HHS accelerates timetable for Medicare payment restructuring

A major announcement rippled through the healthcare industry today: Sylvia M. Burwell, Secretary of Health and Human Services, introduced plans to accelerate Medicare’s move from fee for service (FFS) toward a value-based reimbursement system.

The HHS goal is for 30% of Medicare FFS payments to be made through alternative payment methods by the end of 2016, dispersed via bundled payments, accountable care organizations, population-based payments or other nontraditional payment models. By 2018, the goal increases to 50%. (Currently, 20% of Medicare FFS payments meet that criterion)

The agency also intends to escalate the use of quality metrics, with the goal of linking 85% of traditional Medicare FFS to quality or value metrics by the end of 2016, increasing to 90% by 2018.

Today’s announcement marks the first time the administration has presented a specific timetable for moving away from the fee-for-service model. According to a prepared statement from HHS, alternative payment methods have contributed to reduced Medicare spending, hospitalizations and readmissions. For instance, the ACO program has reduced Medicare expenses by $417 million since it was introduced in 2011.

 “We believe these goals can drive transformative change, help us manage and track progress and create accountability for measurable improvement,” said Secretary Burwell in today’s statement.

In conjunction with these goals, HHS also announced the establishment of the Health Care Payment Learning and Action Network, which begins meeting in March. This organization will work with private payers, employers, consumers, states and state Medicaid programs to extend alternative quality-based payment structures.

Burwell outlined the three-pillared HHS vision in a column published in the New England Journal of Medicine.