Medicare Announces Plan to Reward Quality Over Volume

medical team meeting with...

WASHINGTON — The Obama administration Monday announced a plan to shift Medicare payments it makes to hospitals and doctors so they reward quality over volume. Officials said they hoped the move would be a catalyst for the entire health-care system.

“It is in our common interest to build a health care system that delivers better care, spends health care dollars more wisely and results in healthier people,” Health and Human Services Secretary Sylvia M. Burwell said in a statement. A broad cross-section of health-care industry representatives attended the announcement, including insurers, hospitals, and doctors, as well as employers, who pay for coverage for most workers and their families. The ultimate goal is to reward quality care, and not just the sheer volume of services like imaging scans.

Medicare and employers are already moving in that direction, but the outlook for the administration’s initiative remains unclear. Despite a slowdown in spending over the last few years, Medicare continues to grapple with longstanding financing problems, including a budget formula that will cut doctor payments by 21 percent in April unless Congress acts.

Rising Expectations

But Burwell says it’s time to take a longer-term view. Building on experiments under the president’s health care law, she set a goal of tying 30 percent of payments under traditional Medicare to new models of care by the end of 2016. That would rise to 50 percent of payments two years thereafter.

Those new models include so-called accountable care organizations, in which doctors coordinate care to help keep patients from landing in the hospital for avoidable problems. HHS also set a goal of tying 85 percent of all payments under traditional Medicare to measures of quality or value by the end of 2016. That would rise to 90 percent two years thereafter.

Costing about $600 billion a year, Medicare is the government’s flagship health insurance program, serving seniors and disabled people. About 55 million people are covered, with services financed through payroll taxes on workers as well as beneficiary premiums. Roughly 7 out of 10 beneficiaries are in the traditional program, while the rest are covered through private insurance plans offered under Medicare’s umbrella.

The $2.9 trillion-a-year U.S. health care system remains at the forefront of scientific innovation globally. But there is widespread agreement that health care is costing the nation too much. Many people get treatments and tests that either don’t help them or have problematic side effects. The price of new drugs is a perennial issue for insurers, as well as for federal and state governments. And fraudsters take a cut of the health care dollar that’s estimated to run into the tens of billions of dollars annually.

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