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Moving Toward a Better, Smarter Health Care System With an Engaged and Empowered Consumer at the Center

Better Care, Smarter Spending, and Healthier People

With the Affordable Care Act (ACA), we took one of the most important steps toward a more accessible, affordable, and higher quality health care system in almost 50 years. In fact, since it became law, about 17.6 million uninsured people have gained coverage—the largest reduction in the uninsured in decades. This is a historic start, but there is more work to do.

Using the ACA’s new tools, we have an opportunity to seize this historic moment to transform our health care system into one that works better for the American people. We have a vision of a system that delivers better care, spends our dollars in a smarter way, and puts patients in the center of their care to keep them healthy.

To make that vision a reality, our strategy is three-fold:

  1. INCENTIVES. Pay providers for what works and incentivize quality of care over quantity of services.
  2. CARE DELIVERY. Improve care delivery by promoting coordination and integration, with a priority on prevention and wellness.
  3. INFORMATION. Share health information so that providers are better informed and consumers are empowered to be active participants in their care.

Through all of this work, we are committed to putting an engaged and empowered consumer at the center of their care. We believe we can improve health outcomes for everyone when people play a more informed and active role in staying healthy and making treatment choices and when patients and providers partner together.

Historic Strides Pave the Path Forward

Already, we are making significant strides across these three areas, and these changes are directly impacting consumers and providers alike. The goals we have set, implementation activities we are pursuing, and the innovative models we are testing through the Innovation Center in the Centers for Medicare & Medicaid Services (CMS) indicate promising results.


  • Value-Based Payment Goals: In January 2015, the Administration set measureable goals and a timeline for moving Medicare and the health care system at large towards rewarding quality over quantity of care. Specifically, the Department of Health and Human Services (HHS) set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to alternative payment models, such as Accountable Care Organizations (ACOs), advanced primary care medical homes, 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 Medicare that HHS has set explicit goals for alternative payment models and value-based payments. To support these efforts, HHS also launched the Health Care Payment Learning and Action Network to help advance the work being done across the public and private sectors to increase the adoption of value-based payments and alternative payment models.

Additionally, the implementation of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 put a broad range of health care providers on the path to value over volume, and promotes the adoption of alternative payment models. The MACRA permanently repeals the outdated Sustainable Growth Rate (SGR) formula with a more predictable payment update method that incentivizes value and participation in alternative payment models, and creates the Merit-Based Incentive Payment System which is based on quality, resource use, clinical practice improvement activities, and meaningful use of certified electronic health record technology.

  • Comprehensive Care for Joint Replacement: Hip and knee replacements are some of the most common surgeries that Medicare beneficiaries receive. In 2013, there were more than 400,000 inpatient primary procedures, costing Medicare more than $6 billion for hospitalizations alone. While some incentives exist for hospitals to avoid post-surgery complications that can result in pain, readmissions to the hospital, or protracted rehabilitative care, the quality and cost of care for these hip and knee replacement surgeries still vary greatly among providers. The new Comprehensive Care for Joint Replacement Payment model proposes to hold hospitals accountable for the cost and quality and costs of care they deliver to Medicare fee-for-service beneficiaries for hip and knee replacements from surgery through recovery.
  • Accountable Care Organizations (ACOs):  Over 420 ACOs are participating in the Medicare Shared Savings Program and Pioneer ACO program, serving over 7.8 million beneficiaries. Results released earlier this year indicated the Medicare ACOs continue improve quality of care for beneficiaries, as Shared Savings Program ACOs that reported quality measures in 2013 and 2014 improved on 27 of  33 quality measures. Pioneer ACOs showed improvement in 28 of 33 quality measures and experienced average improvements of 3.6 percent across all quality measures in their third performance year. Overall, in performance year 2014, Medicare ACOs in the Pioneer and Medicare Shared Savings Program (MSSP) models have resulted in combined net savings of $411 million.

