Big changes are on the horizon in how Medicare reimburses healthcare providers. Yesterday, the Secretary of Health and Human Services (HHS), Sylvia Burwell, announced a timeline and measurable goals to move the Medicare program toward reimbursing providers based on the quality, rather than the quantity, of care they give their patients.
The shift from the traditional fee-for-service Medicare payment structure to a more outcome-based model hinges on “alternative payment models.” These payments emphasize patient outcomes over getting paid for individual medical services, notes Burwell. “In alternative payment models, providers are accountable for the quality and cost of care for the people and populations they serve moving away from the old way of doing things, which amounted to ‘the more you do, the more you get paid.'”
In 2011, Medicare made almost no payments to providers through alternative payment models, according to HHS. Today, alternative payments tied to “quality” represent approximately 20 percent of Medicare payments. HHS aims to get that up to 30 percent by the end of 2016, and 50 percent by the end of 2018.
Burwell expounded upon these models in yesterday’s blog post announcing the government’s plan:
[T]hrough Accountable Care Organizations, providers partner together on a patient’s care and get rewarded for delivering better care while spending less. In a Patient Centered Medical Home model, instead of doctors working separately in their own siloes, care coordinators oversee all the care a patient is getting. That means patients are more likely to get the right tests and medications rather than getting duplicative tests, procedures, etc. These medical homes typically offer patients access to a doctor or other clinician 7 days a week, 24 hours a day including through extended office hours on evenings and weekends.
Another example is a “bundled payment” model. In this model, providers are reimbursed together for the entire cost of what’s called an “episode of care” – something like say a hip replacement. So lab tests, pre-visits, hip replacements, and so forth are all paid for in the same lump sum – whether the same test is conducted once, twice or five times. This creates an incentive to deliver better care that makes patients healthier and keeps them out of the hospital.
A major aspect of the government’s effort relies on incentives to drive providers to these alternative payment models. Burwell lists two other strategies. First is a focus on “care delivery,” which Burwell indicates will be developing policies to encourage greater integration within practice sites, coordination among providers, and attention to population health with a priority on prevention and wellness. “With more emphasis on coordinated care, patients are more likely to get the right tests and medications rather than taking tests twice or getting procedures they do not need,” her announcement states. Second, CMS is also working on information sharing to create more “transparency on the cost and quality of care, to bring electronic health information to inform care, and to bring the most recent scientific evidence to the point of care in order to bolster clinical decision-making.”
HHS also announced the creation of a Health Care Payment Learning and Action Network, through which HHS will work together with private payers, employers, consumers, providers, state Medicaid programs, and other partners to expand alternative payment models beyond Medicare.
A blog announcing the new value goals from Secretary Burwell is here, and a perspectives piece in the New England Journal of Medicine from Secretary Burwell is here.
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The response to the reforms has been cautiously optimistic. American Medical Association President Robert Wah said many of his members were frustrated and anxious about changes in the system and that while he was “encouraged” by the announcement, physicians needed more flexibility in the way the payments would be administered to be able to participate, the Wall Street Journal reports.
Pharmaceutical Research and Manufacturers of America (PhRMA) president and chief executive officer John J. Castellani issued the following statement on Secretary Burwell’s announcement:
“PhRMA supports Secretary Burwell’s goal of advancing affordable, high quality and patient centered health care, and today’s announcement represents an important step forward.”
“New medicines make important contributions to value in health care for patients, payers and policymakers, and we look forward to working with the secretary on this new initiative. As HHS works to evaluate and expand new models of health care payment and delivery, we believe it is essential they:
1) Incorporate clear mechanisms for recognizing the value of new treatment advances, such as precision medicine and other new tests and treatments;
2) Are grounded in strong quality measures and incentives, with emphasis on outcomes that matter to patients;
3) Support shared decision making between providers and patients, which is informed by high quality evidence about the full range of available treatment options; and,
4) Are transparent and enable manufacturers and other stakeholders to work collaboratively in support of high-quality, high-value health care.
Read PhRMA’s Principles for Payment Delivery and Reforms here