Medicare and Medicaid Continue Transition to Value-based Payments

Earlier this month, the Department of Health and Human Services (HHS) announced that 30 percent of Medicare payments are now tied to quality or value, nearly a year ahead of goals that it set for itself in early 2015.

According to HHS, over 10 million Medicare recipients are receiving care under alternatives to traditional fee-for-service arrangements. HHS credited most of its progress to the growth of Accountable Care Organizations (ACOs).  According to the department, there are now a total of 477 ACOs participating in its Shared Savings Program and the Pioneer ACO program.

The administration says that the transition to ACOs and value-based care will reduce costs and improve health-related outcomes for patients. It hopes to tie 50 percent of Medicare payments to these models by the end of 2018.

The ACO model is also increasingly being adopted within the Medicaid program. According to a recent report from the Center for Healthcare Strategies, eight states ─ Colorado, Illinois, Maine, Minnesota, New Jersey, Oregon, Utah, and Vermont ─ have launched Medicaid ACO or ACO-like programs, serving a total of more than 2.5 million beneficiaries.

“Value-based purchasing is quickly becoming the new paradigm in Medicaid,” said Tom Betlach,  president of the National Association of Medicaid Directors (NAMD), which released a study of alternative payment models in Medicaid in late March.

These developments suggest rapid advancement in the use of value-based payment systems, but there is enormous variation among them, including the size of their financial incentives and the performance measures that are being used, according to a recent analysis for Health Affairs.

Organizations like the National Quality Forum have been working to support improvements in performance measures. Progress will also depend heavily on advancements in electronic health record (EHR) systems, which are still being rolled out in many health systems and have experienced a number of usability, interoperability, and security problems.

Some provider groups remain skeptical. According to a study released by American Academy of Family Physicians in late 2015, 69 percent of its members said that value-based payments would not improve patient care. They cited a number of barriers, including lack of evidence that using performance measures improved such care, lack of standardized measures, and increased costs in terms of staff time and training.

HHS is working to address these problems through a number of initiatives, including technical assistance and a pilot program for testing new financial incentives, quality standards, and increases in coordinated care.


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