Health and Human Services Sets Goals for Quality-Based Payment Models

In a meeting with almost two dozen health care leaders on January 26, 2015, Health and Human Services (HHS) Secretary Sylvia M. Burwell outlined the clear goals and timelines for moving the Medicare program towards quality-based payments, from quantity or fee-for-service payment models. According to HHS, the purpose of these goals is to ultimately improve patient lives by spending health care dollars more wisely.

HHS’s press release, titled “Better, Smarter, Healthier: In historic announcement, HHS sets clear goals and timeline for shifting Medicare reimbursements from volume to value,” offers a good outline of some of HHS’s quality-based payments plans. The following are some of its main points:

Timelines

By the end of 2016: Tying 30 percent of traditional, fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations or bundled payment arrangements.
By the end of 2018: Tying 50 percent of payments to alternative payment models.
By 2016: Tying 85 percent of traditional Medicare payments to quality or value through programs such as Hospital Value Based Purchasing and Hospital Readmissions Reduction Programs.
By 2018: Tying 90 percent of traditional Medicare payments to quality or value through programs such as Hospital Value Based Purchasing and Hospital Readmissions Reduction Programs.
According to HHS, “[t]his 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.”

Future Expansion

To encourage the expansion of quality-based payment models beyond Medicare, Secretary Burwell has also announced the creation of a Health Care Payment Learning and Action Network that will enable HHS to work with private payers, employers, consumers, providers, states and state Medicaid programs, and others to expand alternative payment models into their own programs. The Network is expected to have its first meeting in March 2015. A fact sheet on the Health Care Payment Learning and Action Network is available here.

Secretary Burwell’s Perspective piece in the New England Journal of Medicine regarding HHS’ value-based payment goals is available here.