HHS FACT Sheet: Delivery System Reform: Progress and the Future

As the largest health care purchaser in this country, the Department of Health and Human Services is directly responsible for ensuring access to high quality health care services for more than 100 million Americans. This Administration is dedicated to using that role to ensure that all Americans receive better care; that we spend our health care dollars more wisely; and that we have healthier communities, a healthier economy, and ultimately, a healthier country. To accomplish these goals, we are working with State and private partners to drive change throughout the system by find better ways of paying providers, delivering care, and sharing information. We call these efforts delivery system reform, and we are making tremendous strides in advancing high-quality patient care.

Last year, the Administration articulated a specific delivery system reform goal: having 30 percent of Medicare payments flow through Alternative Payment Models (APMs) by the end of 2016. APMs, which include approaches like bundled payments or Accountable Care Organization, change the way doctors and hospitals are paid to make them more attentive to the overall quality of care patients receive and the total costs of delivering that care. Because clinicians participating in APMs are rewarded for the value of care they deliver, instead of the volume of services they provide, their incentives are to make care more accessible to patients, improve follow-up care and transitions between doctors or facilities, eliminate unnecessary or duplicative tests, and keep patients healthier overall. The Administration met our APM goals for Medicare 11 months early, at the beginning of 2016.

Today, the Health Care Payment Learning and Action Network (LAN), a public-private partnership established by HHS in January 2015, is announcing that 72 health plans and states have voluntarily reported on the same payment goals. For these plans and states, which represent almost 200 million of the nation’s covered lives, 23 percent of their 2015 health care spending flowed through APMs.

Today’s announcement complements other important steps taken over the past month to drive progress on health care affordability and quality in Medicare, Medicaid, and among private payers.

• Launching Medicare’s Quality Payment Program. The Centers for Medicare & Medicaid Services (CMS) recently took the next step in implementing the new Quality Payment Program (QPP) put in place by the bipartisan Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). The Quality Payment Program will equip clinicians with the tools and flexibility to provide high-quality, patient-centered care, while encouraging additional participation in APMs.
• Collaborating with states on delivery system reform waivers in Medicaid. CMS announced new waiver approvals in Rhode Island and Massachusetts, and are working toward finalizing a waiver approval for Vermont, that allow these states to accelerate delivery system reform efforts, including the development of APMs that align with multiple public and private payers. These innovative arrangements will prioritize health care value and quality, with a focus on health outcomes that will help transform the delivery of care for priority populations. The three waivers – along with other Medicaid delivery system reform waivers already put in place in other states – feature specific goals for moving toward APMs to deliver better care at lower cost.
• Helping clinicians get the most out of their technology. The Office of the National Coordinator for Health Information (ONC) recently finalized updates to the Health Information Technology (IT) Certification requirements to make them more open and accessible to settings beyond Medicare and Medicaid. These updates improve access across the care continuum to technical standards and criteria necessary to ensure that key information is consistently available to the right person, at the right place, and at the right time. ONC also released a dynamic, easy-to-use, web-based Health IT Playbook to help clinicians get the most out of their technology, as well as an electronic health record (EHR) contract guide to help clinicians and hospitals avoid contract terms that could inhibit the utility of their EHR technologies or the flow of health data.

Medicare as a Leader

The Affordable Care Act provided many new tools to help Medicare take the lead in improving the coordination and integration of health care, engage patients more deeply in decision-making, and improving the health of patients, with a priority on prevention and wellness. Central to this national collaborative effort, the Center for Medicare and Medicaid Innovation (Innovation Center) is charged with testing payment and service delivery models to find approaches that reduce expenditures in Medicare and Medicaid while preserving or enhancing quality of care.

Through Innovation Center models, as well as other programs such as the Shared Savings Program, Medicare has been leading the move away from paying for quantity of services towards paying for value. Medicare provides health care coverage to our nation’s seniors, many of whom are at a point in their lives when they require more assistance and care than ever before. Through ACOs, bundled payments, and other integrated care models we are making it easier for seniors and their families to access high-value, coordinated care and ensuring that doctors are involved in all aspects of their patients’ care so they can make decisions based on the full picture.

