Payment should be tied to quality in Medicare

The quiet revolution in improving healthcare quality and affordability continued this month. In proposed rules recently released by the Obama administration, Medicare has advanced its drive toward promoting efficient and high-quality care for its patients and the nation.

Until a few years ago, Medicare’s main charge was paying the bills on time. Under the fee-for-service system, Medicare was required to pay for each individual service provided by a hospital, physician or other provider, regardless of quality or patient experience.

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Medicare is now promoting primary care to help patients stay out of the hospitals and paying based on the quality of care delivered. This new approach has become central to the way Medicare pays for healthcare.

We’ve already implemented many of these measures. Hospitals now have a portion of their payments tied to patient satisfaction and health outcomes, and if patient readmissions are too high, they will see a penalty. We’re also working directly with more than 3,700 hospitals to improve patient safety through the Partnership for Patients. As a result of these initiatives, for the first time ever hospital readmissions have dramatically fallen in the last year, resulting in an estimated 70,000 fewer patients who had to go back into the hospital after being admitted.

Since last year, Medicare has tied payments to kidney dialysis facilities directly to their performance on quality measures, resulting in better care at lower cost for nearly 500,000 Americans with kidney disease.

In all the payment regulations we’ve issued this year, you can see quality of care front and center.

Medicare proposed, for the first time in 2015, to pay for care coordination services furnished by primary care physicians even if that care is not provided in person. This supports physicians spending time on the phone with the patient as well as other providers working with patients to keep them healthy in the first place.

Medicare proposed that it would link payment to safety, reducing a hospital’s payment if it doesn’t actively prevent bloodstream and urinary tract infections from central lines and catheters.

Home health agencies will be graded on how well they’re caring for patients who entered home health after a hospitalization.

Payments to doctors are moving toward payment based on cost and quality performance. These proposed rules move toward paying physicians more who deliver high-quality, low-cost care, and paying physicians less who deliver low-quality, high-cost care.

Improving healthcare quality is part of a wide-ranging plan to reform the way healthcare is delivered. This means ensuring Medicare’s payment systems make sense, such as not paying more for a service delivered in a physician’s office than we would pay in a hospital. It means paying for all the services that support a particular surgery or other procedure together, so patients will get better-coordinated, less expensive care.

Medicare’s new emphasis on health quality and outcomes has already contributed to improvements. Growth in the rate of Medicare spending per beneficiary has been dropping, without reducing benefits for beneficiaries. In fact, thanks to the Affordable Care Act, Medicare beneficiaries have gained access to additional benefits, such as increased coverage of preventive services, lower cost-sharing for prescription drugs and more choice of high-quality Medicare Advantage plans.

Growth in national health expenditures over the past three years was lower than any time over the last 50 years. And Medicare spending per beneficiary has grown at historically slow rates over the past three years as well.

For the first time ever, we have the data to focus on quality work. We are building the health information technology infrastructure to make coordinated care possible. We’re aligning our payment structure to give doctors, hospitals and other providers incentives to deliver better value, not just volume. And thanks to the Affordable Care Act, we have the authority to take ideas that work and take them to scale nationally.

In healthcare, in the long run, doing it right costs less and helps more than doing it wrong. The reforms and investments put in place by the Affordable Care Act are already building a healthcare system that will ensure quality care for generations to come.

Blum is deputy administrator and director for the Center of Medicare at the Centers for Medicare and Medicaid Services. He is responsible for overseeing the regulation and payment of Medicare fee-for-service providers, privately administered Medicare health plans and the Medicare prescription drug program.