The Department of Health and Human Services (HHS) Jan. 26 released the Better, Smarter, Healthier announcement that sets clear goals and a timeline for shifting Medicare reimbursements from volume to value. HHS Secretary Sylvia Matthews Burwell made the announcement at a meeting with nearly two dozen leaders representing consumers, insurers, providers, and business leaders, setting targets for the percent of Medicare fee-for-service payments that will be tied to alternative payment models.
HHS set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018. Additionally, HHS 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 (VBP) and the Hospital Readmissions Reduction Programs (HRRP).
In 2011, Medicare made almost no payments to providers through alternative payment models, but today such payments represent approximately 20 percent of Medicare payments. HHS’ goals represent a 50 percent increase by 2016. Medicare fee-for-service payments were $362 billion in 2014.
Secretary Burwell also announced the creation of a Health Care Payment Learning and Action Network. HHS will work with private payers, employers, consumers, providers, and state Medicaid programs to support adoption of alternative payments models beyond Medicare. The Network will hold its first meeting in March 2015.
The Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) created a number of new payment models including ACOs, primary care medical homes, and new models of bundling payments for episodes of care. But this is the first time in the history of the Medicare program that explicit goals for alternative payment models and value-based payments have been set. HHS also described new efforts to develop and test payment models for specialty care, starting with oncology care, and institute payments to providers for care coordination for patients with chronic conditions.
In addition, the Health Care Transformation Task Force Jan. 28 announced a provider-payer coalition goal of moving 75 percent of their business in value-based arrangements by 2020.