Publications & Presentations
March 3, 2016
From Inside Health Policy

by Michelle M. Stein

CMS reached its goal of tying 30 percent of traditional Medicare payments to alternative payment models 11 months ahead of schedule, and some lobbyists say the agency is set to increase the number of Medicare payments tied to value-based pay with the mandatory joint replacement bundle going into effect soon and providers looking to prepare for the new physician payment system.
The agency has also reached its goal of tying 85 percent of all Medicare fee-for-service payments to quality or value by 2016, according to Patrick Conway, CMS' deputy administrator for innovation & quality and chief medical officer.

In January 2015, CMS set goals for moving providers to alternative pay models and value-based payments, including trying 30 percent of payments to these models by the end of 2016 and 50 percent by the end of 2018. The agency also said it aimed to tie 85 percent of Medicare payments to quality or value by 2016 and 90 percent by 2018.

When CMS made that announcement, 20 percent of payments were already tied to alternative payment models. When questioned whether the agency was ambitious enough, considering how many payments were already tied to these models when agency made its first announcement, Conway responded that CMS was ambitious. He noted that some had raised questions about whether the goal was attainable.

CMS says in a fact sheet it met the first milestone when 121 new accountable care organizations joined Medicare -- the agency says Pioneer, Next Generation and Medicare Shared Savings Program ACOs count as alternative payment models -- on top of new participants in other models including bundled payments.
Conway added the agency was able to reach its goal so far ahead of schedule in part due to stakeholder acknowledgment that the system is changing and improvements made to existing models that led to increased participation.

Julius Hobson, senior policy adviser at Polsinelli, said that reaching 30 percent of payments tied to alternative pay models, while not surprising, is good news. However, he said it will be a bigger test to reach the next milestone that requires 50 percent of payments to be tied to those models. Once CMS reaches that goal, the program is likely to see significant savings through a reduction in spending growth, Hobson said.

Conway said that CMS is moving toward the next milestone, and pointed to the mandatory Comprehensive Care for Joint Replacement model and the Oncology Care model as programs that will grow the share of Medicare pay tied to alternative pay models.

The current models are voluntary, and Hobson said it will be important to see how a mandatory model plays out to gauge how alternative payment models will work over the long haul.

Providers will also be preparing for the new physician pay system, which Amanda Forster, vice president of public relations at Premier, Inc., says could combine with the mandatory CCJR to add momentum to the move to alternative pay models.

Medicare will pay bonuses to physicians that participate in alternative pay models and they won't be subject to the performance rating Merit-Based Incentive Payment System. Physicians who get a substantial part of their revenue from alternative pay models will get a 5 percent bonus from 2019 through 2024, in addition to shared-savings bonuses they might receive for participating in those models. Those not in alternative pay models will get only a 0.25 percent pay bump each year, and they'll be subject to the Merit-Based Incentive Payment System, which CMS has yet to design.