HHS Sets Goals For Expanding New Medicare Payment Models
The Obama administration wants 30% of payments for traditional Medicare
benefits to be tied to alternative payment models such as accountable
care organizations by the end of 2016. The administration also has set
a goal of hitting 50% by the end of 2018.The administration wants even
larger portions of hospital payments to be tied to quality- or value-based
payment models. HHS indicated that it wants 85% of Medicare's hospital
payments made through programs such as the Hospital Value-Based Purchasing
Program or the Hospital Readmissions Reduction Program by the end of 2016.
That threshold kicks up to 90% two years later.
It is the first time that the federal agency has set specific goals for
overhauling the payment system for standard Medicare beneficiaries, which
has traditionally relied on a fee-for-service model. That system has long
been criticized for providing economic incentives for providers to offer
a greater volume of care regardless of outcomes. Currently, 20% of Medicare
payments for traditional beneficiaries are made through alternative payments
models, which also include bundled payment arrangements, according to HHS.
Medicare's payment reform push draws praise and fears
"We believe these goals can drive transformative change, help us
manage and track progress and create accountability for measurable improvement,"
HHS Secretary Sylvia Mathews Burwell said in a statement announcing the targets.
HHS also announced the creation of the Health Care Payment Learning and
Action Network, which is intended to spread value-based payment models
to other segments of the health insurance market, including employer-based
coverage and state Medicaid programs. The network will hold its first
meeting in March.
The federal agency announced the new goals after a meeting in Washington
between Burwell and key healthcare industry officials. They included Karen
Ignagni, CEO of America's Health Insurance Plans; Richard Gilfillan,
CEO of Trinity Health; and Dr. Douglas Henley, CEO of the American Academy
of Family Physicians.
"We're on board, and we're committed to changing how we pay
for and deliver care to achieve better health," Henley said in a
HHS estimates that the ACO program has reduced Medicare spending by $417
million since it began in 2011. In addition, the federal agency estimates
that alternative-payment methods helped reduce hospital readmissions by
8% in 2012 and 2013, resulting in 150,000 fewer hospitalizations.
Roughly 70% of Medicare beneficiaries are currently enrolled in the traditional
coverage program. The rest are enrolled in private plans through the Medicare
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