HHS announces aggressive plans for quality pay

After slow, episodic changes over the past few years, the Department of Health & Human Services (HHS) has announced measurable goals and an aggressive timeline to move the Medicare program toward a system based on paying providers based on the quality, rather than quantity, of care they provide.

HHS has established 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.  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. 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 make these goals scalable beyond Medicare, HHS Secretary Sylvia M. Burwell also announced the creation of a Health Care Payment Learning and Action Network.  Through the Learning and Action Network, HHS will work with private payers, employers, consumers, providers, states and state Medicaid programs and other partners to expand alternative payment models into their programs. HHS intends to intensify its work with states and private payers to support adoption of alternative payments models through their own aligned work, sometimes even exceeding the goals set for Medicare.  The Network will hold its first meeting in March 2015, and more details will be announced in the near future.

“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. 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,” Burwell said. “We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement.” 

"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 CEO of the American Academy of Family Physicians.  

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.