Sylvia M. Burwell, secretary of the U.S. Department of Health and Human Services (HHS), announced that Medicare payments to physicians, hospitals, and other providers will shift from the current fee-for-service (FFS) payment model to a system that will pay healthcare providers “based on the quality, rather than the quantity, of care they give patients,” according to an HHS press release.
HHS has set a goal to tie 30 percent of Medicare FFS 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 50 percent of payments to these models by the end of 2018. According to the Centers for Medicare & Medicaid Services (CMS), Medicare FFS payments totaled $362 billion in 2014. HHS has already seen combined total program savings of $417 million to Medicare due to existing ACO programs.
To make the goals scalable beyond Medicare, Burwell also announced the creation of a Health Care Payment Learning and Action Network within which 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.
“Whether you are a patient, a provider, a business, a health plan, or a taxpayer, it is in our common interest to build a healthcare system that delivers better care, spends healthcare dollars more wisely, and results in healthier people,” Burwell said. “We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement.”