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March 3, 2016
Contact: HHS Press Office

HHS reaches goal of tying 30 percent of Medicare payments to quality ahead of schedule

A major milestone in the effort to improve quality and pay providers for what works

Thanks to tools provided by the Affordable Care Act, an estimated 30 percent of Medicare payments are now tied to alternative payment models that reward the quality of care over quantity of services provided to beneficiaries, HHS announced today.  Today’s announcement means that over 10 million Medicare patients are getting improved quality of care by having more time with their doctors and better coordinated care – nearly a year ahead of schedule.

The Affordable Care Act established tools such as the Medicare Shared Savings Program and the Center for Medicare and Medicaid Innovation, which tests a number of alternative payment models for achieving better care, smarter spending and healthier people. Alternative payment models are ways for Medicare to reimburse providers based on the health of the patient and quality of care rather than the number of services provided.  Examples include accountable care organizations (ACOs), advanced primary care medical homes, and new models that bundle payments for episodes of care.

In January 2015, the Administration announced clear goals and a timeline for shifting Medicare reimbursements from quantity to quality, setting a goal of 30 percent of Medicare payments through alternative payment models by the end of 2016.  With the January 2016 announcement of 121 new ACOs as well as greater provider participation in other models, HHS today estimates that it has achieved that goal well ahead of schedule.

“Improving the quality and affordability of care for all Americans has always been a pillar of the Affordable Care Act, alongside expanding access to health care,” said HHS Secretary Sylvia M. Burwell.
“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.”

Previously, any patient who had multiple doctors experienced the frustration of fragmented care: lost or unavailable medical charts; duplicated conversations, medical procedures and tests; difficulty scheduling appointments. Thanks to the Affordable Care Act, Medicare beneficiaries in alternative payment models, such as ACOs, have better control over their health care, and providers have better information about their patients’ medical history and better relationships with their patients’ other providers. Doctors and other clinicians can focus on care coordination to ensure patients, especially those with chronic conditions, get the right care at the right time while avoiding medical errors and duplication. Under alternative payment models, providers have an incentive to coordinate care inside and outside the doctor’s office, by helping patients with their medications, communicating about upcoming appointments and expectations, and talking with the other members of the patient’s care team.

Today, there are 477 Medicare ACOs participating in the Shared Savings Program and the Pioneer ACO Model combined.  In 2014, these programs generated a total net savings of $411 million.  ACOs represent about three quarters of progress toward the goal announced today.  And these gains will continue to increase over the course of the year, with the start of the Comprehensive Care for Joint Replacement model and the Oncology Care Model in 2016.

Today’s estimates were evaluated by the independent Centers for Medicare & Medicaid Services (CMS) Office of the Actuary and found to be sound and reasonable. CMS estimated progress toward the goal by multiplying the number of Medicare beneficiaries in alternative payment models (net any overlap or attrition) by the expected cost of their care and compared that figure to projected Medicare fee for service spending. As of January 2016, CMS estimates that roughly $117 billion out of a projected $380 billion Medicare fee-for-service payments are tied to alternative payment models.

“We reached this goal in partnership with the thousands of providers who collaborated with us in innovation,” said Dr. Patrick Conway, Deputy Administrator for Innovation & Quality and CMS Chief Medical Officer. “It’s in our common interest – as patients, providers, businesses, health plans, taxpayers - to build a health care delivery system that delivers better care; spends health care dollars more wisely; and makes individuals and communities healthier.”

Before the Affordable Care Act, Medicare paid essentially $0 through alternative payment models. By 2014, approximately 20 percent of payments were made through alternative payment models, and today more than 30 percent of payments are made through alternative payment models.  CMS is joined by dozens of insurance companies, health systems, employers, and organizations who have set their own goals to move to alternative payment models.

In 2015, HHS established the Health Care Payment Learning and Action Network to align efforts between government, private sector payers, employers, providers, and consumers to broadly scale these gains in better care, smarter spending, and healthier people.

To learn more about the models visit: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-03-03.html

To read a fact sheet about today’s announcement visit: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-03-03-2.html

To see the actuarial analysis visit: https://innovation.cms.gov/Files/x/ffs-apm-goalmemo.pdf

Note: All HHS press releases, fact sheets and other news materials are available at https://www.hhs.gov/news.
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Last revised: March 3, 2016

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