare Advantage Star Ratings, which can offer millions of dollars in quality performance bonus payments, increases visibility and accountability at all levels of care delivery. This creates a compelling reason for providers, facilities, and payers to align expectations and implement evidence-based improvement strategies.

The influence of quality measures and their use in value-based care programs strongly impacts both clinical behavior and system-level decisions in all aspects of care, driving which aspects of quality are prioritized for improvement and the level of effort allocated to improvement strategies. This could manifest as how providers and health systems evaluate care pathways, build standard order sets, and select which drugs, devices, and diagnostics they prescribe. Accounting for quality measures may also impact a range of tactics implemented, like alerts in electronic health record systems reminding providers to order recommended preventive screenings, implementing shared decision-making models at the point of care, or weighing a drug or diagnostic’s impact on quality when making system-level formulary and purchasing decisions.

Why Quality Matters for Manufacturers

For life sciences manufacturers, this environment creates exposure to both risk and opportunity. The inclusion— or absence— of specific quality measures can significantly affect uptake, access, and preferred formulary placement. In some cases, measures become de facto coverage criteria.  For example, the inclusion of statin use in persons with diabetes as a quality measure in Star Ratings has driven broad adoption of statins in this population, which in turn impacts prescribing behavior, plan performance strategies, and formulary design to ensure access to guideline-directed therapy. Moreover, manufacturers are increasingly expected to support quality improvement initiatives or generate evidence aligned with high-profile measures to demonstrate value beyond clinical trial data.

Understanding and aligning with quality priorities also enables manufacturers to map their product’s value proposition to the needs of their target clinicians, health systems, and payers.  This is critical even in the absence of measures that are directly relevant to the product of interest. Knowing that a health system is engaged in an accountable care model, for example,  should prompt evidence generation and value messaging for how the product can support goals of reducing hospital readmission rates or total cost of care.

Developing a quality strategy can help assess how well a product aligns with prioritized domains such as cardiometabolic health, patient-centered outcomes, or equity. Therapeutics that align with existing quality programs and measures or that fill clear gaps are more likely to be adopted and rewarded in VBC arrangements. Conversely, products that fail to map to prioritized quality domains (e.g., prevention of complications, patient-reported outcomes, patient-centered care) risk marginalization even with strong clinical data. Building a quality strategy is essential for understanding customers and the broader environment in which innovative treatments, diagnostics, and technology are introduced. Linking existing and pipeline offerings to key quality priorities underscores the potential and realized benefits for patients, payers, and the healthcare ecosystem writ large.

Entities like CMS, the National Committee for Quality Assurance (NCQA), and Partnership for Quality Measurement are actively shaping the next generation of quality programs and measures, including condition-specific outcomes, digital measures, and patient-centered stratifications. Manufacturers who engage early by supporting measure development, piloting value-based contracting, or partnering on care transformation initiatives can help ensure their innovations are positioned for future success.

Recent Developments

Recent CMS efforts to refine the Medicare Quality Payment Program and Medicare Advantage Star Ratings, as well as Food and Drug Administration-CMS collaborations on real-world evidence and outcomes-based contracting, have highlighted the growing convergence of regulatory, clinical, and quality policy domains. CMS and particularly the CMS Innovation Center are actively updating their quality strategies to reflect the agency’s current priorities. Additionally, organizations like NCQA and the Core Quality Measures Collaborative are inviting public comment on new measures relevant to therapeutics in areas like oncology, obesity, and chronic disease prevention with a greater emphasis on patient-reported outcome measures.

Next Steps
Avalere Health brings deep expertise across evidence generation, quality strategy, and market access to help manufacturers navigate this complex terrain. We support clients in identifying developing pre- and post-launch quality strategies, supporting measure development, and aligning product strategy with payer and provider incentives. Whether informing pipeline decisions or shaping policy conversations, Avalere Health is uniquely positioned to help manufacturers succeed in a value-based care world. To learn more, connect with us.