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90% of Medicare Will Be Value-Based Reimbursement by 2018

- Existing accountable care organizations will be getting a great deal of company within the next few years thanks to an ambitious HHS timeline that hopes to see 90% of traditional Medicare payments transformed into value-based reimbursement, through accountable care organizations, bundled payments, or hospital quality programs, by the end of 2018. HHS Secretary Sylvia Burwell announced the plan at a stakeholder conference on Monday.

“Whether you are a patient, a provider, a business, a health plan, or a taxpayer, it is in our common interest to build a health care system that delivers better care, spends health care dollars more wisely and results in healthier people. Today’s announcement is about improving the quality of care we receive when we are sick, while at the same time spending our health care dollars more wisely,” Burwell said. “We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement.”

The accountable care roadmap includes several different goals intended to reduce extraneous spending, improve outcomes, and foster more coordinated care for patients. By 2016, Burwell hopes to see 30% of traditional fee-for-service Medicare payments issued through programs such as accountable care organizations or bundled payments by the end of 2016. By 2018, that percentage will increase to half of all traditional payments. This represents a 50% increase over current value-based reimbursement, which made up around a fifth of payments in 2014.

The Department will also focus on increasing participation in its Hospital Readmissions Reduction and Hospital Value Based Purchasing programs with the aim of ensuring that 90% of all Medicare payments are somehow tied to value and quality by the end of 2018. HHS will also help to guide the private insurance industry through similar transformation through the new Health Care Payment Learning and Action Network, which will bring together stakeholders from across the industry to discuss and implement reforms. The first meeting of the workgroup will take place in March, Burwell said.

“We’re all partners in this effort focused on a shared goal,” said Douglas E. Henley, MD, executive vice president and chief executive officer of the American Academy of Family Physicians. “Ultimately, this is about improving the health of each person by making the best use of our resources for patient good. We’re on board, and we’re committed to changing how we pay for and deliver care to achieve better health.”

In a concurrent article published in the New England Journal of Medicine, Burwell notes that this is the first time HHS has set explicit goals for expanding the adoption of value-based reimbursement, though HHS has long been a leader in the development and deployment of ACOs and quality programs. Burwell outlined three strategies that will further progress towards the new targets:

Incentives, such as those involved in ACOs, will help to motivate physicians and hospitals to deliver high-quality care. Adoption of quality improvement strategies like the patient-centered medical home (PCMH) and bundled payments for episodes of care will allow providers to coordinate services and engage patients. HHS will continue to develop new payment models, including frameworks for specialty care, and will also promote the use of care coordinators for patients with chronic disease.

Care quality improvement tactics, including Medicaid health homes, the PCMH model, and efforts to reduce preventable readmissions, will drive providers towards better delivery of safer services. HHS will invest $800 million in the Transforming Clinical Practice Initiative to help providers understand and leverage the principles of quality improvement.

Health IT and data analytics adoption will also facilitate system-wide improvements by allowing for the better collection of data, the measurement of quality and outcomes, and more immediate, actionable reporting. “Ongoing efforts will advance interoperability through the alignment of health IT standards and practices with payment policy so that patients’ records are available when needed at the point of care to permit informed clinical decisions to be made in a timely fashion,” Burwell writes, noting the successful adoption of EHRs across the care continuum.

“Although we have much to celebrate regarding increased access and quality and reduced cost growth, much of the hard work of improving our health care system lies ahead of us,” Burwell concludes. “We are dedicated to using incentives for higher-value care, fostering greater integration and coordination of care and attention to population health, and providing access to information that can enable clinicians and patients to make better-informed choices. We believe that, by working in partnership across the public and private sectors, we can accelerate these improvements and integrate them into the fabric of the US health system.”

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