Healthcare News & Insights

Feds announce value-based payment timeline

It’s not just a vague threat anymore: Value-based payments are coming – and soon.

487098007Fresh on the heels of news that many hospitals are missing the mark with Medicare’s incentive programs comes the announcement of a timeline for value-based reimbursement from the feds.

The Department of Health and Human Services (HHS) has made it a priority to have almost all Medicare fee-for-service payments directly linked to quality and value – and it’s finally come up with specific deadlines for certain benchmarks, according to a new statement.

By 2016, HHS wants 85% of provider payments to depend on the quality of care. And by 2018, 90% of payments will depend on quality and value.

This will happen through the expansion of Medicare initiatives, such as the value-based purchasing and readmissions reduction programs.

HHS has also created a new coalition, the Learning and Action Network, that’s designed to work with other healthcare entities and stakeholders to promote the spread of value-based reimbursement throughout the industry. Specifically, it’ll collaborate with private payors, employers, consumers, providers, states and state Medicaid programs.

New payment models

Along with altering the traditional fee-for-service structure, HHS wants 30% of all Medicare provider payments distributed under “alternative payment models” by 2016. This number will increase to 50% of all payments by 2018.

The agency describes alternative payment models as reimbursement structures where “providers are accountable for the quality and cost of care for the people and populations they serve.”

Examples of these models include accountable care organizations (ACO), patient centered medical homes and bundled payments for single episodes of care.

Currently, only 20% of provider payments are made using alternative payment models, so these new goals reflect a 50% increase in the use of these models by 2016.

And HHS also wants to work with private payors and states to increase the adoption of these models – in some cases, even surpassing the goals set for Medicare.

The agency hopes to continue the reduction in healthcare spending attributed to alternative payment models. So far, according to HHS, ACOs alone have saved $417 million since they’ve been implemented.

And, initiatives like ACOs have also made patients safer. Combined, all of Medicare’s quality improvement programs contributed to a nearly 8% decrease in readmissions and have saved close to 50,000 lives, according to preliminary data from the feds.

In addition, Medicare’s quality programs have saved $12 billion in healthcare spending.

Implications for hospitals

Taking all this information into consideration, it’s clear: Value-based care is here to stay. Whether your hospital is prepared or not, payments will be tied to value permanently.

HHS said that, regardless of whether healthcare providers are ready to fully transition to a value-based care reimbursement model, at least some of their payments will be tied to quality and value as time goes on.

With that in mind, hospitals need to be sure the care they provide patients meets the new standards for getting paid.

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