HHS Secretary Sylvia Burwell today signaled a seismic leap — at least symbolically — away from traditional fee-for-service health care. In a blog posting, the secretary set an ambitious goal of having 30 percent of traditional Medicare payments be tied to an alternative payment model, such as bundled payments or ACOs, by 2016. That would grow to 50 percent by 2018. As for lingering fee-for-service payments, 85 percent would be tied to quality and value starting in 2016 and 90 percent in 2018. Nearly 70 percent of beneficiaries are enrolled in traditional Medicare, the rest are in Medicare Advantage plans.
“If we succeed,” she wrote, “a patient who is admitted to a hospital or referred to a specialist, will be more likely to get the right tests and medications because his or her doctors are coordinating and have the information they need.”
During a background briefing, agency officials said that these alternative models are showing signs of success. Pioneer ACOs improved on 28 out of 33 quality measures, they noted.
As recently as 2011, Medicare made “almost no payments to providers through alternative payment models, but today such payments represent approximately 20 percent of Medicare payments,” according to an HHS release.
Looking more broadly than government programs, hospitals have been moving steadily toward new delivery models aimed at increasing integration with other providers and improving care coordination. Hospital participation in ACOs, for instance, grew 6 percent per year between 2011-2013, according to the newly released AHA Hospital Statistics, 2015 Edition. Additionally, more than 20 percent of hospitals reported being involved in a medical home program.
In terms of alternative payment models though, the data were bit more mixed. For instance, 20 percent of hospitals with a medical home and 45 percent of those in an ACO reported being part of a bundled payment initiative. Also, 31 percent of hospitals reported having contracts with commercial payers that link payments to quality metrics.
Conversely, roughly 5 percent of hospitals reported that between 1 and 10 percent of net patient revenue was tied to a risk-based payment in 2013. The same percentage holds true for capitation. The vast majority of hospitals — 92 percent — had zero net patient revenue paid under capitation. Ditto for risk-sharing arrangements.
Still, when you consider the efforts underway — both public and private — to promote value-based purchasing and you can understand why the AHA stat book suggests, “the era of fee-for-service medicine is coming to an end” and says hospital leaders need to “fundamentally rethink the way they deliver care.”
Back to the HHS strategy: To better coordinate payment reforms, the secretary established the Health Care Payment Learning and Action Network, which will hold its first meeting in March. Agency officials, though, were a little fuzzy about how the new panel will work with the Center for Medicare & Medicaid Innovation, which has taken the lead in testing new care models.
Trade associations were cautiously supportive of Burwell's announcement. Robert Wah, M.D., president of the AMA said that the plan “aligns with the American Medical Association’s commitment to work toward innovative care delivery reform.” A statement from the Federation of American Hospitals noted that “it is important that Medicare take the time to test” new approaches to ensure that they are effective and efficient.
“We look forward to learning more from HHS on how these new goals will be phased in,” said Rick Pollack, executive vice president, AHA. “At the same time, we encourage the administration to fully evaluate and improve on the delivery system reforms currently in place to ensure that we are learning from the pilot and demonstration projects to best meet patient needs. Moreover, we need to phase in changes in a thoughtful manner that is tailored to the specific needs of individual communities. We look forward to learning more from HHS on the details and metrics of this program.”
