Earlier this week, the Secretary of Health and Human Services (HHS), Sylvia Burwell, made a significant announcement regarding Medicare’s planned shift to value-based purchasing of healthcare. A copy of the announcement is available here.
Burwell noted that “for the first time, [HHS is] setting clear goals—and establishing a clear timeline—for moving from volume to value in Medicare payments.” HHS set forth an ambitious timeline for this shift: by 2016, 30 percent of provider Medicare reimbursements will be outcomes-based, and this portion will rise to 50 percent by 2018. Accountable Care Organizations (ACOs) and bundled payment models, which the Centers for Medicare and Medicaid Services (CMS) has been piloting for several years, will play a central role in this shift. Consistent with HHS’ desire to move away from payments that reward volume, HHS is targeting Medicare fee-for-service payments in particular. The agency anticipates restructuring reimbursement so that by 2016, 85 percent of payments are tied to quality and value, rising to 90 percent by 2018.
HHS acknowledged not only the importance of value-based purchasing, but the key role the private sector has to play in contributing to the success of such initiatives. Burwell closed by noting, “We want to continue and build upon our work with state Medicaid programs, private payers, employers, consumers, providers and other partners. We also recognize our partners in the private sector have the opportunity to be even more aggressive and we welcome that.” To “facilitate this public-private partnership,” HHS is forming a Health Care Payment Learning & Action Network, which will meet for the first time in March 2015. Nonetheless, while HHS has espoused the promise of value-based purchasing with increasing enthusiasm, the ability of the private sector to similarly embrace innovative arrangements has been restrained by the fact that little has changed with respect to the fraud and abuse regulatory regimes governing such relationships. The extent to which the private sector can meaningfully contribute to value-based purchasing remains an issue that industry will need to continue to engage on with HHS.
This significant policy announcement, and the reimbursement changes that would result, are likely to have a significant impact on market interest in risk-based, outcomes-based and other value-based contracting strategies.