Transforming Medicare Payments: Ambitious New Goals

Leah Ralph
Director of Health Policy, ACCC

There has been renewed focus in recent years on moving healthcare reimbursement from a system that incentivizes volume to one that incentivizes value. Largely an effort to rein in costs, particularly those related to Medicare, this trend has cropped up in every major healthcare law in the past decade, from the Medicare Modernization Act in 2003 to the Patient Protection and Affordable Care Act (ACA) in 2010. In fact, the ACA allocated $10 billion to the new Center for Medicare & Medicaid Innovation, whose purpose is to develop and test innovative ways to pay providers. Even last year’s bipartisan, bicameral sustainable growth rate legislation ultimately tied payment updates to participation in some form of alternative payment arrangement.

In January, though, for the first time in Medicare’s history, the US Department of Health & Human Services announced explicit goals for tying Medicare payments to alternative payment models and value-based payments. According to the agency, 30% of Medicare payments will be tied to alternative payment models such as accountable care organizations (ACOs), medical homes, and bundled payments for episodes of care by 2016. By 2018, 50% of payments will be tied to these models. The agency also set a goal of tying 85% of Medicare payments to quality or value by 2016 and 90% by 2018 through efforts such as the Hospital Value-­Based Purchasing and Hospital Readmissions Reduction programs.

Perhaps most notable, the first benchmark is next year—an admirable but ambitious goal. The Obama administration is making this a priority, and we can expect to see an accelerated push to transition Medicare payments, and, in turn, private payer reimbursement. This shift is a huge undertaking, however, that will not only affect payments, but fundamentally change incentives for how providers deliver care. Implementation will take time and requires the right balance of forward momentum and critical safeguards to ensure that patients continue to receive the most appropriate quality care. As the US Department of Health & Human Services moves forward, the provider community should urge policymakers to continue to work toward consensus on appropriate quality measures; establish a sound, fair methodology for calculating financial benchmarks and risk adjustment; and allow providers the time, resources, and flexibility they need to implement these new payment models.

Unlike primary care physicians, specialists will face unique challenges on how to fit into these new models. The Centers for Medicare & Medicaid Services has placed a particular focus on oncology, funding a major community oncology medical home initiative, the COME HOME project, in 2012, and recently announced an oncology care model that will test the bundling of payments for chemotherapy administration. With other models (ie, Medicare’s Shared Savings Program) that are focused on primary care, however, it is still unclear how oncologists would be included or even participate. Caring for patients with cancer is complex and often expensive, leaving inherent challenges in how to account for cancer care in alternative models. How are high-cost drugs and innovative therapies treated in the construct of an ACO? Would high-cost treatments for patients with cancer be included in the financial benchmark? What is oncology’s role in shared risk and savings?

The Association of Community Cancer Centers (ACCC) and other organizations continue to work with the Centers for Medicare & Medicaid Services to answer these questions. We urge the provider community to remain active participants in this dialogue to ensure that meaningful, realistic payment reform is achieved. One way to actively engage is by becoming more involved with ACCC. If you are interested in becoming a member, serving on a committee, attending one of our Oncology Reimbursement Meetings, or becoming more involved in advocacy, please e-mail me at This email address is being protected from spambots. You need JavaScript enabled to view it..

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