HHS Sets Goals to Move Medicare Payments From Volume to Value

HHS has announced goals and a timeline to move Medicare toward a quality-based payment system and away from the current fee-for-service system.

By the end of 2016, HHS will tie 30% of traditional Medicare payments to quality or value through payments models such as accountable care organizations (ACO) or bundled payment arrangements, according to HHS Sylvia M. Burwell. By the end of 2018, 50% of payments should be tied to these models.

The goals for payments through programs such as Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs are even more ambitious. By the end of 2016, 85% of all traditional Medicare payments through these programs should be tied to quality or value, and 90% by the end of 2018.

In 2011, Medicare made almost no payments to providers through alternative payment models. Currently, approximately 20% of payments are made through such models. Existing ACO programs have saved Medicare $417 million, according to HHS.

“Whether you are a patient, a provider, a business, a health plan, or a taxpayer, it is in our common interest to build a health care system that delivers better care, spends health care dollars more wisely and results in healthier people,” Ms Burwell said in a statement. “We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement.”

In conjunction with these newly set goals, HHS also announced the creation of a Health Care Payment Learning and Action Network to make these goals scalable beyond Medicare. The Network will hold its first meeting in March 2015, with more details about working with private payers, employers, consumers, providers, states and state Medicaid programs, and other partners to expand these alternative payment models.

“Advancing a patient-centered health system requires a fundamental transformation in how we pay for and deliver care. Today’s announcement by Secretary Burwell is a major step forward in achieving that goal,” Karen Ignagni, president and chief executive officer of America’s Health Insurance Plans, said. “Health plans have been on the forefront of implementing payment reforms in Medicare Advantage, Medicaid Managed Care, and in the commercial marketplace. We are excited to bring these experiences and innovations to this new collaboration.”