Move Toward ‘Pay for Quality’ Accelerates With HHS Announcement

In an announcement last week, the US Secretary of Health and Human Services Sylvia M. Burwell set the stage for more aggressive adoption of a Medicare reimbursement system centered on paying physicians based on the quality rather than the quantity of care they provide patients.The program she described will have measurable goals and a timeline. For instance, HHS has set a goal of tying 30 percent of traditional, or 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 percent of payments to these models by the end of 2018. HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs. This 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.To make these goals scalable beyond Medicare, Secretary Burwell also announced the creation of a Health Care Payment Learning and Action Network. Through this 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. The Network will hold its first meeting in March 2015.

For decades, while payers marginalized quality as a legitimate concern in health delivery, the physician community aggressively advocated for more emphasis on it. The North Carolina Medical Society (NCMS) has been working diligently for the past several years to help prepare NCMS members for this new reimbursement model through its Toward Accountable Care (TAC) Consortium and Initiative. TAC provides resources such as specialty specific toolkits to help physicians better understand what the move to quality means to them and their patients. Physicians who are knowledgeable about how quality affects payment can also participate more effectively in NCMS advocacy efforts to address shortcomings and make improvements.

The Affordable Care Act created a number of new payment models that move the needle even further toward rewarding quality. These models include ACOs, primary care medical homes, and new models of bundling payments for episodes of care. In these alternative payment models, health care providers are accountable for the quality and cost of the care they deliver to patients. Providers have a financial incentive to coordinate care for their patients – who are therefore less likely to have duplicative or unnecessary x-rays, screenings and tests. In addition, through the widespread use of health information technology, the health care data needed to track these efforts is now available.

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 Secretary Burwell outlined represent a 50 percent increase by 2016.

Read a new Perspectives piece in The New England Journal of Medicine from Secretary Burwell.