One week prior to the unveiling of the President’s first budget under a completely Republican-controlled Congress, the Department of Health and Human Services (HHS) made its most formal announcement yet on the Obama Administration’s efforts to reduce total Medicare and Medicaid spending.

Citing success in expanding coverage to “many more Americans,” HHS Secretary, Silvia Burwell, penned a perspective piece in the New England Journal of Medicine, outlining the Obama Administration’s plan going forward.  Burwell laid out her priorities within three categories:

  1. Using incentives to motivate higher-value care by increasingly tying payment to value through alternative payment models;
  2. Changing the way care is delivered through greater teamwork and integration, more effective coordination of providers across settings, and greater attention by providers to population health; and
  3. Harnessing the power of information to improve care for patients.

In large part, the announcement came as a restatement of the broad portfolio of initiatives already undertaken by the Administration to improve or maintain the quality of health care while reducing total spending, in particular for the Medicare program.  Burwell pointed to the Accountable Care Organization (ACO) program as a sign of early success, saving the Medicare program roughly $417 million to-date. Additionally, preliminary estimates demonstrate that various quality improvement initiatives ranging from Quality Improvement Organizations (QIOs) to hospital readmission penalties, have helped improve quality while potentially saving $12 billion from 2010 to 2013.

When combined with efforts in partnership with state Medicaid programs through innovative waivers and grant funding, it is clear that the Obama Administration has already invested a considerable amount of time and resources into delivery and payment reform. This includes significant resource allocations in both scope and staff to carry out these various initiatives such as the Medicare-Medicaid Coordination Offices (Duals Office), CMS Innovation Center, and Office of Enterprise Data and Analytics as a few recent examples.

Beyond the summary of current programs, the Burwell announcement did mark two new issues for stakeholders to consider:

  1. It marked the first time the Administration had set out comprehensive and bright-line metrics to gauge progress towards delivery and payment reform goals; and
  2. The creation of the “Learning Action Network” to align efforts and accelerate the transition to more value-based payment and delivery models via a public-private collaborative of stakeholders.

Many stakeholders, especially providers, have cited multi-payer approaches as the best way to achieve truly transformative efforts and system redesign. Although Medicare and Medicaid can often represent the dominant payor for many providers, without alignment of payment systems, quality measures, and data sharing among other attributes, most experts believe that providers will be limited in their ability to transform care.

Interestingly, in what many perceive as a coordinated announcement, a task force consisting of major health systems and payers announced two days later their intent to move 75% of their business into value-based models by 2020. The alliance of private sector stakeholders is led by Trinity Health CEO and former CMS official, Dr. Rick Gilfillan. Other similarly-themed announcements by industry coalitions spanning employers to health systems are expected soon as industry stakeholders jockey to shape national efforts to support (or at least not hinder) their own local and regional ones.