Alternative Payment Models Gaining Momentum

Last week we reported that the Department of Health and Human Services announced its initiative that 50 percent of Medicare payments be delivered through alternative payment models by 2019. This is the first time Medicare has set specific time frames and payment percentages for the shift away from fee-for-service payments.


Provider advocates, according to the Healthcare Financial Management Association (HFMA), generally supported the news but concern has been expressed about lack of detail. One HFMA executive said, “Lacking specific details, it is not yet clear how Medicare will reach the short-term payment reform goals that HHS announced . . . However, the goals of this payment initiative do increase both the potential significance of the proposed overhaul of the Medicare Shared Savings Program (MSSP) and the need to expand bundled payments.” (“Medicare to Shift 50 Percent of Payments to Alternative Models by 2019,” HFMA Weekly News, January 30, 2015)


The Importance of Accountable Care Organizations


It is likely that the Medicare Shared Savings Program (MSSP)—Medicare’s primary ACO program—would have to undergo significant changes in order to have an impact on growing the share of payments that are tied to quality. Only a quarter of those reporting first-year results achieved significant savings.


HHS proposed an overhaul of the MSSP program in December that would reduce the financial barriers to providers participating in the program. The changes under the proposed rule included the extension of the bonus-only period for participants in “Track 1” from three years to six years. Many worried that the existing time frame was too short for providers to develop value improvement steps and then widely implement such changes to avoid major penalties in a subsequent phase of the program. ((“Medicare to Shift 50 Percent of Payments to Alternative Models by 2019,” HFMA Weekly News, January 30, 2015 and “Providers Would Get a Boost Under Proposed Rule Changes to MSSP ACOs,” iProtean Connect, December 2, 2014)


Executives at leading insurance companies have pledged to increase the use of quality and cost-control incentives similar to ACOs, bundled payments and other contracts with the potential for rewards or penalties based on quality performance as well as better cost control. However, many questions remain unanswered. Some question whether meeting targets will accomplish the desired improvements in quality and efficiency; others have expressed concern that Medicare incentives may be tied to weak measures of quality.


One policy analyst noted, “If all you’re going to do is . . . put providers at risk for cost, but you don’t have a robust system for measuring quality, then you’re not leaving patients better off. “ (“Where healthcare is now on march to value-based pay, Modern Healthcare, January 28, 2015)




iProtean subscribers, the new advanced Quality course, Board Mindsets to Drive Value, featuring Stephen Beeson, M.D., and Larry McEvoy, M.D. is now in your library. Dr. Beeson and Dr. McEvoy offer suggestions about working with physicians to build a different kind of organization where collaboration, innovation and change will become the norm.


Please note that Dr. Beeson will be one of the featured speakers at the iProtean Symposium in March.



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