U.S. Department of Health and Human Services (HHS) Announces New Value-Based Payment Goals

This week, HHS announced they have set a goal of tying 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 by the end of 2016 and tying 50% of Medicare payments to these models by the end of 2018. This illustrates the ongoing bipartisan effort away from a traditional, fee-for-service model to alternative payment models and bundled payments.

Despite these goals, the details of the plan are not specific. However, current quality and value-based purchasing programs such as PQRS, EHR/Meaningful Use, and the Value-Based Payment Modifier (VBPM) are already linking Medicare fee-for-service payments to value and quality, so it would seem likely that HHS would use their authority under these programs to achieve their goals.

In a factsheet released with the announcement, HHS lays out a payment taxonomy framework that divides healthcare payment into four categories:

  • Category 1: fee-for-service with no link of payment to quality;
  • Category 2: fee-for-service with a link of payment to quality (includes PQRS and the VBPM);
  • Category 3: alternative payment models built on fee-for-service (such as ACOs, medical homes, and bundled payments);
  • Category 4: population-based payment (eligible Pioneer ACOs).

HHS states that reaching the above goals means that by the end 2016, 30% of Medicare payments will be Category 3 or 4, growing to 50% by 2016. Currently, 20% of Medicare payments are considered to be meeting Category 3 or 4.

HHS also announced the creation of a Health Care Payment Learning and Action Network. HHS noted that through this network they will work with private payers, employers, consumers, providers, and states to expand alternative payment models into their programs. Specifically, HHS said the Learning and Action Network partners will:

  • Serve as a convening body to facilitate joint implementation and expansion of new models of payment and care delivery;
  • Identify areas of agreement around movement toward alternative payment models and define how best to report on these new payment models;
  • Collaborate to generate evidence, share approaches, and remove barriers;
  • Develop common approaches to core issues such as beneficiary attribution, financial models, benchmarking and risk adjustment;
  • Create implementation guides for payers and purchasers.

For more information on HHS’ goals, read HHS Secretary Sylvia Burwell’s journal article on the new proposal, or review CMS’ fact sheet on this proposal.

ASCRS•ASOA is working in conjunction with the Alliance of Specialty Medicine to determine more specifics on this proposal and how it will relate to current programs. We will keep you updated.