Obama administration looks to jump-start value-based payment programs

Seeking to give a boost to the value-based healthcare reimbursements, the Obama administration has announced it wants to tie 50% of fee-for-service Medicare reimbursements to alternative, quality-based payment methods by the end of 2018.

In a background briefing for reporters Monday, senior officials with the U.S. Department of Health and Human Services (HHS) said Medicare will use payment models such as accountable care organizations (ACOs) and bundled payments to reach its goal. HHS has set an interim target of making 30% of reimbursements quality-based by the end of 2016.

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By the end of 2018 HHS want to have 90% of all Medicare-based payments, including through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reductions programs tied to alternative payment models.

Medicare made $362 billion in fee-for-service payments to physicians in 2014. About 20% of those were made through alternative, value-based payment models.

“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,” HHS Secretary Sylvia M. Burwell said in an accompanying statement. “We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement.” 

The announcement did not say how HHS plans to increase the number of physicians participating in alternative payment models.

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Earlier on Monday Burwell met with representatives of corporations, insurance companies, medical societies and consumer organizations to explain the department’s goals and announce the formation of a Health Care Learning and Action Network. Through the network, HHS plans to “work with private payers, employers, consumers, providers, states and state Medicaid programs to expand alternative payments models into their programs,” according to the HHS statement.

Mark Friedberg, MD, MPP, senior natural scientist with the RAND Corporation, said the long-term impact of the announcement will depend on how the government defines the concept of value-based payments. "If you're counting every dollar an ACO [accountable care organization] or a medical home pilot as being value-based, the goal seems achievable but it may not mean that much, because these are programs that are stil running on a fee-for-service chassis. That's where most of the dollars are being generated. But if they're talking about most of these dollars coming in the form of performance bonuses, that would be a real change for Medicare," Friedberg said.

Medical societies generally endorsed the goals set forth in the HHS announcement. “Today’s announcement by the U.S. Department of Health and Human Services aligns with the American Medical Association’s commitment to work toward innovative care delivery reform that will promote high-quality and efficient care for our nation’s seniors who count on Medicare, while reducing the administrative and regulatory burdens physicians face today,” said Robert M. Wah, MD, president of the American Medical Association.

 “The current focus on fee for service payment must end and be replaced with better alternatives such as blended or prospective global payment models which promote value over volume,” said Douglas E. Henley, M.D., executive vice president and chief executive officer of the American Academy of Family Physicians. “These goals for payment reform are critical to achieving what family medicine is really all about: delivering the right care, at the right time, to the right person, in the right place.”