CMS confirms path toward payment reform


Agency hits 30% value-based target goal 11 months ahead of schedule.

The Centers for Medicare and Medicaid Services (CMS) reached its goal of tying 30% of Medicare payments to quality and value, instead of volume-11 months ahead of schedule, the agency recently announced.

The announcement came just prior to the Alternative Payment Models in Healthcare Conference 2016, held in Orlando, Florida, March 17 and 18. The conference highlights top trends in alternative payment models, such as accountable care organizations (ACOs) and bundled payments.

According to CMS, increases in the number of providers participating in these shared-savings models helped it reach its milestone of tying 30% of Medicare payments to value. In fact, it attributes its success to 121 new ACOs joining the Medicare program, in addition to new participants in models such as the Bundled Payments for Care Improvement Initiative and the Comprehensive Primary Care Initiative


HoaglandAchieving the goal of having 30% of Medicare payments tied to value by the end of 2016 is the first step toward meeting CMS’ larger target of 50% by 2018, G. William Hoagland, senior vice president, Bipartisan Policy Center in Washington, D.C., tells Managed Healthcare Executive.

“The policy of moving Medicare payments away from their current fee-for-service format to alternative payment models such as performance-based payment systems has long been the goal of healthcare reform,” Hoagland says. “For executives … this announcement by the Administration, confirms the march toward fundamental payment reform will not turn back and the need for them to double down on developing systems that focus not just on costs, but quality of the service provided.”

Colin LeClair, senior vice president, business & product development, ConcertoHealth, says the announcement is confirmation that the Center for Medicare and Medicaid Innovation’s (CMMI’s) portfolio approach to innovation is bearing fruit.



“By offering a variety of payment models with limited initial risk, CMMI has created a safe environment for healthcare providers to experiment with value-based reimbursement,” LeClair says. “This is a critical first step in breaking through ‘fee-for-service inertia,’ that stubborn dependence on volume-based reimbursement that has become engrained in our industry’s DNA. Optimism is appropriate, as this early milestone appears to be evidence that the nation is approaching a tipping point in the shift to value-based reimbursement.” 

Next: Broader industry implications



Broader industry implications


According to healthcare consultant Marty Hauser, a former CEO of a provider-owned health plan, health systems and physicians “have spent significant time and money over the past few years preparing for the transition to value-based payments so it may not be all that surprising that Medicare has met its goal earlier than anticipated.

“Many integrated systems and ACOs have already educated themselves and begun building the expertise to make the transition. In many cases they were just waiting for the government and private payers to implement the payment criteria and models,” Hauser says.

Managed care executives should embrace the proliferation of alternative payment models, as a means to shift more provider payments to outcomes-based incentives, says LeClair. “Not since the introduction of the Medicare Plus Choice program, has there been so broad a movement toward value-based reimbursement. This movement should have a halo effect on patient care across all payment models.”

This is reportedly the first time that the Obama administration-or any administration-set a target for value-based payments. 

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