Hospitals

HHS launches ambitious payment reform for Medicare

As much as 30 percent of Medicare payments could come in the form of value over volume through the likes of ACOs, bundled payments and other quality-metric payments by 2016 under a new proposal by Health and Human Services, with the goal of possibly reaching 50 percent by 2018. The move represents perhaps the most […]

As much as 30 percent of Medicare payments could come in the form of value over volume through the likes of ACOs, bundled payments and other quality-metric payments by 2016 under a new proposal by Health and Human Services, with the goal of possibly reaching 50 percent by 2018.

The move represents perhaps the most palpable shift away from the fee-for-services model that has dominated in healthcare for years and which has been cited by scores of health experts as a pervasive disincentive to coordinated, value-driven care.

HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.  It’s he first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments.

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Several payment reform advocates and medical associations praised the announcement.

“Today’s announcement by the U.S. Department of Health and Human Services aligns with the American Medical Association’s commitment to work toward innovative care delivery reform that will promote high-quality and efficient care for our nation’s seniors who count on Medicare, while reducing the administrative and regulatory burdens physicians face today,” said Robert Wah, M.D, president of the American Medical Association.

The nonprofit group Catalyst for Payment Reform said it “welcomes the goal set today by the U.S. Department of Health and Human Services to tie an increasing proportion of Medicare payments to quality or value over the next several years and hopes we can work together to evaluate which alternative payment models prove to be most effective, and spread those that are.”

In 2011, Medicare made almost no payments to providers through alternative payment models, but today such payments represent approximately 20 percent of Medicare payments. The goals announced today represent a 50 percent increase by 2016. In 2014, Medicare fee-for-service payments were $362 billion.

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HHS  said it has already seen promising results on cost savings with alternative payment models, with combined total program savings of $417 million to Medicare due to existing ACO programs.