Medicare Payments Are Shifting to Reward Value

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The Obama administration reported last week that it had achieved an initial goal of moving the Medicare payment system towards one that rewards value instead of volume.

As announced in January of 2015, the Centers for Medicare and Medicaid Services (CMS) hoped to have 30 percent of Medicare payments by the end of 2016 distributed through “alternative payment models” that use a variety of strategies to reward providers when patient care costs less than it would in the traditional fee-for-service system but has the same or better health outcomes.

Medicare has already reached that goal and is trying to hit the next one, 50 percent, by 2018. As recently as 2011, there were no value-based payments in the health care program. Bipartisan legislation passed last year to eliminate the need for annual “doc fixes” in Medicare physician payments will likely accelerate Medicare towards CMS’s goal.

While payments are shifting, it is still too early to determine the extent of savings that will ultimately be achieved through this transition. Some models, like Accountable Care Organizations (ACOs), have had mixed results. The hope is that as new models come online offering the potential for greater sharing of risks and rewards, they will have more success.

External links:
HHS Reaches Goal Tying 30 Percent of Medicare Payments to Quality Ahead of Schedule
Obama Administration Reaches 2016 Value-Based Payments Goals
Targets To Move Medicare Away From Fee-For-Service (Concord)

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