New Goals Shift to Value-Based Medicare Payments

In a “historic” announcement, the Department of Health and Human Services on Monday set new goals for tying Medicare payments to quality or value through alternative payment models. The news received widespread print and online media coverage and is portrayed as an ambitious step by the Administration. Most sources also report on the generally positive response by providers, insurers and other stakeholders.

The Washington Post  (1/27, Millman) reports in its “Wonkblog” that the Obama Administration on Monday “announced an ambitious goal to overhaul the way doctors are paid, tying their fees more closely to the quality of care rather than the quantity.” Rather than pay more money to physicians for every procedure they perform, Medicare will also evaluate whether patients are healthier, “among other measures.” HHS Secretary Sylvia Mathews Burwell said in a press conference, “As a very large payer in the system, we believe we have a responsibility to lead.” She added, “For the first time, we’re going to set clear goals and establish a clear timeline for moving from volume to value in the Medicare system.”

USA Today  (1/27, O’Donnell) reports that HHS hopes to tie 30 percent of traditional Medicare payments to quality or value through “alternative payment models” by the end of 2016, up from 20 percent. These plans include accountable care organizations and “bundled payments,” which are groups of payments for treatments of the same issue. By the end of 2018, “HHS hopes to link 50% of payments to these arrangements.” Secretary Burwell stated, “We believe these goals can drive transformative change, help us manage and track progress and create accountability for measurable improvement.”

Bloomberg News  (1/27, Wayne) reports that the Administration’s “historic” announcement on Monday marks “the first time the government has ever set specific goals to steer the nation away from fee-for-service payments.” According to Bloomberg, the plan would be a major transformation for hospitals, health facilities and physicians, “eventually more than doubling the reach of programs that the U.S. said has saved $417 million and that have been a model for how the government hopes to influence, and slow down, health spending.”

The Wall Street Journal  (1/27, Radnofsky, Beck, Subscription Publication) reports that the government’s ambitious goal to rework hundreds of billions of dollars in Medicare payments will likely see resistance from healthcare providers and skepticism from beneficiaries and lawmakers. Indeed, American Medical Association President Robert Wah, MD, said that while he was “encouraged” by the announcement, physicians need more flexibility in the way the payments would be administered. The AP  (1/27, Alonso-Zaldivar) adds that Dr. Wah “stopped short of an endorsement, telling reporters his group is encouraged but wants specifics.”

The Los Angeles Times  (1/27, Levey), however, reports that the “ambitious new goals” set by HHS were “broadly hailed by consumer advocates, leading medical providers and insurance industry officials.” Douglas E. Henley, chief executive of the American Academy of Family Physicians, praised the goals and hailed Monday as a “bless your heart day.” The article adds that the shift away from fee-for-service healthcare “is a central, if little recognized, goal of the Affordable Care Act.”

Jeffrey R. Ungvary President

Jeffrey R. Ungvary