Drive to focus Medicare dollars on quality-based care nears goal

The Obama administration is nearing the finish line on its ambitious push to change the way Medicare providers are paid, focusing federal dollars on value rather than volume. 

Health and Human Services Secretary Sylvia Mathews Burwell announced one year ago that 30 percent of all Medicare payments would be based on value by the end of 2016, up from the current level of about 20 percent.

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“We think we’ll reach that goal,” Dr. Patrick Conway, chief medical officer for the Centers for Medicare and Medicaid Services (CMS), said at an event hosted by The Hill on Tuesday.

That 30 percent commitment marks the most dramatic shift in Medicare payments in the program’s 50-year history. It’s also the first time the Obama administration — or any administration — has set a target on value-based payments.

Buzzwords like “quality-based payments,” “patient-centered systems” and “delivery system reforms” are part of a decadelong shift in the nation’s healthcare system. And it’s one that began far before the Affordable Care Act. 

Conway, whose background also includes work for private companies, said the efforts have intensified in the last three years and have been part of a “public-private partnership.” Nationally, the attention on these issues has been driven by a stronger focus on transparency by patient groups as well as increased availability of information.

“We’re just at the beginning of a sea change,” Marc Boutin, CEO of the National Health Council, said at The Hill’s panel on Tuesday. “We are now beginning to ask patients for the first time: What is value to you? What is important to you?”  

By 2018, Burwell said half of all payments to Medicare would be judged on whether a patient is healthier, among other measures. In the current healthcare system, doctors are paid almost entirely by procedure. 

These new types of payments, which take into account new metrics such as patient experience and coordination of care, are known as “alternative payment models.” 

Under this system, federal health officials say that hospitals have incentives to work with other providers — such as physicians, home health agencies and nursing facilities — that would otherwise be operating in different spheres.

When those providers offer conflicting care, it can lead to rehospitalizations and complications, the CMS warns.

Federal health officials hope that by integrating outcome-driven care into Medicare — the nation’s largest healthcare payer — it will have a ripple effect. 

“As a very large payer in the system, we believe we have a responsibility to lead,” Burwell said in a press conference announcing the initiative in 2015. “For the first time, we’re going to set clear goals and establish a clear timeline for moving from volume to value in the Medicare system.”

Going forward, patient groups say they hope the massive amounts of new data — from patient ratings to other types of quality outcomes — will be able to highlight strengths and weaknesses of each provider. 

“A critical part of our journey is putting out data,” Conway said. 

There are growing pains, however, particularly for doctors and hospitals accustomed to the current “fee-for-service” system. 

“Hospitals being asked to step up,” Peggy O’Kane, president of the National Committee for Quality Assurance, said in an interview last month.

“It’s like turning healthcare systems upside down,” she said. “You don’t make change on this scale without unintended consequences.”

The ways of measuring that success are complicated, and that has giving rise to new initiatives such as “measurement science” by groups including the National Quality Forum.

Besides improving quality, the end goal is reducing costs. As part of that approach, health officials are seeking ways to entice providers to spend more time with the nation’s costliest patients. About 20 percent of the population accounts for about 80 percent of the costs, according to HHS.  

Another challenge is working with a GOP-led Congress that is often skeptical of the Obama administration’s health agenda.

“Delivery system reform truly is, and should be, a bipartisan issue that we can communicate clearly, not just on the Hill but to the American people,” Conway said. “I don’t think we’ve communicated this well. I don’t think the average consumer across America really gets it at the level that we need to. We’re not there yet.” 

This article is a part of the From Volume to Value series sponsored by Astellas. To read more articles in the series, click here.