The results show that ACOs with more experience in the program tend to perform better over time. In fact, savings in the Pioneer ACO model were so significant, coupled with promising results on improved quality of care, that the independent CMS actuary certified that expansion of the model as it was tested in the first two years would reduce net program spending under Medicare. We are working now on integrating certain elements of this model into existing programs such as the MSSP.


  • Reducing Hospital Readmissions and Increasing Patient Safety: Through the Hospital Readmissions Reduction Program, the Partnership for Patients Initiative, and other efforts, we reduced the number of hospital readmissions by 8 percent between January 2012 and December 2013. That means 150,000 fewer readmissions during that time period. Additionally, we have increased safety in hospitals. From 2010 to 2013, we reduced by 17 percent the rate of hospital-acquired conditions and helped saved an estimated 50,000 lives translating to an estimated $12 billion in savings.
  • Transforming Clinical Practice Initiative: In September, CMS awarded $685 million to 39 national and regional collaborative health care networks and supporting organizations to provide technical assistance support to help equip more than 140,000 clinicians and their practices, especially those small group practices or in rural areas, with tools and support needed to improve quality of care, increase patients’ access to information, and spend dollars more wisely.
  • Million Hearts ® Cardiovascular Disease Risk Reduction Model: In May, CMS announced a first of its kind care delivery model to reduce the risk of heart disease. This model is paying providers for outcome performance related to measuring and reducing risk for a population of patients. Providers screen their patients for their 10-year risk of a heart attack or stroke. After determining this personalized 10-year-risk percentage, providers in the intervention group receive a monthly per patient payment to reduce their practice-wide risk percentage using shared decision-making and other new care delivery approaches.
  • Advancing Heart Health in Primary Care: The Agency for Healthcare Research & Quality’s EvidenceNOW initiative is helping transform health care delivery by building a critical infrastructure to help smaller primary care practices apply the latest medical research and tools to improve the heart health of their patients. Evidence NOW established 7 regional cooperatives that cover 12 states composed of public and private health partnerships and multidisciplinary teams of experts. The program will ultimately reach over 5,000 primary care professionals serving approximately 8 million people.
  • Independence at Home Results: The Independence at Home demonstration tests a service delivery and incentive payment model using home-based primary care to improve health outcomes and reduce expenditures for Medicare beneficiaries with multiple chronic conditions. In year 1, the demonstration achieved more than $25 million in savings, an average of $3,070 per participating beneficiary per year. All 17 participating practices improved quality in at least three of the six quality measures.


  • Electronic Health Records: Today, 3 out of every 4 hospitals are using some form of health IT product, such as electronic health records. These tools and associated portals are opening new doors for providers to innovate and communicate with their patients. These technologies are also unlocking greater opportunities to empower patients and caregivers with easier online access to vital health information they can use to better manage their health and care. Moving forward, HHS continues to prioritize data flow. For example, the Office of the National Coordinator for Health Information Technology (ONC) and CMS both recently announced new websites and email addresses to track and monitor reported incidents of entities that are unreasonably blocking the flow of electronic health information.
  • Access to Cost and Quality Information: Better access to health care data helps doctors make more informed decisions when delivering care and equips patients to take a more active role in managing their health. We are making strides to expand and improve our provider Compare websites, which empower consumers with information to make more informed health care decisions, encourage providers to strive for higher levels of quality, and drive overall health system improvement. Additionally, cost and charge data for hundreds of services and quality ratings for hundreds of thousands of providers and hospitals are now available on Medicare.gov, and new data is updated and added every year.

Positive, Transformative Change Is at Hand

  • The ACA is successfully extending health insurance to more Americans.
  • Payers, providers, government and advocacy groups are aligning in moving toward a health system that rewards the quality, not quantity, of care.
  • New research and discoveries are advancing precision medicine.
  • Medicine is moving into the digital and big data world.

Through public and private collaboration, we can create a health care system that works for all Americans.

Content created by Assistant Secretary for Public Affairs (ASPA)
Content last reviewed on October 23, 2015
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