Obama administration beats goal on Medicare payment reform

The Obama administration reached an important landmark in its ambitious push to reform Medicare payments by tying doctor fees to quality rather than quantity.

The Centers for Medicare and Medicaid Services (CMS) announced Thursday it reached its goal of tying 30 percent of Medicare payments to value, instead of volume, with 10 months left in 2016.

“There were many who doubted whether we could reach the goal and certainly the exact timeline,” said Dr. Patrick Conway, chief medical officer for CMS. “We even, internally, questioned whether we could reach the goal or not.”

{mosads}Within Medicare, $117 billion is now spent on value-based payments — up from “virtually zero” dollars in 2011, Conway said.

The 30 percent commitment, which was laid out last year, marks the most dramatic shift in Medicare payments in the program’s 50-year history. It’s also the first time the Obama administration — or any administration — has set a target on value-based payments.

Instead of simply paying doctors for services, CMS now encourages public and private sector healthcare providers to base their payments on quality measures, such as patient outcome and access to care.

The most common of these models are known as Accountable Care Organizations (ACOs), in which groups of doctors, hospitals and specialists voluntarily coordinate care.

The administration has also been pushing a “bundled payments” method, in which hospitals receive a lump sum for a service, like a knee operation, and then divide up the payments to other providers involved.  

The result, Conway said, are doctors who offer extended office hours, quicker follow-ups and a greater focus on avoiding hospitalization.

Conway attributed the success of the program to “tools provided by the Affordable Care Act,” which offered new incentives for providers moving away from the much-maligned fee-for-service model.

“People have really seen the light that the health system is changing,” Conway told reporters. “At the end of the day, people know this is the right thing to do.”

Still, there are growing pains, particularly for doctors and hospitals accustomed to the current “fee-for-service” system.

“Hospitals being asked to step up,” Peggy O’Kane, president of the National Committee for Quality Assurance, recently told The Hill.

“It’s like turning healthcare systems upside down,” she said. “You don’t make change on this scale without unintended consequences.”

The administration is now eying its next goal — tying 50 percent of payments by 2018.