How soon are valuable-based payments going to start replacing traditional Medicare fee-for-service reimbursements? Very soon.

Health and Human Services Secretary Sylvia Burwell on Jan. 26 announced that HHS has a goal of tying 30 percent of FFS Medicare payments “to quality or value through alternative payment models, such as Accountable Care Organizations or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018.”

Further, HHS wants to tie 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through the Hospital Value Based Purchasing and 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,” according to HHS.

The department also is creating the Health Care Payment Learning and Action Network, to work with private insurers, employers, consumers, providers, states and Medicaid programs, among others, to create their own alternative payment models. The goal is to give providers financial incentives to better coordinate care for patients, reduce unnecessary treatments and increase quality, while leveraging information technology to track efforts and meet goals.

Organizations initially supporting the moves include the American Academy of Family Physicians, Bipartisan Policy Center, National Partnership for Women & Families, and America’s Health Insurance Plans.

Alternative payment models today account for about 20 percent of Medicare payments, up from virtually nothing in 2011, according to HHS, so the 2016 goal of 30 percent would be a 50 percent increase from now. Medicare fee-for-service payments in 2014 totaled $362 billion.

An article from Burwell in the New England Journal of Medicine is here. More information is available here and details on the Learning and Action Network are here.

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