Medicare's Value-based Care Payments Gaining Momentum

An evaluation of Medicare's payment reform efforts finds that 42% of every dollar in the program was flowing to value-oriented payment methods, a nonprofit coalition of employer and healthcare purchasers says.

About 42% of Medicare's $360 billion in payments to providers in its fee-for-service program in 2013 were linked with efforts to boost the value of patient care, which is roughly on pace with similar initiatives among commercial payers, an independent review shows.

The first-of-its-kind Scorecard on Medicare Payment Reform was released Tuesday by Catalyst for Payment Reform, a nonprofit coalition of employer and healthcare purchasers.

Using alternative payment models, the Department of Health and Human Services wants to tie 50% of fee-for-service Medicare payments to quality and value by the end of 2018.

Andréa Caballero, CPR's program director and lead researcher for the report, says 58% of Medicare payments in 2013, the latest data available, were through traditional fee-for-service models that do not include quality components.

"While we are not doing a direct comparison to our commercial scorecard, just to put it into a little bit of context, when we issued the 2014 commercial scorecard back in September, which was also a look back on 2013 data, we found that 40% of every dollar in the commercial market was flowing to value-oriented payment methods," Caballero said at a webcast detailing the report's findings.

'Uncanny Similarity'
"That's kind of an uncanny similarity in how the two sectors are moving together at a pace that is similar. It appears that both the public and private sectors are experimenting and moving rapidly in how they pay providers."

While acknowledging the difficulty in comparing commercial and Medicare value-based reforms, Caballero says the commitment demonstrated by all payers toward value-based care illustrates the growing momentum toward changing how healthcare is paid for across all sectors.

A breakdown by CPR found that:

• 42% of payments were linked to value.
• 33% were made through pay-for-performance programs.
• 14% were made through shared-risk and shared-savings programs.
• 58% did not include any quality component.
• 11.8% of payments were through shared savings programs.
• 2% were through shared risk arrangements under the Pioneer Accountable Care Organizations.

While the shift toward value-based care is on, Caballero says it's too early to gauge success or failure. "We have to realized that value-oriented payment arrangements really only matter if they are actually successful at reducing costs and improving quality," she says. "The next big challenge for all of us, now that we have quantified and set a baseline for these payments is to actually look at how effective they are."

Momentum Seen
The report excludes the Medicare Part D drug program and Medicare Advantage, and Caballero says the report methodology also adjusts for payment overlaps. The report relies on 2013 payment data collected from publicly available sources and verified by the Center for Medicare and Medicaid Services and the Center for Medicare and Medicaid Innovation, as well as data contributed to CPR directly by CMS and CMMI. CPR has made all findings available online.

"The big takeaway here is that there is tremendous momentum in the Medicare program on payment reform and we also can see a path to more reforms that are being implemented and planned," Caballero says.

"We also have to keep in mind that most of these payment methods are still entirely based on fee-for-service. Medicare Advantage payment is still unknown and we are eager to understand how the payment methods grow from the Medicare Advantage plans to their contracted providers. Our next big task is to determine which payment reform methods are working best, and spread those best approaches."