The federal government has unveiled its intention to pursue a significant increase in the proportion of Medicare services for which it pays based on the quality of care delivered than the quantity of care provided.

The plan was announced on Monday by Health and Human Services (HHS) Secretary Sylvia Burwell at an event in Washington, D.C.

According to an HHS news release,

HHS has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare 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 tying 50 percent of payments to these models by the end of 2018.  HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs.

To support this endeavor, according to the news release,

…Secretary Burwell also announced the creation of a Health Care Payment Learning and Action Network.  Through the Learning and Action Network, 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.  HHS will intensify its work with states and private payers to support adoption of alternative payments models through their own aligned work, sometimes even exceeding the goals set for Medicare. 

HHS appears to be pursuing these goals in part because it believes its current initiatives are bearing fruit, as the news release notes:

HHS has already seen promising results on cost savings with alternative payment models, with combined total program savings of $417 million to Medicare due to existing ACO programs – HHS expects these models to continue the unprecedented slowdown in health care spending.  Moreover, initiatives like the Partnership for Patients, ACOs, Quality Improvement Organizations, and others have helped reduce hospital readmissions in Medicare by nearly eight percent– translating into 150,000 fewer readmissions between January 2012 and December 2013 – and quality improvements have resulted in saving 50,000 lives and $12 billion in health spending from 2010 to 2013, according to preliminary estimates. 

So far, no new government programs or funding have been announced to help in the pursuit of these objectives.

iStock_000008112453XSmallTo learn more about Medicare’s intentions, see this news release announcing the initiative; this Kaiser Health News report; and three HHS fact sheets:  “Better Care. Smarter Spending. Healthier People: Why It Matters,” which can be found here; “Better Care. Smarter Spending. Healthier People: Paying Providers for Value, Not Volume,” which can be found here; and “Better Care, Smarter Spending, Healthier People: Improving Our Health Care Delivery System, which can be found here.