Paying for Quality: HHS Sets Value-based Payment Goals

March 9th, 2015

The announcement in late January about the shift of Medicare reimbursement from fee for service to something more value-based didn’t exactly come as a shock to anyone who’s been paying attention to the government’s wind direction on healthcare reform. For that matter, demonstration projects related to pay for performance predate the Obama administration. Even so, let’s not minimize how historic the announcement actually was.

Here’s what HHS has in mind, according to the press release that accompanied the original announcement:

“HHS has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018. HHS also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing and the Hospital Readmissions Reduction Programs. This is the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments.”

Personally, I’m glad we’re starting to see some specifics, even if the jury’s still out on how much of a positive effect some of these alternative payment models are going to have on the healthcare system. It’s a complicated issue, but I don’t think anyone could argue with a straight face that traditional fee-for-service reimbursement is still the way to go. Real, sustained, widespread improvements in healthcare quality can occur only when they are supported by financial incentives. Even if it still isn’t clear exactly how to best structure those incentives, it’s good to see HHS moving forward in a concrete way.

Of course the devil is always in the details, and I’m sure there will be a lot to work out when it comes to bringing those goals to fruition. But they’re still worthy goals, and the fact that HHS has now set specific targets and target dates at the very least means that in a few short years, we’re likely to end up with more good data on what works and what doesn’t in terms of alternative payment models.

The April issue of Hospital Case Management discusses the HHS announcement in terms of the big effect it’s likely to have on the role of case management.