• Setting Goals. In January of 2015, the Administration set the ambitious goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through APMs, such as ACOs or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018. The Administration also set a goal of tying 85 percent of all traditional Medicare payments to quality or value by 2016 and 90 percent by 2018 through programs such as the Hospital Value Based Purchasing Program. In March we announced that we hit our 2016 target – 11 months ahead of schedule. 
• Quality Payment Program. In October, we took the next step in implementing the Quality Payment Program. The Quality Payment Program moves Medicare towards a system that pays physicians based on the outcomes that matter to patients. The policy creates a unified framework that will reform Medicare payments for more than 600,000 clinicians across the country, and is a major step in improving care across the entire health care delivery system. At its core, the Quality Payment Program is premised on clinician choice and accountability, allowing clinicians to choose the best way to deliver quality care and to participate in the program based on their practice size, specialty, location, or patient population, while rewarding them based on the quality of care they provide. In particular, the Quality Payment Program encourages participation in APMs.
• New Advanced APM Opportunities. Today we also announced that CMS will re-open two Innovation Center models, Next Generation ACO and Comprehensive Primary Care Plus (CPC+), for new applicants for the 2018 performance year. Advanced APMs are a subset of APMs that let practices earn more for taking on some risk related to patients’ outcomes and meet other requirements. CMS also announced that another Innovation Center model, the Oncology Care Model with two-sided risk, will qualify as an Advanced APM model in 2017.
• Hospital Quality Improvement. Preventable patient harm in US hospitals declined significantly between 2010 and 2014; approximately 565,000 readmissions were prevented across all conditions and patients experienced 2.1 million fewer hospital acquired conditions. This decline coincided with the establishment of the Medicare Hospital Readmission Reduction Program (HRRP) and the Partnership for Patients (PfP) initiative. The HRRP was established by the Affordable Care Act and improves care quality by linking what we pay hospitals to the quality of care they provide instead of the amount. The PfP initiative was an early Innovation Center model that established a public-private partnership of hospitals, physicians, patients, and government payers to focus on reducing hospital acquired conditions and readmissions in the Medicare program. In September, CMS awarded almost $350 million to hospitals, Quality Improvement Organizations, and health systems to continue efforts started under PfP. 

State Driven Initiatives

Medicaid has long been a leader in supporting state innovation.  Through existing authorities, waivers, and Innovation Center models, the federal Medicaid program is working closely to support State efforts to reform their delivery systems build robust models to drive care quality and efficiency. 

The first states to offer state-wide ACO models and bundled payments did so through existing Medicaid authorities.  As a result of the Minnesota ACO model, one of the first Medicaid ACOs, health care teams are providing more intensive primary care services and building stronger relationships with mental health care providers and community resources. Together, their efforts to better coordinate care are leading to decreases in hospitalizations and in emergency room visits.

Flexibilities created by the Affordable Care Act enabled the Medicaid “Health Home,” which is an option for states to establish Health Home entities to coordinate care for people with Medicaid who have chronic conditions. Health Home providers integrate and coordinate primary, acute, behavioral health, and long-term services and supports to treat the whole person. Currently 20 states plus DC are implementing a total of 29 approved Health Home programs.

New models developed through the Innovation Center also provide an on-ramp for states that want to provide care delivery models that are aligned across payers.

• Under the Medicare-Medicaid Financial Alignment Initiative, CMS has partnered with 13 states to implement 13 demonstrations designed to better align Medicare and Medicaid and to integrate primary, acute, behavioral health, and long-term services and supports for Medicare-Medicaid enrollees. The demonstrations are currently serving more than 400,000 individuals.
• Comprehensive Primary Care Plus (CPC+) is a national advanced primary care medical home model that aims to strengthen primary care through regionally-based multi-payer payment reform and care delivery transformation. The model will begin early 2017 in 14 regions. State Medicaid agencies in 8 states and Medicaid managed care organizations in another 5 states are participating as payer partners in the model along with Medicare and private payers. Participating practices in each of these regions will enhance existing primary care services through care delivery and payment models that will be aligned across payers.
• The State Innovation Models Initiative is providing financial and technical support to states for the development and testing of state-led, multi-payer health care payment and service delivery models that will improve health system performance, increase quality of care, and decrease costs for Medicare, Medicaid, and Children’s Health Insurance Program beneficiaries—and for all residents of participating states. Funds for State Innovation Model activities are also being used to support state-level APM data infrastructure.

Medicaid demonstration waivers are another way states can create new care delivery models that address issues specific to their populations. Under each of the following new waivers, states are implementing new payment and delivery systems aimed at achieving better care coordination, improving access to both physical and behavioral health care, and addressing social determinants of health.

• Massachusetts. CMS is working towards finalizing Massachusetts’ request for the restructuring of its 1115 waiver that transforms MassHealth from a mix of fee-for-service and Medicaid managed care to a system of provider-led ACOs operating in partnership with community-based organizations.
• Rhode Island.  Rhode Island developed a new payment and delivery system model, called the Accountable Entity model through 1115 waiver authority, in which provider-led Accountable Entities will operate under shared risk contracts with the state’s Medicaid managed care plans. Accountable Entities are responsible for all Medicaid services including behavioral health and long-term care, and will incorporate providers of mental health, substance use, and long-term care services.
• Vermont All-Payer ACO Model.  CMS is working with Vermont to finalize their All-payer ACO Model. This model is a unique opportunity for CMS to partner with a state to incentivize health care value and quality, with a focus on health outcomes, under the same payment structure across all significant health care payers (including Medicare, Medicaid, and commercial payers) and the majority of providers throughout the care delivery system. The state will use updated flexibilities in its 1115 waiver, in addition to state innovation funding and waiver authority provided under Innovation Center, to design an all-payer ACO. This is a major step in federal and state efforts to align how health care is delivered.

