Feds reach alternative payment goal ahead of schedule

The federal government says it is ahead of schedule in its goal to tie 30 percent of Medicare payments to alternative payment models by the end of 2016.

The Department of Health and Human Services (HHS) set the goal in January 2015, adding that by 2018 it hoped to tie 50 percent of Medicare payments to alternative payment models that reimburse providers based on health outcomes. At the time, about 20 percent of payments were tied to alternative models.

HHS estimates that as of January 2016, about $117 billion out of a projected $380 billion Medicare fee-for-service payments are now tied to alternative payment models. It reached that estimate by multiplying the number of Medicare beneficiaries in alternative payment models by the expected cost of their care and comparing that figure to projected Medicare fee-for-service spending.

In the agency's announcement Thursday, HHS Secretary Sylvia Mathews Burwell credited the programs created by the Affordable Care Act for boosting the transition to value-based payments.

"The law gives us the tools to put patients at the center of their care, improve quality and help make care more affordable over the long term," she said.

About three-quarters of progress toward HHS' end-of-2016 goal is attributable to the proliferation of accountable care organizations (ACOs), the agency says. HHS announced in January that there were 121 new participants in various ACO models, including the first group of Next Generation ACOs, which require greater financial risk of participants but also after greater incentives.

Currently, the Medicare Shared Savings Program and the Pioneer ACO program have a total of 477 participants, HHS says. However, the Pioneer program has seen some participants drop out.

Provider participation in bundled payment models is also increasing, the announcement notes. In addition, "dozens of insurance companies, health systems, employers and organizations" have set their own goals for moving to alternative payment models. Aetna, for instance, said in September that 30.6 percent of its total spending now is tied to value-based contracts.

"It's in our common interest--as patients, providers, businesses, health plans, taxpayers--to build a healthcare delivery system that delivers better care; spends healthcare dollars more wisely; and makes individuals and communities healthier," said Centers for Medicare & Medicaid Services Chief Medical Officer Patrick Conway.  

To learn more:
- read the announcement
- here's the HHS fact sheet