42 percent of all 2013 Medicare payments were value-oriented

Just under half, or 42 percent, of all payments paid by to providers in Medicare’s fee-for-service program in 2013 were paid for services designed to increase the value of patient care, according to a scorecard prepared by the Catalyst for Payment Reform (CPR). While 58 percent of payments in that same year went to services not tied to performance incentives, CPR’s findings suggest that that the use of value-oriented payment methods is quickly becoming popular.

According to CPR, payment methods are considered to be value-oriented if they “reflect or are designed to improve the quality and safety of care along with payment methods designed to spur efficiency and reduce unnecessary spending.” CPR collected data from public sources and CMS and had the information verified by the Center for Medicare and Medicaid Innovation (CMMI) and CMS. Of the 42 percent of value-oriented payments, 32.8 percent were made through pay-for-performance programs and 13.7 percent were made through shared risk and savings programs. The scorecard did not asses date from Medicare Advantage plans, which is not yet available.

CMS recently announced that it was setting a goal of having 50 percent of Medicare payments made to alternative payment models by the year 2018, which it predicts will be achieved by the use of Accountable Care Organizations (ACOs), advanced primary care medical home models, new bundled payment models, and integrated care. Section 3022 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), authorized the creation of ACOs to incentivize multiple health care providers to work together to keep costs down. As a result, the number of ACOs has risen recently, with 70 percent of the population living within an ACO service area (see ACOs grow slow and take savings where they go, Health Law Daily, April 24, 2015).

CPR states that its scorecard will provide a baseline to track value-oriented Medicare payments. According to CPR Executive Director Suzanne Delbanco, “This Scorecard establishes a reference point for measuring Medicare’s implementation of payment reforms and how it pays health care providers.” She also added, “Our collective challenge going forward will be to gauge not just how quickly payment reform progresses, but also how effectively it helps to improve the quality and value of care for the over 50 million Americans insured by the Medicare program.”