HHS Will Emphasize Quality, Not Quantity, in Future Medicare Payments

October 13th, 2016

WASHINGTON, DC – Quality, not quantity, is the goal of a new initiative announced by HHS to change the way physicians and other medical professionals are paid for providing healthcare.

After meeting with nearly two dozen leaders representing consumers, insurers, providers, and business leaders in January, HHS Secretary Sylvia M. Burwell announced a timeline to move the Medicare program – and, ideally, healthcare in general – toward the new payment system.

By the end of 2016, HHS seeks to tie 30% of fee-for-service Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs), or bundled payment arrangements; 50% of payments would be attached to those models two years later, according to an HHS announcement.

In addition, through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs, 85% of all traditional Medicare payments would have a quality or value component by 2016 and 90% by 2018.

Burwell noted that this is the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments.

To extend the goals past the Medicare system, HHS also has created the Health Care Payment Learning and Action Network to help educate private payers, employers, consumers, providers, states and state Medicaid programs on alternative payment models. The network, which holds its next meeting in March, possibly could help other programs meet some of the goals before Medicare does, Burwell said.

“Whether you are a patient, a provider, a business, a health plan, or a taxpayer, it is in our common interest to build a healthcare system that delivers better care, spends healthcare dollars more wisely and results in healthier people,” she said. “Today’s announcement is about improving the quality of care we receive when we are sick, while at the same time spending our healthcare dollars more wisely. We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement.”

The efforts were applauded by some healthcare organizations.

"We're all partners in this effort focused on a shared goal. Ultimately, this is about improving the health of each person by making the best use of our resources for patient good. We're on board, and we're committed to changing how we pay for and deliver care to achieve better health," said Douglas E. Henley, MD, executive vice president and chief executive officer of the American Academy of Family Physicians.

The Affordable Care Act created a number of new payment models that make it possible to focus payment more on quality than quantity, according to HHS. Those include ACOs, primary care medical homes, and new models of bundling payments for episodes of care. Not only do the models give providers a financial incentive to coordinate care for patients, according to federal healthcare officials, but data needed to track these efforts is now available.

In a perspective piece in the New England Journal of Medicine, Burwell noted that, just three years ago, Medicare made no payments through alternative delivery systems but now 20% of payments to providers are through those models.