Private Payer Initiatives

We know that transforming the health care system is a collaborative effort, which is why we worked with our partners to create the LAN to better align the important work being done across the private, public, and non-profit sectors.

• Setting Goals. The LAN was established to create a public-private partnership that would help drive the U.S. health care sector toward matching or exceeding the Administration’s goals for shifting Medicare payments into APMs – 30 percent by the end of 2016 and 50 percent by the end of 2018. The LAN is tracking progress towards this goal by categorizing payments across commercial, Medicare Advantage, and Medicaid lines of business. This initiative represents the first large-scale, nationwide measurement of public and private spending through APMs. Beyond the value of these results in gauging progress towards the LAN’s goals, they also provide a clear demonstration of the pace of change in health reform.  Today’s announcement serves to further confirm the broad impact of the Administration’s delivery system reform efforts.
• Sharing Information.  The LAN has also issued a series of rich intellectual capital about APMs. It has developed a Framework for categorizing the different payment model types, in an effort to have the greater health care community use common terminology about payment and broaden the collective understanding of various approaches. Additionally, the LAN has developed valuable resources in the areas of episode payment, population-based payment, and primary care. The Framework and white papers represent the effort of leading experts across the stakeholder spectrum who seek to contribute to the collective knowledge on APMs, which is all part of an effort to disseminate learning so that increased proportions of U.S. health care dollars can flow through payment mechanisms that are grounded in value and benefit patients.

Using and Unlocking Information to Advance and Reward Quality Care

As we work to transform our health care system into one that works for all Americans, technology is the foundation of our progress. We have made tremendous strides to bring health care into the 21st Century, but we still have work to do. In order to put people in the center of their care, we are working toward a health care system where patients and doctors alike can access and use their data to its fullest potential.

• Health IT Certification Program. The 2015 Edition final rule of the ONC Health IT Certification Program builds on past rulemakings to facilitate greater interoperability for several clinical health information purposes and enables health information exchange through new and enhanced certification criteria, standards, and implementation specifications. These modifications support the use of the ONC Health IT Certification Program by a variety of HHS programs, as well as private entities and associations.
• Private Sector Interoperability Commitments. In order to spur market progress on the seamless and secure flow of electronic health information for patients and clinicians, HHS announced commitments from companies that provide electronic health records used by 90 percent of U.S. hospitals, the nation’s largest private health systems—with facilities in 47 states—and more than two dozen professional associations and stakeholder groups to (1) help consumers more easily and securely access and transmit their electronic health information, (2) help health care providers share individuals’ health information for care with other providers and their patients whenever permitted by law, and not block electronic health information, and (3) implement federally recognized, national interoperability standards and adopt best practices, including those related to privacy and security.
• Electronic Health Record (EHR) Contracting Guide. In September, ONC released an EHR contract guide. The guide not only helps support the interoperable flow of health information, but also the Administration’s efforts to foster a cost efficient health care system by ensuring patient data is available to clinicians – and patients – when and where it is needed. EHR contracts can be confusing and may result in data blocking – the practice of knowingly and unreasonably interfering with the exchange or use of electronic health information – and other practices that limit opportunities to use EHRs to deliver safer and more efficient care. Providers all too often agree to contracts without fully understanding the “fine print” or negotiating rights that can ensure that the technology will meet their needs and expectations. The new EHR contracting guide is a key resource to help providers address data blocking and other challenges.
• Health IT Playbook. The Health IT Playbook is a dynamic, web-based tool intended to make it easy for providers and their practices to find practical information and guidance on specific topics as they research, buy, use, or switch EHRs. It incorporates feedback from the provider community regarding the need for user-friendly, specific tools for how to get the most out of health IT to better manage patient health and care, including supporting participation in APMs. 
• Transformed Medicaid Statistical Information System (T-MSIS) project. Through the T-MSIS project, Medicaid data on enrollment, utilization, and quality within a state and from different states will for the first time be aligned in a single database with a published data dictionary. This data is crucial to delivery system reform in terms of tracking outcomes, cost, utilization, benchmarking, risk-adjustment, and attribution for quality based payment initiatives. This single source will align previously fragmented reporting requirements to help provide foundational support for current and future delivery system reform activities.
• Clarifying Patients and Providers’ Ability to Access and Transmit Electronic Health Information.  ONC and the Office for Civil Rights have developed a number of products to clarify individuals’ rights to access and transmit their information, as well as health care provider’s ability to access, use, or disclose health information electronically, when and where it is needed for patient care and in response to patient requests. When individuals get, review, use, and share copies of their health information, they are better able to monitor chronic conditions, make sure that their health information is accurate, and share their information with others, including health care providers, family, and for research.