Health and Human Services (HHS) Secretary Sylvia Mathews Burwell recently made an announcement that has the potential to accelerate the transformation of health care delivery and payment. Secretary Burwell’s goal of moving away from fee-for-service health care is critical to beneficiaries and the quality of the care they receive, the future of the Medicare program and the health care system as a whole.

In the past few years, care coordination and value-based models have become hot issues in the health care arena with the realization that they can significantly improve outcomes and lower costs. At the same time, Medicare continues to careen toward bankruptcy – just fifteen years away, by recent estimates. HHS’ ambitious effort to move Medicare spending incrementally away from volume-based payments, and toward a system that instead rewards value of care, can go a long way toward fixing that.


Intensely partisan debate over health care policy is the norm in Washington. So when the proverbial pigs are flying and we have agreement on an issue from both sides of the aisle, we must act.

The House Energy and Commerce Committee recently held a two-day hearing to discuss repeal of the current formula by which Medicare pays physicians, the sustainable growth rate (SGR), aptly titled, “A Permanent Solution to the SGR: The Time Is Now.” They are correct; there has been no better time, with the Congressional Budget Office estimating a so-called ‘doc fix’ cost of about $140 billion. Members on both sides of the aisle, witnesses and industry thought leaders are all in agreement on the need to do away with the flawed SGR, but how to do so (and pay for it) remains a challenge.

Like the SGR, we all agree that Medicare’s fee-for-service model is not working. HHS’ newly announced goals are significant because they are widely supported by patients, providers, and insurers. We commend HHS for reinforcing their commitment to move toward value-based, patient-centered care. However, what we still need from HHS are strategic, concrete next steps on how they will reach this lofty goal – and if Medicare spending on coordinated care is expected to reach 30% by the end of 2016, we need to get moving.

Luckily, many health care stakeholders have been making progress on care coordination for years, and we have a strong base of evidence and impressive successes on which to build. The Medicare Advantage (MA) program, which offers coverage through private insurance as an alternative to traditional Medicare, currently serves approximately 17 million people, or about one-third of Medicare beneficiaries. MA’s emphasis on prevention and care coordination is beginning to show how much more efficient seniors’ health care can be if it is liberated from fee-for-service. A 2012 Health Affairs analysis found that, over a span of six years, beneficiary utilization of emergency departments and ambulatory surgery or procedures was 20 to 30 percent lower in MA, compared to traditional Medicare.

Despite strong evidence that patients thrive in MA models that focus on value instead of volume, the program continues to face payment cuts year after year. Just a few weeks ago, CMS released its 2016 proposed rates, which include even more cuts to MA. Given HHS’ new commitment to a system in which virtually all of Medicare spending will be spent on coordinated care, our hope is that CMS will reassess these cuts and continue to support models that develop innovative approaches to care and decrease costs to Medicare.

As co-chairs of the Partnership for the Future of Medicare (PFM), a bi-partisan organization focused on ensuring the long-term security of Medicare, we commend HHS on its renewed pledge to move the current, flawed fee-for-service system to a system that rewards innovative, value-driven care while saving the Medicare program from unnecessary and wasteful spending. We finally have bipartisan momentum on SGR repeal and in turn, the move away from the fee-for-service model. We are lucky to have strong, evidence-based care coordination models at our fingertips. The time to move away from a volume-driven system is now – for the health of our patients, our providers, the Medicare program, and the U.S. health system as a whole.

Holtz-Eakin, former director of the Congressional Budget Office and current president of the American Action Forum, and Thorpe, the Robert W. Woodruff professor and chairman of the Department of Health Policy and Management at Emory University, are co-chairs of the Partnership for the Future of Medicare, a bipartisan organization focused on ensuring the long-term security of Medicare.