Half of Medicare’s provider payments will come through alternative payment models within four years, according to goals the Obama administration announced Jan. 26.
The initiative would expand the roughly 20 percent of Medicare payments that were made through alternative payment models and population-based payments in 2014 to 30 percent by the end of 2016 and 50 percent by the end of 2018. When including traditional Medicare payments that are tied to quality measures, such as in the Hospital Value-Based Purchasing and the Hospital Readmissions Reduction programs, the goal for the proportion of quality- and value-based payments grows to 85 percent of total payments by the end of 2016 and 90 percent by the end of 2018.
The initiative marks the first time Medicare has set specific time frames and payment percentages for the shift away from fee-for-service payments.
Provider advocates were generally supportive of the goals of the initiative, although some were uncertain about exactly how the U.S. Department of Health and Human Services (HHS) proposes to reach them given that those details were not spelled out.
“Lacking specific details, it is not yet clear how Medicare will reach the short-term payment reform goals that HHS announced Monday,” said Chad Mulvany, director, healthcare finance policy, strategy and development, for HFMA. “However, the goals of this payment initiative do increase both the potential significance of the proposed overhaul of the Medicare Shared Savings Program (MSSP) and the need to expand bundled payments.”
ACOs’ Increasing Importance
For the MSSP—Medicare’s primary ACO program—to play a significant part in growing the share of payments that are tied to quality, HHS would likely have to make significant changes to it. Although HHS recently hailed the program’s ability to garner $417 million in savings since its launch in 2012, with only a quarter of those reporting first-year results achieved significant savings.
“Without important changes to the rules governing ACOs and the bundled payment program, providers will avoid taking the risks necessary for these programs to succeed,” Blair Childs, senior vice president of public affairs for Premier, a healthcare performance improvement coalition, said in a written statement.
HHS proposed an overhaul of the MSSP program in December that would include reducing the financial barriers to providers participating in the program. Among the changes under theproposed rule was the extension of the bonus-only period for participants in “Track 1” from three years to six years. Provider advocates had worried that the existing time frame was insufficient for them to develop value improvement steps and then widely implement such changes to avoid major penalties in a subsequent phase of the program.
HHS also announced the creation of the Health Care Payment Learning and Action Network, a partnership to help private payers, employers, consumers, providers, states, and state Medicaid programs expand alternative payment models into their healthcare programs.