Value-based paymentThe transition to value-based payment models picked up speed last week on both the Medicare and private payer fronts. First, the Obama administration announced on Jan. 26 that it wants to tie 50% of fee-for-service Medicare reimbursements to quality-based payment methods by the end of 2018, with an immediate goal of making 30% of reimbursements quality-based by the end of 2016.

Senior officials with the U.S. Department of Health and Human Services (HHS) said Medicare will use payment models such as accountable care organizations (ACOs) and bundled payments to reach its goal. In 2014, Medicare made $362 billion in fee-for-service payments to physicians. About 20% of those were made through value-based payment models.

“We believe these goals can drive transformative change, help us manage and track progress, and create accountability for measurable improvement,” said HHS Secretary Sylvia M. Burwell.

HHS did not announce how it plans to increase the number of physicians participating in value-based payment models, but the trend in that direction has been clear for several years.

Following on that announcement, on Jan. 28 several leading healthcare providers and payers announced a new alliance aimed at stepping up the transition to value-based models that are believed to reduce costs and improve outcomes.

Interestingly, HHS Secretary Burwell had just met with representatives of corporations, insurance companies, medical societies and consumer organizations before the HHS announcement of its goals.

Members of the industry group, the Health Care Transformation Task Force (HCTTF), include six of the top 15 health systems in the nation and four of the nation’s top 25 health payers, according to the announcement. Among the participants are major providers such as Partners HealthCare, Heritage Provider NetworkDignity Health and Premier, Inc.

Task Force members committed to transitioning three-quarters of their business into value-based models that emphasize the Triple Aim, defined as improved care, improved outcomes and reduced costs, and encouraged other payers and providers to work toward these same goals.

What does a value based payment model mean for providers?

First, hold on to your hats while HHS decides how to “encourage” practitioners to transition to value-based payment. Certainly HHS has been trending that way with encouragement of the ACO model and the rollout of the Value-Based Modifier program. However, as Mark Friedberg, MD, MPP, of the RAND Corporation observed,  “If you’re counting every dollar an ACO [accountable care organization] or a medical home pilot as being value-based, the goal seems achievable but it may not mean that much, because these are programs that are still running on a fee-for-service chassis. That’s where most of the dollars are being generated. But if they’re talking about most of these dollars coming in the form of performance bonuses, that would be a real change for Medicare.”

Medical societies mainly endorsed the goals for value-based care set forth by the HHS.

“These goals for payment reform are critical to achieving what family medicine is really all about: delivering the right care, at the right time, to the right person, in the right place,” said Douglas E. Henley, M.D., executive vice president and chief executive officer of the American Academy of Family Physicians.

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