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HHS Announces Shift in Medicare Reimbursement: From Volume to Value
January 27, 2015

On January 26, US Department of Health and Human Services (HHS) Secretary Sylvia Burwell announced measurable goals and timeline to move the Medicare program and health care system at large toward paying providers based on quality or value of care rather than the quantity or volume of care they give their patients. In today’s health care system, many providers receive payment for each individual service, such as a blood test, surgery, or physician visit, and it does not matter whether the services help or harm a patient.

This is the first time in the history of the Medicare program that HHS has set explicit goals for alternate payment models and value-based payments, as indicated. HHS has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) 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.

HHS also announced the creation of a Health Care Payment Learning and Action Network, which will involve working with private payers, employers, consumers, providers, state Medicaid programs, and others to expand alternate payment models into their programs. This new network will conduct their first meeting in March. Additional information will be forthcoming following this meeting.

For additional information, members are encouraged to read the following documents:

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