Health and Human Services Secretary Sylvia M. Burwell announced Jan. 26 goals and a timeline to move the Medicare program, and the health care system at large, toward paying providers based on the quality, rather than the quantity of care they give patients.

HHS has set a goal of tying 30% of traditional, or 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 2016, and tying 50% of payments to these models by the end of 2018. HHS also set a goal of tying 85% of all traditional Medicare payments to quality or value by 2016 and 90% by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.

To make these goals scalable beyond Medicare, Secretary 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 will 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, HHS said.


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

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. To put this in perspective, in 2014, Medicare fee-for-service payments were $362 billion.  

“Physicians have many ideas for redesigning and improving the delivery of high-quality patient care in this country," said Robert M. Wah, MD, president, American Medical Association."We strongly support reform of the Medicare payment system, including elimination of Medicare’s flawed sustainable growth rate formula, which provides a pathway for physicians to innovate and develop new models of health care delivery for our patients. We staunchly support efforts that will improve the information and data available to physicians so that they will have better information for better decisions about treatment plans for their patients, and we look forward to participating in the Learning and Action Network and working collaboratively to achieve the goals of improving health care delivery."