Setting Value-Based Payment Goals — HHS Efforts to Improve U.S. Health Care

By Sylvia M. Burwell, U.S. Secretary of Health and Human Services
The New England Journal of Medicine, January 26, 2015

Now that the Affordable Care Act (ACA) has expanded health care coverage and made it affordable to many more Americans, we have the opportunity to shape the way care is delivered and improve the quality of care systemwide, while helping to reduce the growth of health care costs. Many efforts have already been initiated on these fronts, leveraging the ACA’s new tools. The Department of Health and Human Services (HHS) now intends to focus its energies on augmenting reform in three important and interdependent ways: using incentives to motivate higher-value care, by increasingly tying payment to value through alternative payment models; changing the way care is delivered through greater teamwork and integration, more effective coordination of providers across settings, and greater attention by providers to population health; and harnessing the power of information to improve care for patients.

As we work to build a health care system that delivers better care, that is smarter about how dollars are spent, and that makes people healthier, we are identifying metrics for managing and tracking our progress. A majority of Medicare fee-for-service payments already have a link to quality or value. Our goal is to have 85% of all Medicare fee-for-service payments tied to quality or value by 2016, and 90% by 2018. Perhaps even more important, our target is to have 30% of Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% of payments by the end of 2018. Alternative payment models include accountable care organizations (ACOs) and bundled-payment arrangements under which health care providers are accountable for the quality and cost of the care they deliver to patients. This is the first time in the history of the program that explicit goals for alternative payment models and value-based payments have been set for Medicare. Changes assessed by these metrics will mark our progress in the near term, and we are engaging state Medicaid programs and private payers in efforts to make further progress toward value-based payment throughout the health care system.

Although we have much to celebrate regarding increased access and quality and reduced cost growth, much of the hard work of improving our health care system lies ahead of us.

http://www.nejm.org/doi/full/10.1056/NEJMp1500445

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Early Evidence On Medicare ACOs And Next Steps For The Medicare ACO Program (Updated)

By Mark McClellan, S. Lawrence Kocot, and Ross White
Health Affairs Blog, January 22, 2015

On December 1, CMS released a Notice of Proposed Rulemaking (NPRM) for the Medicare Shared Savings Program (MSSP), which requests feedback for changes CMS is considering for the Medicare accountable care organization (ACO) programs in 2016 and beyond. The proposal suggests significant potential alterations to the program, many of which we recently reviewed, that would address major issues that ACOs and others have raised: uncertainty and inexperience at transitioning to increasing levels of risk, lack of timely and accurate data, changes in attributed patient populations from year-to-year, and financial benchmarks that fail to account for regional variations and continue to reward high ACO performance over time.

Ideally, big changes in key features in a major program like the MSSP would be based on extensive empirical evidence on what determines success in the program. Unfortunately, only limited evidence, including case studies and some comparative data, is available on the determinants of success for Medicare ACOs, and thus on the MSSP.

http://healthaffairs.org/blog/2015/01/22/early-evidence-on-medicare-acos…

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Unpacking The Medicare Shared Savings Proposed Rule: Geography And Policy

By Scott Heiser, Carrie Colla, and Elliott Fisher
Health Affairs Blog, January 22, 2015

The Centers for Medicare and Medicaid Services (CMS) recently announced a Notice of Proposed Rulemaking (NPRM) for Medicare Shared Savings Program (MSSP) Accountable Care Organizations (ACOs).

Of the 220 ACOs in the program that participated in the first performance year, 53 earned shared savings, 52 saved money but not enough to meet the required “minimum savings rates,” and the other 115 did not accrue savings (spending on patients assigned to the ACO was greater than projected).

Depending on one’s perspective, the early results of the MSSP are either promising or disappointing. On the one hand, nearly a quarter of qualifying ACOs achieved shared savings in the first year of performance; on the other, three-quarters either did not lower spending or did so but failed to exceed the minimum savings rate.

Improvements in the benchmarking formula, the risk adjustment methodology, and perhaps additional incentives to sustain high performance over a longer period are worth exploring.

http://healthaffairs.org/blog/2015/01/22/unpacking-the-medicare-shared-s…

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Measuring Success in Health Care Value-Based Purchasing Programs

By Cheryl L. Damberg, Melony E. Sorbero, Susan L. Lovejoy Grant Martsolf, Laura Raaen, Daniel Mandel
RAND Corporation

Value-based purchasing (VBP) refers to a broad set of performance-based payment strategies that link financial incentives to providers’ performance on a set of defined measures in an effort to achieve better value by driving improvements in quality and slowing the growth in health care spending. Policymakers are grappling with many policy decisions about how best to design and implement VBP programs so that they are successful in achieving stated goals.

Although the past decade has witnessed a fair amount of experimentation with performance- based payment models, primarily P4P programs, we still know very little about how best to design and implement VBP programs to achieve stated goals and what constitutes a successful program.

http://www.rand.org/content/dam/rand/pubs/research_reports/RR300/RR306/R…

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Medicare’s payment reform push draws praise and fears

By Melanie Evans and Paul Demko
Modern Healthcare, January 26, 2015

“I think we can all agree that moving away from fee-for-service and moving toward more value-based payment is a really good idea,” said Dr. Ashish Jha, a health policy professor at Harvard University who studies healthcare quality. “The challenge is, how do you measure value? If you don’t do that well, then these models can end up being not only not all that helpful, but even hurtful.”

With weak incentives, Medicare’s shift to alternative contracts could amount to little actual change, said Mark Pauly, an economist and health policy professor at the University of Pennsylvania. “It’s not a sledgehammer. If the penalty or reward is relatively modest, then a cynic could say what’s the big deal?”

http://www.modernhealthcare.com/article/20150126/NEWS/301269813/medicare…

Since the beginning of the reform process we have been inundated with rhetoric about how health reform is going to improve quality and slow spending, but the mechanisms proposed were more “wish lists” than being proven mechanisms based on sound policy science. Now we have an announcement from HHS Secretary Sylvia Burwell that, even though we have not progressed much beyond the rhetoric, these mechanisms will be put into place by the end of 2018.

An extensive RAND report confirms that we still don’t know how to do this. Advocates such as Elliott Fisher and Mark McClellan report that, although we need extensive empirical evidence, only limited evidence is available. Harvard policy professor Ashish Jha says that “these models can end up being not only not all that helpful, but even hurtful.” And University of Pennsylvania policy professor Mark Pauly, of “moral hazard” fame, even says “what’s the big deal?”

Primum non nocere…

… and, second, let’s put into place policies that really would benefit everyone – a single payer national health program, aka an improved Medicare for all.